'...As the business of intercollegiate athletics has ballooned, the IRS repeatedly has identified some sports revenue as unrelated to education and thus subject to income tax. But universities employ a battery of attorneys, lobbyists and tax specialists to convince the government otherwise.

They have been overwhelmingly successful. "Everything's pretty much gone the universities' way," said James Musselman, a professor specializing in tax law at the South Texas College of Law in Houston. "There are some pretty serious benefits, and (the schools) have pretty much gone unrestrained."

Thirty years ago, when athletics departments started earning big money from the televising of their football and basketball games, the IRS argued that the income wasn't linked to the universities' educational mission and should be taxed. But after resistance from colleges arguing that the money was essential to athletics — and athletics was a part of education — the government backed down.UT athletics earns about $5.2 million per year from TV rights.

In 1991, the IRS proposed taxing the millions of dollars that athletics departments were receiving for the sale of naming rights to football stadiums. The agency again reversed course after a storm of protest, and in 1997, Congress passed a law exempting from income tax the money that colleges receive from corporations for naming rights — about $275 million a year, according to the NCAA.

University Federal Credit Union is paying UT $13 million to place its name on the Longhorns' baseball field. Texas Tech University has deals totaling $30 million from AT&T and United Supermarkets for football stadium and basketball arena naming rights.

Most recently, the IRS tried to tax the growing income that big schools were receiving from shoe and apparel firms but dropped the idea. Adidas pays Texas A&M University $1.4 million annually in cash and gear. UT gets about $2.6 million a year in apparel and cash from Nike....'