(Bloomberg) -- The pay packages for the newly hired football coaches at Louisiana State University and the University of Southern California are being targeted in a House Democrat's inquiry about whether those pay arrangements violate the tax code.
Representative Bill Pascrell, a member of the House Ways and Means Committee, sent letters Friday to the presidents of the two universities to inquire about the compensation of Brian Kelly, who is reportedly being paid $95 million on a 10-year contract by LSU, and Lincoln Riley, who has a contract reportedly worth $110 million at USC. Both were hired away from other schools.
Pascrell says he has “significant concerns” about whether those contracts are in accordance with the rules governing tax-exempt organizations about highly-paid employees.
“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,” Pascrell said in the letter to LSU, a public university. USC, a private institution, received a similar letter.
Pascrell also said that the compensation for men's college basketball coaches deserves scrutiny as well.
Congress has sought to clamp down on highly paid sports coaches in recent years, including a measure in former President Donald Trump's 2017 tax law law that places an excise tax on a nonprofit's five highest-paid employees earning $1 million a year or more. That hits many elite college basketball and football coaches but also applies to all tax-exempt organizations under the IRS code's Section 501.
However the 21% excise tax doesn't apply to employees at many public colleges. Those institutions can claim tax-exempt status as a government unit, and not as a tax code Section 501 organization. At top level programs, the bulk of the compensation for football and basketball coaches comes from marketing and broadcast deals.
Pascrell requested that the universities respond to a series of questions about their athletic programs, students, facilities and payroll by Jan. 14, 2022.
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