WASHINGTON — A potential new tax on seven-figure salaries for employees of non-profits hasn’t deterred schools from doling out huge contracts to new coaches.
Football powers aiming for a national title have continued to pay the market rate for proven coaches, topped by the 10-year, $75 million deal for Jimbo Fisher at Texas A&M. If the GOP tax overhaul becomes law — perhaps before the end of the year — the school could be on the hook for $15 million in new taxes over the life of that contract.
Both the House and Senate versions of the bill include a new 20 percent excise tax on salaries of $1 million or more paid by universities and other nonprofits. Universities also would take a financial hit from the elimination of a tax deduction for the donations that many schools require for the right to purchase season tickets. Donors currently get to deduct 80 percent of those contributions. Without the tax break, giving could plummet.
How schools would absorb those costs is an open question. But economists and other experts say an excise tax is not the best way to drive down coaches’ salaries or combat the widespread public perception they are overpaid.
In its most recent survey, USA Today found 78 football coaches and 41 men’s basketball coaches making $1 million or more, topped by Nick Saban’s $11.1 million salary at Alabama. If the tax proposal does become law, Alabama would face a $2.24 million tax bill every year.
“Right now, there’s so much uncertainty,” Alabama athletic director Greg Byrne told The Associated Press. “All we know is, it’s going to have an impact.”
Many schools are taking a similar wait-and-see approach, at most doing some preliminary number-crunching about the potential impact on their budgets. In the meantime, coaches continue to get eye-popping contracts. Twelve Power Five schools hired new coaches this year — including Mississippi, which gave a four-year deal to interim coach Matt Luke — and the lowest annual salary among that crop is $1.9 million.
