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By Ryan Prete
The NCAA men’s basketball tournament is down to its “Final Four” teams after weeks of nail-biting match-ups: the University of Kansas, Loyola University Chicago, the University of Michigan, and Villanova University.
And while only one team can be crowned the Division I champion, each team has already secured millions in tax-free funding for its respective conference.
Every team that makes the tournament, often referred to as “March Madness,” receives funding pooled from tournament revenue. For every game played, the funding shares increase.
While this amount changes yearly, the reported payout for the 2018 tournament is $1,638,000, disbursed in six yearly installments of $273,000. For every additional game played in the tournament (not counting the championship game), a team gains an additional $1,638,000 to be paid out over six years.
The NCAA is a nonprofit organization, so income received by the association is tax-exempt, according to Stacey Osburn, NCAA director of public and media relations. This includes millions from television contracts and merchandise sales.
Osburn told Bloomberg Tax she believes most if not all Division I conferences are also nonprofits, which would also exempt them from income taxes.
Each of the Final Four teams have so far contributed $8,190,000 to their respective conferences. The figures represent play prior to the Final Four games March 31.
Teams eliminated in the tournament still collected revenue for their conferences. For example, Kansas is a part of the Big 12 Conference, which also had six other teams represented at the tournament’s start. Nineteen total games played by Big 12 teams have so far resulted in more than $31 million in funding for the conference.
Other conferences have benefited from a sole team. Eleven-seed Loyola Chicago, the Final Four’s lone “Cinderella” team, has secured all of the funding for the Missouri Valley Conference.
Final Four contributions to each conference are as follows:
While the lack of taxable income means states can’t benefit from NCAA and Division I conference earnings, states soon might be able to benefit from bets placed on collegiate and professional sporting games.
Dozens of state governments are awaiting a U.S. Supreme Court ruling in Murphy v. NCAA, a New Jersey lawsuit challenging the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which bans states from “authorizing” gambling related to professional and amateur sports leagues. A decision could come down as early as April 2.
In anticipation of a new law, Connecticut, Mississippi, New Jersey, New York, Pennsylvania, and West Virginia have already authorized sports betting in their states, with ranging taxes and fees attached.
Scores of similar bills are also active in 17 states.
Some states have attached an “integrity fee” to their proposals. The fee would allow professional sports leagues like the National Basketball Association and the National Football League to grab a piece of each wager. New York and Kansas have proposed a 0.25 percent integrity fee. Indiana, Kansas, and Missouri have lobbied for a 1 percent integrity fee.
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