If you’re a college football fan it’s hard to forget the beginning of the 2013 season when star quarterbacks Johnny Manziel (Texas A&M) and Tajh Boyd (Clemson) took the Internet by storm after rubbing their fingers together in the air – prompting “Show Me the Money!”, Jerry Maguire type hype across the nation – following touchdown plays.  That season Manziel even donned the cover of Time Magazine with the accompanied headline: “It’s Time to Pay College Athletes”.

Not six months later, Region 13 of the National Labor Relations Board (NLRB) held that Northwestern University football players qualified as employees and could unionize and bargain collectively.  Although the national level NLRB ultimately overturned this decision – denying players at private universities the ability to form unions – these highly-broadcast events reignited the historic debate about whether student-athletes should be paid to play.

As a tax aficionado and amateur sports fanatic, I can’t help but ponder the various tax consequences associated with paying student-athletes.  Such intrigue ultimately led to the first of three papers I’ve written thus far addressing the tax issues surrounding the pay-for-play model.  ‘Show Me the Money!’ – Analyzing the Potential State Tax Implications of Paying Student Athletes evaluates state tax issues surrounding pay-for-play and the ripple effect that such taxes could have on the world of college sports. 

Within this paper my co-author Adam Epstein and I created a theoretical analysis to illustrate several state tax considerations that should be considered, such as the immediate competitive recruiting advantage that athletic programs in states like Texas, Washington, and Florida – which have no state income tax – would have over programs located in high-tax jurisdictions like California (which boasts a 12.3% individual income tax rate!).  Realistically, just how much more cash or benefit incentives would schools like Southern Cal (currently ranked 9^th in the CFP) or Stanford (ranked 18^th) have to offer potential recruits in order to make their offers as attractive as those coming from the Huskies (ranked 4^th), Seminoles (ranked 11^th), and Gators (ranked 17^th) – all located in states with no income tax?  While perhaps some wealthy programs could afford bargaining with additional “carrots”, what about those schools that can’t?  Could state tax rates ultimately affect the location of National Championship teams under the pay-for-play model?

Rather than promoting arguments for or against paying student-athletes, this article purposefully reserves a neutral tone and instead offers many thoughtful and candid tax points that should be included in the overall discussion about the future of pay-for-play.  With the prospect of paying student-athletes still just a hypothetical idea to ponder, I simply look forward to the next few weeks of bowl games, playoffs, and (perhaps!) a 2^nd straight go-round for the Tigers at the National Championship!