Random Ivy notes for 5/21

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1) Tomorrow's big game is approaching as the the W. Lax team heads to Towson, Md., for the Final Four contest against Northwestern (much more on The Buzz tomorrow). Here's the last interview with some Quakers before they left West Philadelphia.

2) Today Penn Athletics formally announced the incoming football freshmen class. Perhaps the highlight of the 34-person class is quarterback Billy Ragone (Chesire, Conn.), who was a 2008 Wendy's Heisman nominee and Connecticut State Player of the Year, as voted by some publications.

3) Here's an interesting look at the commercialization of college sports. It's not specifically relevant to Penn (the Ivy League is the conference the least worried about increasing its profits, in my opinion), but it's a compelling look at the NCAA as a whole. However, you need an account with The Chronicle of Higher Education to read the article, so I'll paste the full text after the jump.

Commercialization in College Sports May Have 'Crossed the Line,' Congressional Report Says

By BRAD WOLVERTON Washington

Big-time college sports programs derive 60 to 80 percent of their revenue from commercial sources, suggesting that intercollegiate athletics—at least at the elite levels—may have "crossed the line" from an educational to a commercial endeavor.

That finding comes from a report, "Tax Preferences for Collegiate Sports," released Tuesday by the Congressional Budget Office. The office, a nonpartisan research arm of Congress, questioned whether the rise in such commercial ventures should lead big athletics programs to lose their tax-exempt status.

The report offers no position, but says removing the current tax incentives would do little to bring in additional revenue to the U.S. Treasury and would be unlikely to alter the growing commercial activities in college sports.

The National Collegiate Athletic Association has long argued that athletics departments are no different from other university programs that secure corporate deals to finance their operations. But the report found that athletics programs bring in a far greater proportion of their revenue from commercial sources than do colleges on the whole. Over all, colleges derive just 11 to 14 percent of their revenue from corporate deals.

The report, requested two years ago by Sen. Charles E. Grassley of Iowa, the top Republican on the Senate Finance Committee, covers little new ground and left several observers scratching their heads.

"They ignored the basic principle that nonprofit organizations are granted their special nonprofit status by the IRS to further their mission, which in the case of universities and colleges is exclusively educational," said Nathan Tublitz, a professor of biology at the University of Oregon and co-chair of the Coalition on Intercollegiate Athletics, a faculty-led reform group. He believes the report provides strong evidence that intercollegiate athletics programs are primarily a commercial enterprise and are moving away from their educational mission.

The report's authors bemoaned the lack of readily available data on college sports spending, but according to John D. Colombo, a professor at the University of Illinois College of Law, they missed an opportunity to call for athletics departments to disclose more information on their federal tax forms.

The report discusses a number of policy options federal lawmakers could take, should they decide that college sports programs are too commercial in nature. Members of Congress could further limit the deduction of charitable contributions, which have helped finance much of the growth in college sports in recent years, for such programs, or they could curtail athletics departments' use of tax-exempt bonds, the report says.

If those tax breaks were eliminated, however, donors could simply shift their contributions to a university foundation, still earmarking them for sports.

And if lawmakers prohibited the use of tax-exempt bonds to finance athletics facilities, colleges could continue using such bonds for their sports programs by borrowing indirectly.

Questioning Tax Breaks

Senator Grassley, who has helped legislate broad changes to nonprofit tax law in recent years, said in a statement that federal lawmakers should take a closer look at college sports programs and demand that they disclose more about their finances.

"Colleges should explain how they use their commercial revenue to get the biggest bang for the buck in fulfillment of their educational mission," he said.

But Richard A. Grafmeyer, a Washington lawyer and former tax counsel for the Senate Finance Committee, said lawmakers are unlikely to have much appetite this year for questioning the tax breaks in college sports.

Some observers worried that imposing changes on the tax status of athletics departments, or limiting their revenue, could have unintended consequences—namely, that they might be forced to cut the sports that are more closely aligned with their educational mission in favor of those that just bring in the most revenue, said Glenn Wong, a professor of sports law in the Isenberg School of Management at the University of Massachusetts.

He sees the need for a different kind of clarification from the federal government.

“I would love to see the tax code reshaped in a way that would encourage institutions, if they want to retain their contributions and deductions, to maintain their sports programs also," he said.