September 10, 2026

Your Tax Dollars Could Be Funding Your State’s College Sports

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College sports have entered a new financial era. Athletes can earn money from their name, image, and likeness (NIL), schools can now directly share millions of dollars in revenue with players, and athletic departments are spending more to remain competitive.

Now, taxpayers are increasingly becoming part of the equation.

An Associated Press analysis found that a growing number of states are directing public money toward college athletic programs as schools struggle with rapidly rising expenses. The money generally isn't being handed directly to star quarterbacks or basketball players. Instead, states are paying for facilities, debt, and other athletic expenses—freeing up university funds that can then be spent elsewhere, including on athlete compensation.

Why Are College Sports Suddenly So Much More Expensive?

The transformation has happened quickly.

The 2025 House v. NCAA settlement opened the door for Division I schools to share revenue directly with student-athletes. At the same time, schools continue spending heavily on coaching salaries, facilities, recruiting, and travel—particularly as conference realignment sends teams farther across the country.

According to the AP's analysis of data from the Knight-Newhouse College Athletics Database, operating expenses at public Division I athletic programs have risen by nearly one-third in just four years, outpacing revenue and contributing to growing deficits.

How Are States Using Tax Dollars?

There isn't one standard approach. Instead, lawmakers are finding a variety of ways to support their universities.

North Carolina, for example, directs a portion of its sports betting tax revenue to public university athletic departments. A recent budget change expanded that support to the University of North Carolina at Chapel Hill and North Carolina State University, which are projected to receive $3 million each this year and $5.8 million next year.

Louisiana also increased its sports wagering tax and earmarked approximately $2.2 million for each of 11 public universities with Division I football programs.

Connecticut has taken a different approach. Lawmakers authorized the University of Connecticut to offer state tax credits equal to half the value of qualifying donations, sponsorships, and licensing endorsements. According to the AP, the program generated $1.7 million in its first four months.

Meanwhile, Wisconsin's budget includes $14.6 million for athletic facility debt payments at the University of Wisconsin-Madison.

Is Taxpayer Money Actually Paying College Athletes?

Usually, not directly.

Instead, public funding may cover expenses that universities otherwise would have paid themselves. If a state pays millions toward an athletic department's facility debt, for example, the university can potentially redirect some of its own resources toward other athletic expenses.

That includes the increasingly important task of attracting and retaining players.

Wisconsin state Rep. Alex Dallman, who sponsored his state's funding legislation, acknowledged that dynamic in the aforementioned AP report. Although the state money isn't technically being paid to athletes, covering other costs could allow the university to use its own funds for NIL or other competitive priorities.

Athlete Compensation Could Get Even Bigger

The financial pressure may not stop here.

Federal legislation currently pending in the Senate could allow schools to spend an additional $27.5 million annually to retain athletes. That could push the overall athlete-payment ceiling close to $50 million per school, per the AP’s analysis.

Critics worry that without limits on overall athletic spending, additional public funding could simply fuel another round of competition between schools trying to build the best—and most expensive—programs.

Don't Forget: Athlete Payments Are Taxable, Too

There's another tax story happening on the other side of these transactions.

The IRS makes clear that money and other benefits athletes receive through NIL arrangements are generally taxable. That can include cash payments, endorsements, social media income, royalties, merchandise, gift cards, services, and even some non-cash perks.

Depending on how an athlete is classified and compensated, income may also be subject to self-employment taxes, and athletes may need to make quarterly estimated tax payments. The IRS also warns athletes to track where they perform NIL services because they may create tax obligations in multiple states.

College athletics is no longer just a question of ticket sales, television contracts, and booster donations. The financial model is changing rapidly, and in some states, public tax dollars are becoming part of the effort to keep university athletic programs competitive.

Whether taxpayers believe funding successful college sports is a worthwhile public investment is a larger policy debate. But one thing is increasingly clear: as the amount of money flowing through college athletics grows, the tax implications—for universities, athletes, donors, and even ordinary taxpayers—are growing along with it.

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Your Tax Dollars Could Be Funding Your State’s College Sports

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