Coaching salaries

[Leroy Lizard]

Saw this news item and I thought it would provide some interesting perspective:

Chevron (a for-profit company) earnings = $19.1 billion
CEO of Chevron income for that year = $14 million.

Texas' Athletic Department (a non-profit) = $120 million
Macks' income = $5 million (?)

The IRS needs to step in and whack the non-profit status of these athletic departments.

[rekamrettuB]

I saw someone mention someting similar about taxing churches. Just because an organization is "not-for-profit" doesn't mean it can't make a profit. Also, think of it this way...if a not-for-profit organization can pay it's head guy $5 mil then that $5 mil is taxed.

[Leroy Lizard]

I saw someone mention someting similar about taxing churches. Just because an organization is "not-for-profit" doesn't mean it can't make a profit. Also, think of it this way...if a not-for-profit organization can pay it's head guy $5 mil then that $5 mil is taxed.

What makes it worse is that Mack is not even the top executive in the non-profit.

(Not picking on Mack specifically. Just an example.)

[yermom]

i don't know about Texas, but at OU, i think a lot of Stoops' salary comes from the OU Foundation, not directly from the Athletic Department

[tfoolry]

I'm sure Mack has a McMansion among other things to deduct from his income. With no state tax in Texas, I'm sure his tax burden on that 5m is pretty low.

[Leroy Lizard]

i don't know about Texas, but at OU, i think a lot of Stoops' salary comes from the OU Foundation, not directly from the Athletic Department

The CEO of Chevron isn't just paid from corporate salary budgets either. The funding source doesn't matter if the athletic department made these arrangements.

[StoopTroup]

Always nice to know that when you give your hard earned dough to a Non-Profit that $5 million in salary getting taxed is more important than $4.4 Million going towards research for curing a childs illness.

Or....

That $5 million gets taxed instead of $4.4 Million going to help feed the needy.

I'm not for whacking their status as much as putting limits on how much salaries can be. A greater % needs to be spent on the cause instead of the Staff.

For Profit Companies? CEOs should be compensated on profits for Stock Holders and not how well they controlled the hemorrhaging of internal costs and salaries. If you want to reap the profits of a Company....go start one instead of bleed one.

[Leroy Lizard]

I looked it up. The Chevron CEO's salary is only $1.47 million, with an added performance bonus of $3 million. The rest of the money comes from stock options, and such.

BTW, I get calls from the Foundation asking for alumni donations. I guess money doesn't grow on trees after all.

[StoopTroup]

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[OhU1]

I am very conflicted about college football and pro athletes salaries. As a free market capitalist I believe these people should reap what the market deems their fair worth.

On the other hand I find it absurd that the football coach at the University of Oklahoma makes about 20 -25 times what the President of the University makes. Not to mention that they make 40-50 times the salary of a research scientist at the OU Medical Research Foundation. Of course all the top programs do this not just OU.

And lets break it down, coaching athletes: not important in the scheme of life. Curing Alzheimer, cancer, and heart disease: life and death.

[Leroy Lizard]

I am very conflicted about college football and pro athletes salaries. As a free market capitalist I believe these people should reap what the market deems their fair worth.


These are non-profits -- the normal dog-eat-dog rules of free-market capitalism don't apply. The IRS essentially caps salaries on non-profit CEO heads, so they have a right to go in here and slap the athletic departments around.

[yermom]

how much money does Bob Stoops' presence make for everyone involved though?

[Muno]

These are non-profits -- the normal dog-eat-dog rules of free-market capitalism don't apply. The IRS essentially caps salaries on non-profit CEO heads, so they have a right to go in here and slap the athletic departments around.

This isn't really true. First, the IRS doesn't "cap" salaries. The IRS can challenge unreasonable compensation but as long as the non-profit Board followed some simple rules in setting compensation the rebuttable presumption is very difficult for the IRS to overcome. Also, comparing an NCAA football coaches salary to public CEO isn't making the case for anything because you are talking about completely different skill sets. The IRS isn't going after Mack Brown because they would lose.

It does look there may be new legislation coming to try and address some of the issues with non-profit CEO compensation but until those rules are law it will be business as usual and justifying non-profit compensation is a relatively easy thing to do in order to avoid IRS challenge.

[Leroy Lizard]

how much money does Bob Stoops' presence make for everyone involved though?

Non-profits can't set salaries according to such criteria.

[Leroy Lizard]

This isn't really true. First, the IRS doesn't "cap" salaries. The IRS can challenge unreasonable compensation but as long as the non-profit Board followed some simple rules in setting compensation the rebuttable presumption is very difficult for the IRS to overcome.

The IRS can simply rule that a compensation package is significantly more than typical, so in essence they very much do cap salaries. IOW, a non-profit can't choose to pay its employees any amount it wishes, so it does not operate under free-market rules like a for-profit company.


Also, comparing an NCAA football coaches salary to public CEO isn't making the case for anything because you are talking about completely different skill sets. .

You can defend any salary using that logic. "The rules don't apply to us because we're special."


