Press Releases
Pascrell Probes Whether Colossal College Coaching Contracts Consistent with Tax CodeDetailed inquiries to LSU and USC on gigantic deals to new football head coaches Brian Kelly ($95,000,000) and Lincoln Riley ($110,000,000) question schools’ tax-exempt status, invoke unpaid student athletes
Washington, DC,
December 17, 2021
U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), the Chairman of the House Ways and Means Subcommittee on Oversight, today wrote lengthy letters to the Presidents of Louisiana State University (LSU) and the University of Southern California (USC), which enjoy federal tax exemption benefits while lavishing gigantic contracts on their recently-hired head football coaches. “This week on national signing day, thousands of young students agreed to play sports for free for university programs paying literally tens of millions of dollars a year and giving free houses to their coaches. These exorbitant contracts to sports coaches from schools that receive federal tax-exempt status demand answers for the taxpayers that help fund these institutions,” said Chairman Pascrell. “My letters today are beginning the work of seeking those answers and our subcommittee will remain focused on this issue and further possible abuses of the tax code by schools enjoying tax-exempt status giving exorbitant contracts to athletic coaches.” “I write today to request important information about how the university’s lucrative athletics program is furthering the educational purposes for which LSU receives tax exemption… [R]ecent reports about compensation that [your school] will pay its football coaches have raised significant concerns about whether the university is operating consistent with its tax-exempt status,” Pascrell writes in his letters to the Presidents of LSU and USC. “It is unclear how such lucrative compensation contracts further USC’s overall educational mission and benefit your student body as a whole.” Pascrell invoked the unpaid NCAA student athletes who will play under these coaches: “These contracts also present a stark contrast to the benefits received by the university’s student-athletes, whose grants-in-aid each semester pale in comparison to their coaches’ compensation. Student-athletes make an enormous commitment of time and effort as team members, but it is the coaches that are profiting handsomely from their labor.” Plucked from the University of Notre Dame by LSU, Brian Kelly will be the highest paid public university coach in America with total contract benefits reaching $95,000,000. Published reports suggest his yearly salary (base and supplemental compensation) is $9 million in 2022, $9,200,000 in 2023, $9,200,000 in 2024, $9,400,000 in 2025, $9,400,000 in 2026, $9,600,000 in 2027, $9,600,000 in 2028, $9,800,000 in 2029, $9,800,000 in 2030, and $10,000,000 in 2031. Additionally, Kelly will receive a $500,000 bonus each July of his contact and another $500,000 bonus each season where LSU is bowl eligible (LSU was bowl eligible for 20 straight seasons before 2020). In sum, Kelly will receive approximately $1,350,000 in annual max incentives, as well as an interest-free loan of 20% of the purchase price of Kelly’s primary residence (up to $1.2 million) and two vehicles or two vehicle allowances of $1,000 per month. Published reports suggest Lincoln Riley will earn $110,000,000 over the course of his contract. Additionally, USC will buy him a Los Angeles home for $6,000,000, and give him unlimited use of a private jet. A copy of Chairman Pascrell’s letter to USC President Carol Folt is available here and a copy of his letter to LSU President William Tate IV is available here, the text of which is below.
December 17, 2021 William F. Tate IV Office of the President Louisiana State University 3810 West Lakeshore Drive Baton Rouge, LA 70808
Dear President Tate, The Committee on Ways and Means of the U.S. House of Representatives has a long history of oversight of organizations granted Federal tax exemption. Much of that oversight is conducted through its Oversight Subcommittee (Subcommittee), which I chair. I understand that Louisiana State University (LSU) qualifies for Federal tax exemption as a wholly-owned State instrumentality and as an organization described in Section 501(c)(3) of the Internal Revenue Code. I write today to request important information about how the university’s lucrative athletics program is furthering the educational purposes for which LSU receives tax exemption. This inquiry is particularly timely in light of recent reports about the exorbitant compensation that your university will reportedly pay its new and former football coaches. Educational organizations, including public universities like LSU, comprise one of the largest segments of the tax-exempt sector. Undoubtedly, most of the activities undertaken by LSU further the university’s exempt purposes. However, recent reports about compensation that LSU will pay its current and former football coaches have raised significant concerns about whether the university is operating consistent with its tax-exempt status. Specifically, LSU’s new head football coach reportedly will receive more than $100 million in basic compensation over the next ten years, and LSU will pay its former coach $17 million. It is unclear how such lucrative compensation contracts further LSU’s overall educational mission and benefit your student body as a whole. These contracts also present a stark contrast to the benefits received by the university’s student-athletes, whose grants-in-aid each semester pale in comparison to their coaches’ compensation. Student-athletes make an enormous commitment of time and effort as team members, but it is the coaches that are profiting handsomely from their labor. These issues are not confined just to Division I football programs either. Men’s basketball programs merit scrutiny as well, given the compensation provided to coaches. To help us understand how LSU sets compensation for your Division I football and men’s basketball programs, as well as how these programs protect athletes and contribute to LSU’s educational purpose, the Subcommittee requests answers to the questions below by no later than January 14, 2022. Compensation:
Serving LSU’s educational mission:
Students:
Revenue and expenses of the athletics department:
Governance of the athletics department:
Facilities:
Your answers will assist the Subcommittee in its oversight of tax-exempt universities and colleges and their engagement in intercollegiate athletics. Thank you for your prompt attention to this matter. Sincerely, |