Northwestern Wildcat Players Attempt to Unionize

[Texsox]

I little perspective on the money. My daughter spent just over $100,000 in four years at U of I. That would be over six years of working full time at $8 per hour.

[EvilMonkey]

I little perspective on the money. My daughter spent just over $100,000 in four years at U of I. That would be over six years of working full time at $8 per hour.

Time to do something about that high cost of education then.

[greg775]

Why should RG3 be able to sell jerseys using the Baylor license and colors? Michael Jordan can't market his own line of Bulls material.

 

Cause it's his name. If you flip flop the situation, how can Baylor sell RGIII's name on a jersey? It goes both ways IMO. It'd be bad pub for Baylor to sue RGIII over this matter if he decided to sell his own Baylor RGIII jerseys.

[Jake]

It does seem off that the excesses of the program tend to be distributed everywhere except the players. The players need not get everything -- Nick Saban, the infrastructure at Alabama, etc. all play a big role in player success and revenue generation -- but it seems like there ought to be some way to spread the benefits to the players.

 

The coaches are in a marketplace that demands higher salaries. The players have a hard cap. Even if it doesn't come in the form of paychecks, can there be some way to cut off some of the excess revenue generation and make it benefit the players rather than fighting tooth and nail to keep it from doing so?

[Jenksismyhero]

It does seem off that the excesses of the program tend to be distributed everywhere except the players. The players need not get everything -- Nick Saban, the infrastructure at Alabama, etc. all play a big role in player success and revenue generation -- but it seems like there ought to be some way to spread the benefits to the players.

 

The coaches are in a marketplace that demands higher salaries. The players have a hard cap. Even if it doesn't come in the form of paychecks, can there be some way to cut off some of the excess revenue generation and make it benefit the players rather than fighting tooth and nail to keep it from doing so?

 

Is this really true? From a fans perspective, it seems to me that the perks of being a D1 scholarship athlete have gotten a lot better over the last 20 years.

[Texsox]

Which would sell better a blank Baylor jersey or a generic jersey with RGIII?

 

And is it important to look at the roots of college athletics? Why it was started or has that cat been out of the bag so long?

[Texsox]

The National Labor Relations Board in Chicago rules that football players at Northwestern University are school employees and can unionize.

 

Follow complete coverage of breaking news on CNN.com, CNN TV and CNN Mobile.

 

This just in from CNN. Let the fun begin

[bmags]

Is this really true? From a fans perspective, it seems to me that the perks of being a D1 scholarship athlete have gotten a lot better over the last 20 years.

 

And the amount of money going through the game is insane compared to 20 years ago. TV deals are nuts.

[Texsox]

I wonder how the players will cover the tax liabilty as employees?

Benefits over $5,250. If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income.

 

There are also issues with housing, meals, etc.

[StrangeSox]

There's already precedence for this. There are graduate student unions, and as far as I'm aware, their scholarships and stipends did not suddenly become taxable upon unionization.

 

eta: well some quick googling seems to indicate that TA stipends are in fact taxable!

Edited March 28, 2014 by StrangeSox

[Balta1701]

There's already precedence for this. There are graduate student unions, and as far as I'm aware, their scholarships and stipends did not suddenly become taxable upon unionization.

 

eta: well some quick googling seems to indicate that TA stipends are in fact taxable!

We paid taxes but were exempt from Social Security and Medicare taxes as grad students.

[StrangeSox]

What about on scholarships or grants?

[Jake]

Anything not being spent on tuition or absolutely mandatory student expenses (nope, that Macbook isn't a mandatory expense unless the school requires that every single person in your program/class has it) is taxable income - no payroll taxes, but taxable as income tax.

[StrangeSox]

I haven't really seen it discussed much, but does recognizing the players as compensated employees put the NCAA's and the individual programs' tax-exempt status at risk? It's based on the alleged amateurism of college sports.

[ptatc]

I haven't really seen it discussed much, but does recognizing the players as compensated employees put the NCAA's and the individual programs' tax-exempt status at risk? It's based on the alleged amateurism of college sports.

In the current system they are amateurs as they aren't on a formal payroll to play. However, you are right that this ruling will change that.

[StrangeSox]

That actually explains really easily why the NCAA forbids them from being able to sell their autographs or memorabilia, sign outside endorsement deals, etc. The NCAA, the conferences and all of the teams would lose their tax-exempt status over it.