It does look there may be new legislation coming to try and address some of the issues with non-profit CEO compensation but until those rules are law it will be business as usual and justifying non-profit compensation is a relatively easy thing to do in order to avoid IRS challenge.

You may be right, but that isn't the issue here. We're not arguing what IS, but what SHOULD BE. And I fail to see how anyone can justify paying a $5 million per year salary to second-in-command employee of a non-profit grossing only $120 million per year. That's just insane.

[yermom]

Non-profits can't set salaries according to such criteria.

i don't know the laws, but if OU wasn't paying what they are, or close anyway, Stoops would likely be somewhere else. Similarly, if colleges had limits like that the good coaches would probably be in the NFL

[ouwasp]

I'm not much for jumping on others' salaries. I just need to make sure I'm earning my own. That said, the coaching salary issue is puzzling, how it spiraled into orbit so quickly...:confused:

But when I remember the Dark 90s, any tiny begrudgement I might have against the size of Bob's payola vanishes!:)

[StoopTroup]

That's just insane.

You saying something is insane doesn't quite mean a lot.

[Leroy Lizard]

i don't know the laws, but if OU wasn't paying what they are, or close anyway, Stoops would likely be somewhere else. Similarly, if colleges had limits like that the good coaches would probably be in the NFL

Irrelevant. And since there are only about 30+ teams in the NFL, the mass exodus won't happen. Two or three coaches might be able to make the move, but that's about it.

[Leroy Lizard]

You saying something is insane doesn't quite mean a lot.

I was wondering if you were going to let that opportunity slip by.

[Soonerwake]

Right or wrong, Stoops is paid according to what successful D1 college football coaches command in the football market. Comparing sports salaries, college or pro to any other industry, with the exception of the entertainment industry, is an exercise in futility. We, as a society reward those who entertain us at a much higher rate than anyone else in society. That's what we do. I don't think it's necessarily right either, but it is what it is. Think it's OK to pay an actor $20 million for a movie that grosses $150 million?? I don't either...

[Muno]

The IRS can simply rule that a compensation package is significantly more than typical, so in essence they very much do cap salaries.

That's not how the process works. There is a rebuttable presumption that the pay is reasonable that the IRS must overcome. Just because the IRS "thinks" you are paid more than you should be doesn't mean much in this context.

[Muno]

[QUOTE=Leroy Lizard;3199342]You can defend any salary using that logic. "The rules don't apply to us because we're special.QUOTE]

Exactly and this is how the real world works for both profit and non profit entities.

[texaspokieokie]

IDGAS what Stoops or mack are paid.

[Leroy Lizard]

Right or wrong, Stoops is paid according to what successful D1 college football coaches command in the football market.

I think we all know that. It's like arguing that the speed limit should not be lowered to 65 because the law says you can drive at 75.

[Leroy Lizard]

That's not how the process works. There is a rebuttable presumption that the pay is reasonable that the IRS must overcome. Just because the IRS "thinks" you are paid more than you should be doesn't mean much in this context.

You're splitting hairs. When you start a non-profit you have to pay your employees so that you don't burst the corporate bubble. Essentially, compensation that makes it appear that employees are being financially rewarded for the success of the company makes it a corporation, not a non-profit.

Therefore, there is very much a salary cap. It isn't a hard number, which you seem to be arguing, but it is definitely there.

How hard it is for the IRS to prove its case is completely irrelevant here.

[Leroy Lizard]

[QUOTE=Leroy Lizard;3199342]You can defend any salary using that logic. "The rules don't apply to us because we're special.QUOTE]

Exactly and this is how the real world works for both profit and non profit entities.

I'm not even going to bother with this one.

[Leroy Lizard]

IDGAS what Stoops or mack are paid.

Then don't bother posting in this thread.

[sooner_born_1960]

Just reading this thread, I'm of the opinion Muno knows more about this than Leroy. But, I could go either way. Keep it up, boys.

[Leroy Lizard]

Just reading this thread, I'm of the opinion Muno knows more about this than Leroy. But, I could go either way. Keep it up, boys.

I'm not disagreeing with Muno, but his point is irrelevant.

[Jacie]

Soonerwake was the closest to pointing out why successful college coaches are paid the big bucks, because they are in the entertainment business (as opposed to the teaching business with which most think of first when the topic of college salaries is discussed).

The entertainment business, of which professional sports is a subset, pays the most successful participants salaries that are orders of magnitude above and beyond what any other job at any level earns.

A football coach may not fit your idea of being an entertainer but watching Sooner football before Bob Stoops was hired was a whole lot less entertaining than it was after he arrived on campus.

Now if a college president did something that led to a series of events which would draw 70,000 thousand paying customers and sell the television rights to it for millions of dollars, college presidents would be paid much more.

The same could be said for a college professor. If some doc's class became so popular it had to be held in the stadium to accomodate everyone who wanted to sit in on it, the university would be foolish not to pay him much more and even market video of it lest said professor take his "act" to a school more willing to show appreciation of his effort. If this gives you any ideas of improving your delivery so that you regularly max out your class enrollment and get assigned ever larger venues in which to hold it, please don't forget to pay me my usual commission.

