We know there’s supposed to be a spending cap in college football. We also know that this year’s cap number is $21.3 million. Beyond that, we can infer two other things to be true:
- Some schools will not utilize the entire cap in the future
- Some schools will try to spend in excess of the cap, again, moving forward
Knowing this, the SEC is trying to be proactive. According to ESPN’s Pete Thamel, the conference is discussing the implementation of a luxury tax for excessive spending. Ideally, this would be instituted before the early signing period for 2027 (Dec. 2-4 of this year).
Here’s an excerpt from Thamel’s reporting:
The SEC hopes a luxury tax will not only discourage schools from exceeding the revenue-sharing cap but also create more transparency so schools know exactly what their competitors are spending. Another goal is to limit or eliminate the need for third parties to ‘wash’ the money.
According to sources, some schools (obviously) want the penalty to be “as low as possible.” The reasoning for why, though, is two-fold. Schools would be willing to spend more if the penalties were less severe, but also would (theoretically) be willing to “[just] pay it directly and report it, [so] everybody’s on the same page and people stop playing games.
“It’s a lot better if we all know what everybody’s doing,” a source told ESPN/Thamel. “We’re living in this world where we have no idea what anybody’s spending. Agents can play you all day long because there is no general database. We’re starting to get some information, but there’s not enough transparency.”
The SEC is not yet sure what it would do with money generated from a luxury tax. Thamel says this is a “looming issue,” but that the conference is considering multiple options. This will need to be decided upon before any luxury tax can be implemented.
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