SEC reportedly discussing luxury tax on schools that spend more than the House settlement-mandated spending cap
· Yahoo Sports
Could the SEC start collecting from schools who exceed the roster spending limits set by the House v. NCAA settlement?
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According to ESPN, the conference has floated the idea of a luxury tax among its members and “would like” to approve it by early December.
From ESPN:
Sources told ESPN that there's still much debate on the issue, but one formula being considered would be to gradually tax schools once they exceed the annual revenue-sharing cap, which was $21.3 million for the 2026-2027 academic year. The cap will increase to about $22.2 million in 2027-28 under the terms of the House settlement.
For instance, a school could be taxed 1% for the $1 million it spends over the cap and 3% for $3 million. As it escalates, there's still uncertainty. There's still work on refining the formula, as sources caution that discussions over specifics are still ongoing. The concept has been well received, but the details still need to be pinned down.
Figuring out just how much schools are spending on their rosters via revenue-sharing and NIL payments is an ever-moving target. According to the Athletic’s surveys, 11 of the top-20 spending college football programs are in the SEC and the conference’s average spend per team is roughly $35 million when accounting for revenue sharing payments, booster donations and other player income associated with a program.
If the SEC instituted a 1% per $1 million rule, is an extra $4 million in luxury tax revenue enough to dissuade a team from spending $20 million more than the settlement limit on its rosters? Perhaps. But it’s also possible to see that added figure as the cost of doing business, especially if a premium player at a position of need becomes available in the transfer portal in football or basketball.
The conference is also reportedly undecided on what it would do with any luxury tax revenue it would receive.
The Big Ten recently enacted a $49 million NIL cap for all of its member schools. The cap would apply to a school’s entire athletic department and not to individual programs.
The Protect College Sports Act has been designed to help legislate spending across the entirety of college sports, but it is becoming less and less likely that the legislation will become law. Though the PCSA has passed the Senate, it still needs to pass the House and it does not appear to be on the docket in the upcoming lame duck session with Democrats set to take control of both the House and Senate in January.