 

Which arguably a multi-billion dollar entertainment industry probably shouldn't be tax-exempt in the first place, but at least their position makes sense.

[ptatc]

That actually explains really easily why the NCAA forbids them from being able to sell their autographs or memorabilia, sign outside endorsement deals, etc. The NCAA, the conferences and all of the teams would lose their tax-exempt status over it.

 

Which arguably a multi-billion dollar entertainment industry probably shouldn't be tax-exempt in the first place, but at least their position makes sense.

Exactly. It shouldn't be allowed to work the way it does, but there is a reason they want it to.

 

I'm not sure if this part of the reason that the ruling applies only to private schools at this point. Could a public tax-exempt entity be different than a private one?

[Jenksismyhero]

Why would it change the NCAA's status? Other not-for-profit, tax exempt institutions have salaried employees (as does the NCAA).

[ptatc]

Why would it change the NCAA's status? Other not-for-profit, tax exempt institutions have salaried employees (as does the NCAA).

I don't think most of the private school are not-for profit. I know the public schools are. Could this be the difference?

[StrangeSox]

Why would it change the NCAA's status? Other not-for-profit, tax exempt institutions have salaried employees (as does the NCAA).

 

It's based on the 501©3 requirements:

 

The exempt purposes set forth in section 501©(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

 

If the athletes themselves are compensated employees, then they aren't fostering amateur sports competition.

[StrangeSox]

I don't think most of the private school are not-for profit. I know the public schools are. Could this be the difference?

I think that's backwards, at least for most of the major private schools. The Ivies, NW, Stanford, UofC, IIT, etc. are all not-for-profit. The for-profit privates are the DeVry, Phoenix, etc. of the world.

 

edit: what separates the non-profits and the for-profits is that, while they're both educational in nature, the for-profits generate profits for private shareholders/individuals. Harvard may generate a profit every year, but it gets plowed back into its giant endowment fund.

 

To be tax-exempt under section 501©(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501©(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Edited March 28, 2014 by StrangeSox

[Jenksismyhero]

I wonder if the players even want to go that far though. They want to be viewed as "employees" only so that they can become a union. They don't want to be compensated like employees. I wonder if the NLRB decisions can make that distinction or if it has to be done by law. I know the guy for ESPN was saying that being considered an employee for union purposes doesn't mean they have to start paying taxes on the scholarships/stipends they get. The law on taxation would have to change or the IRS would have to change an internal rule.

[ptatc]

I think that's backwards, at least for most of the major private schools. The Ivies, NW, Stanford, UofC, IIT, etc. are all not-for-profit. The for-profit privates are the DeVry, Phoenix, etc. of the world.

Yeah, I went and looked up a few and most of the major private universities are not for profit, so that wouldn't factor into it.

[StrangeSox]

I wonder if the players even want to go that far though. They want to be viewed as "employees" only so that they can become a union. They don't want to be compensated like employees. I wonder if the NLRB decisions can make that distinction or if it has to be done by law. I know the guy for ESPN was saying that being considered an employee for union purposes doesn't mean they have to start paying taxes on the scholarships/stipends they get. The law on taxation would have to change or the IRS would have to change an internal rule.

I don't know that it would really be up to the employees after a certain point. The IRS may look at the NLRB ruling and issue its own ruling that NW's athletic program (athletic programs are usually separate entities from the schools themselves) no longer qualifies as a 501©3 because their team isn't amateur. The IRS wouldn't be changing a rule itself but its determination of whether or not a specific entity qualifies under that rule.

 

edit: the difference between how this applies to grad student unions and how it would apply to athletic clubs, as I read it, is that grad students are still very much part of a non-profit-generating educational institution, and the institution still qualifies because it is educational in nature. The athletic club wouldn't meet any of the qualifying exemptions for a 501©3 if they weren't an amateur organization, though. On the other hand, the NFL itself (not the teams) is tax-exempt, so maybe NW would qualify under the same part of the tax code. i dunno I'm obviously not a tax lawyer.

Edited March 28, 2014 by StrangeSox

[Soxfest]

There's already precedence for this. There are graduate student unions, and as far as I'm aware, their scholarships and stipends did not suddenly become taxable upon unionization.

 

eta: well some quick googling seems to indicate that TA stipends are in fact taxable!

It will end up being taxable players cannot have it both ways. Players should be careful what they wish for.

Edited March 28, 2014 by Soxfest