[sooner_born_1960]

I'm not disagreeing with Muno, but his point is irrelevant.
So, in your original post you should have said:

The IRS should be able to to step in and whack the non-profit status of these athletic departments, although, right now, there is nothing they can do.

[Leroy Lizard]

Soonerwake was the closest to pointing out why successful college coaches are paid the big bucks, because they are in the entertainment business (as opposed to the teaching business with which most think of first when the topic of college salaries is discussed).

The entertainment business, of which professional sports is a subset, pays the most successful participants salaries that are orders of magnitude above and beyond what any other job at any level earns.

Your argument would certainly be relevant to whether we were discussing NFL head coaches' salaries. But the OU athletic department is a non-profit.


The same could be said for a college professor. If some doc's class became so popular it had to be held in the stadium to accomodate everyone who wanted to sit in on it, the university would be foolish not to pay him much more...

At OU, they can't.

[Leroy Lizard]

So, in your original post you should have said:

The IRS definitely has the power to challenge the non-profit status of a non-profit. The burden of proof is on the IRS, of course. But the same goes for the legal system in general.

It's like arguing that the law has no power to define what is criminal or not because the burden of proof is on the law. That's nonsense.

Just an update on the issue:




Nonprofits may face some new rules on setting executive compensation and self-dealing if Congress acts on recommendations from Senator Chuck Grassley (R-IA), ranking member of the Senate Finance Committee. Although this report focuses on media-based ministries, it also includes recommendations that would change which organizations are given nonprofit status by IRS, expand penalties on self-dealing, and establish new regulations on setting executive compensation for all nonprofits.

Current Requirements:

Public charities now must report each year on how they set executive compensation. The IRS says that process should include:

* Documenting the compensation policies and procedures in advance and including them in board minutes.
* Collecting comparable salaries (for like services, in like enterprises, in like circumstances).
* Setting compensation in advance on the basis of appropriate comparability data.
* Making sure that no one involved in setting salaries has a conflict of interest.
* Reporting all economic benefits to officers, directors, and key employees on Form 990.


The IRS now allows an organization to establish a rebuttable presumption of reasonableness (meaning the burden of proof that the compensation is unreasonable is on the IRS) if nonprofits use an independent survey of comparability data. Information and software that easily provide the necessary analyses can be obtained from ERI's Nonprofit Salary Assessor, SalariesReview, Abbott, Langer Association Surveys, and other salary survey sources that specialize in the nonprofit sector. But that may now change.

The Grassley Report Recommendations
The report recommends that Congress consider allowing IRS to give charity status only if an organization expressly prohibits excess benefit transactions to disqualified persons. Also, it calls for:

* Imposing penalties if a manager had a "reason to know" an action was wrong, rather than the current standard of "knowingly participated in or approved" it.
* Extending the penalties for excess benefit transactions to the organization if its board does not include sufficient independent members.
* Replacing the rebuttable presumption standards with stronger guidelines and more reporting requirements on how compensation was determined.
* Clarifying guidelines for how "comparable" pay is determined, including when for-profit comparisons are appropriate.

These are pretty radical changes and no one knows whether Congress will take them seriously or not. But in the meantime, all nonprofits should be clear that the public is concerned about nonprofit compensation and IRS compliance efforts are ongoing.


http://www.eri-nonprofit-salaries.com/blog/post.cfm/new-irs-rules-ahead-for-unreasonable-nonprofit-compensation

[texaspokieokie]

Then don't bother posting in this thread.

Obviously, i shal post wherever i please. at least you're not jersey sooner.

[OU_Sooners75]

liztard...why are you so envious of the salaries of coaches?

[NorCal Sooner]

Texas' Athletic Department (a non-profit) = $120 million
Macks' income = $5 million (?)


Thanks a lot for screwing up my day. Now I'm very pissed to find that Mack Brown makes more than me......

[Leroy Lizard]

liztard...why are you so envious of the salaries of coaches?

Loaded question. We can do better than that.

[agoo758]

Obviously, i shal post wherever i please. at least you're not jersey sooner.

Just another case of an inept teacher jealous of those more talented and successful than him.

[Leroy Lizard]

Just another case of an inept teacher jealous of those more talented and successful than him.

I have no problem with the Chevron dude making $14 million a year. No problems at all.

[agoo758]

I have no problem with the Chevron dude making $14 million a year. No problems at all.

So what's the difference?

[Leroy Lizard]

So what's the difference?

1. Go back.

2. Read thread.

3. Comprehend.

[Sooner Cal]

Every person and every organization should be required to pay taxes. I oppose tax exempt organizations and I don't want to be like India where 3% of the people pay 100% of the taxes. Democracy works best when everyone pays. A draft would make it harder for Presidents to take us to war. Paint taxes would make people worry about government spending.

[Leroy Lizard]

Every person and every organization should be required to pay taxes. I oppose tax exempt organizations and I don't want to be like India where 3% of the people pay 100% of the taxes. Democracy works best when everyone pays. A draft would make it harder for Presidents to take us to war. Paint taxes would make people worry about government spending.

You mess with paint quite a bit, don't you?