Excessive College Coach Pay Debate
Two debates are currently underway:
1. Should college coaches be paid with lots of zeros and student athletes be paid zero? See the March 1 USA Today article attached.
2. The new 2017 Tax Act will provide a 21% excise tax on any not for profit (University) for paying over $1 million. In essence, should not for profits have an artificial cap on pay?
The 2017 Tax Act unfortunately will likely produce creative compensation systems for college coaches. For example, this article highlights how college coaches (not for profit employees paid over $1mm) could start to realize sizable revenue agreements through outside vendors like Nike, etc. to reduce the potential excise tax penalty imposed by the new 2017 Tax Act.
Due to these two debates colliding at the same time, the University athletic compensation system is getting a fair amount of air time. And it should. Similar to our advice on setting NFL commissioner pay, we believe the system needs to implement independent advice and expertise to get free market solutions that are fair and equitable for all interested stakeholders and participants.