The $1 Billion Scam Behind College Football Coaching Buyouts

College coaching buyouts and tax dodges. Giant college football buyouts are being sold to the public as, get this, philanthropy. But they function in a way that's not at all like philanthropy at all. This is a, this story is even worse than the last one. And it is profoundly, profoundly annoying to me what goes on. Anytime someone mentions sports, it seems like people say, oh, my brain cells, let me just blow them out. Let's just stop thinking. Because that is essentially what happens. They're functioning like sleazy tax dodges. Scott Hodge, writing in the Washington Post this past week, notes that universities already owe about $228 million this season alone to 15 fired football coaches. That pushes total severance since 2012 to past $1 billion. Let's wrap our heads around this. Colleges give gigantic salaries to these football players. Excuse me, these football coaches, but unlike you or me, if you get fired, if your boss gets sick of you, it's most likely an at will situation. They can fire you at will. They can say, hey TJ don't like the cut of your jib any longer. Bye bye, and walk you out the door. That's what happens to most people, not these football coaches can be told, hey, you've lost every game for the past two years. We know, we told you we wanted you for 10 years, but now we're just going to pay you tens of millions of dollars to go sit on the beach for the next eight years. That's what happens. And it's happening, courtesy of suckers like you and me. That's right. Taxpayers are subsidizing this in a lot of different ways. So as I mentioned, it's a billion dollars of this severance pay in the last decade. LSU reportedly owes Brian Kelly about $54 million after firing him, while Texas A and M paid Jimbo Fisher roughly $76 million in 2023. At LSU, donations, many of them tax deductible. Here's the rub. Made up about 37%, 37% of the athletic department's $220 million in revenue last year. So here's the dirty little secret. Wealthy boosters write these checks to the athletic association of these schools. Donations, they call, they claim a charitable deduction. And they shift part of the cost onto taxpayers because they don't have to pay tax. Athletic departments behave like professional entertainment business while hiding under the non profit umbrella of universities. If you believe in free markets, as I do, this is the opposite. Losses are socialized through tax breaks, while private bragging rights stay with a few big donors. Okay, what's the real message here? It is an obscenity that college coaches are paid tens of millions of dollars quite often for doing nothing. And the money is coming through charitable donations to the school's foundation and nobody has to pay any tax on it. This is an absurdity. It is an indirect propping up. It's a payout to wealthy colleges and their coaches and it needs to stop. Let's dig a little bit deeper. Now, I realize there's some complexity here. It's not as simple as the federal government writing a $10 million check to a coach and say, now go sit on the beach. But when you make certain things tax deductible, you put in all sorts of perverse incentives to people. You think of a non profit organization, you think of the United Way, you think of something that's going to help needy people or perhaps the Boy Scouts or oh, homeless shelter. Well, it's hard to imagine anything less homeless shelter like than a college football coach who's a top 10 coach or top 20 coach. Because not only are they not homeless, they make enough Money to have five or 10 homes if they want it. They make so much money they can buy homes that they've never stepped foot in and don't even know how many homes they have when you ask them. And it's coming in part because of the charitable donations that wealthy alumni give to the school. So that needs to be stopped. There should be absolutely no tax benefit to giving money to a university that's going to turn around and give the money to a football coach. Now I've talked about this before in the show and I'll say it again, that football coaches, basketball coaches, any coach at a public university is a public employee. Absolutely nothing bad would happen at a societal level if we simply said no public employee should be paid more than the President of the United states, which is $400,000 a year. I'm guessing statistically speaking you could live quite well on 400,000 a year because that is five, six times more than what the average family in America makes. So yeah, you could get by on that. But LSU, no, they want to pay Brian Kelly $54 million to go to the beach for the next eight years. It is an absolute obscenity. Now, top conferences generated nearly 110 billion in the last decade. LSU's athletics revenue roughly 220 million in 2024 donations supply 37% of the LSU athletic revenue. It's time more people started asking serious questions about this. Senator Maria Cantwell has asked questions about nonprofit status of big time athletics. I hope she continues to do so. This is a tough problem for reform because the very same people who are the big wealthy fat cat boosters they call them at these colleges are quite often the very same people writing campaign checks to politicians. And so when something like this comes up for a vote, if it even got that far, the person could say, hey, I've given you $20,000 for all your elections the last 20 years. All I'm asking is don't change the tax deductible status of my contribution, my donation to my state university, because that's really important. It's very hard for politicians to say no to that. So look, folks, I'm here on this show to put a spotlight on what's in the news, analyze it, filter it so you understand the real messages behind the story and so you understand the honest philosophical debates going on in stories so that you can be more successful in your own communication. One of the things that frustrates me is we constantly see people who call themselves conservatives bemoaning what they think of as government waste. Wow, can you believe that poor person bought a Coca Cola with a food stamp? Isn't that an outrage? Well, it might not be a good thing, but it's absolutely nothing compared to the indirect funneling of tax dollars through these tax breaks to someone like a Brian Kelly getting $54 million to do nothing. If you really want to make money as a coach, fine. Go work in a professional league, the NFL, and ideally do it in a way where you're not asking taxpayers to pay for your stadium. That would be a free market system. Now this does apply to private colleges too, because guess what? Almost every student at a private college, or a very high percentage of them, they have subsidies from the federal government. They have aid from the foreign government, federal government, they have loans backed by the federal government. So there's just grants flowing to these private universities. So anyone involved with any college in America, you are completely awash in tax dollars. That's okay, but don't try to have it both ways. Say, yes, I'm just a public servant. Give me more money, give me taxpayer money, give me government backed loan. I want all this money, money, money, money. But oh, I'm a private sector person. I want to make $20 million a year. That disconnect is simply too much to stomach.