Northwest, D.C. (WUSA9) -- Consider one shining moment one giant payday for the NCAA. The NCAA brought in more than $900-million in revenues 2013, and thanks to it's non-profit status, most of that money went untaxed.
That fact does not always sit well with the athletes producing the product, and might explain the motivation behind Northwestern football players' recent request to unionize.
"The players in some respect are replicating what they see from the higher ups," says Ellen Zavian, an adjunct Professor of Sports Law at The George Washington University.
Zavian should know. She is the first female sports agent to represent NFL players, she also knows the road Northwestern athletes are about to travel. In 1996 she helped Women U.S. National Soccer players like Mia Hamm unionize form a union.
"Coming to the table and starting to share as you grow, we grow is the same concept that the NFL players had in the '87 strike when I worked at the NFLPA," says Zavian. "I think it will be continuously repeated."
But NCAA president Mark Emmert does not see it that way.
"I don't think unionizing student-athletes and turning them into employees is a way to improve their success," says Emmert.
Momentum seems to be working against Emmert. His organization's business model which features millions of dollars in, but no monetary compensation to players, is becoming more difficult to justify.
Like all non-profits, The NCAA does not pay taxes on revenues unless it comes from an event unrelated to its core mission, or as the IRS calls it, Unrelated business income taxes (UBIT). For years the NCAA has avoided paying taxes on March Madness television revenues, an amount topping $700-million in 2013, claiming those dollars come from an event related to its core mission. According to the NCAA's website, its core mission is to integrate intercollegiate athletics into higher education so that the educational experience of the student-athlete is paramount.
So, the $700-million question is, are events such as the NCAA Tournament related to or unrelated to the NCAA's core mission?
Congress may have a say in that. This past February the House Ways and Means Committee drafted legislation for tax reform, and one of the highlights of that legislation was tightening the rules on what constitutes unrelated business revenues. Specifically, the House bill would require non-profits to pay taxes on royalties received from the licensing of its name or logo, and naming rights deals for events such as bowl games.
Attorney Jeffrey Tennenbaum is Chair of the Non-Profit Practice at Venable LLP in Washington, D.C. and says the latter provision appears to have a specific agenda.
"It seems to be specifically targeting college bowl games and that's major, major money we're talking about," says Tenenbaum.
Such a tax code change would be sweeping and signal an acknowledgement by the Legislative branch that entities such as the NCAA are, in some ways for-profit entities, and would certainly strengthen the case for those beating the drum for student-athletes to be compensated in some fashion.