Really good read in the Statesman.
One way to view Mack Brown’s recent salary modification, to as much as $5.7 million this year with performance bonuses, is that the University of Texas’s generosity has made him the highest-paid college coach in the country.
But there’s another way to look at it: Brown is also one of the country’s best-compensated nonprofit executives.
As a UT employee, Brown works for a educational charity that, as a nonprofit, benefits from generous tax breaks. His salary, critics say, is the latest symptom of a haphazard public policy that lumps UT’s football program into the same category as its law school and Blanton Museum of Art.
To tax analysts, the issue is not how much money the Longhorns football team makes — $87.6 million last year — or whether the coach deserves his salary. Rather, said John Colombo, a professor at the University of Illinois College of Law, the question is: “Is Texas paying Mack Brown $5 million for his contribution to the educational environment at the university, or because it wants to win football games?”
How policymakers answer is worth millions of dollars to large and successful programs such as UT’s. Federal laws require a nonprofit’s income and expenses both to be tied to its charitable mission. But a number of critics, as well as a recent federal report, say the nation’s biggest college athletics programs are raising and spending money in ways increasingly divorced from education.
“The large sums generated through advertising and media rights by schools with highly competitive sports programs raise the question of whether those sports programs have become side businesses for schools,” a May 2009 study by the nonpartisan Congressional Budget Office noted.
Read the whole thing. I did not realize that pretty much all of the revenue that universities derive from athletics is tax free. There’s a lot of room for reform in there, but given the history and the repeated interference by Congress on behalf of the NCAA when the IRS has tried to declare a particular revenue stream taxable, I wouldn’t hold out much hope. For another perspective on this, read UT President Bill Powers’ blog post called “A Self-Sustaining Athletics Program”, which was published a couple of days before that Statesman story. (Thanks to Jake Silverstein for pointing out Tower’s blog.)
I’ve read a lot of articles stating that since the football program makes X million a year, and is self sustaining and is using only revenue generated by the football program, then whatever they want to pay Mack is fine and the professors that teach at UT can just lump it. My question is: if Mack Brown coached a semi-pro football team called the Austin Longhorns, would that program make $87 million a year and would he be able to make $5 million a year in salary? I would say “no”. Any argument that posits the football program is separate from UT and self sustaining in it’s own right is disingenuous at best. If it wasn’t for it’s association with the university of texas, the longhorns would attract no interest in texas or the rest of the country. If Mack wants to make sure there are plenty of well educated, well paid longhorn fans in the future that can make sure the football program generates $87 million/year he should cut his salary in half, donate it to the university and institute a program where some part of the “football revenue” is used to sustain the university itself.
Charles, an interesting article as far as it goes. But how can there be a meaningful analysis of the hypocrisy of this minor league sports business without mentioning the appalling failure of the academic businesspeople to pay direct compensation to the workers who are primarily responsible for generating the revenue — i.e., the players?
Providing indirect compensation to the players through academic scholarships and resort facilities simply increases the perverse incentives that result in absurdly high coaching salaries. Does anyone really think that UT would pay Mack Brown such a huge compensation package if it was required to pay unregulated market prices for the services of the players who largely create the value of its football enterprise?
As I’ve said many times on my blog, college football and basketball are an entertaining form of corruption. That the leaders of many of our best educational institutions continue to promote that entertainment without addressing the corruption is a sad reflection on the quality of those leaders.
Interesting post – a few questions it raised for me:
(1) Why wouldn’t we consider Brown, ‘as a UT employee’, to be working for the State of Texas rather than for ‘an educational charity’? I work for a public university in Texas. My salary is paid through tax dollars. Is Brown’s?
(2) Would it be any different than spending $5.7 million on advertising or on alumni relation-building? are the ends not the same – burnishing the school image – if we look past the means?
(3) could we reasonably consider it an investment? (a) it might generate good will and a higher quality applicant pool (b) it seems to encourage state legislators to pay out – at least one economist found that “institutions with successful football teams receive 3% to 8% increases in state appropriations the following year” including an apparent bump for defeating an in-state rival. See Humphreys, The Relationship Between Big-Time College Football and State Appropriations to Higher Education
Mack’s salary is paid out of the athletic budget. The athletic dept gives a large chunk of money to the University. With state support shrunk to shameful levels around (11%), I think it would be counterproductive to try to tax athletic revenue. My feelings about big-time college sports are not without qualm, but taxing them is no answer.
Kva