Basketball Recruiting on the Nonprofit Margins
Sunday, December 31, 2006
For one college basketball coach, it's a familiar and frustrating conversation. It starts with a phone call to the coach of an AAU team to discuss a recruit. Soon, the AAU coach begins making casual references to the fact that his program is set up as a nonprofit charity under IRS guidelines. Eventually, the AAU coach lets it be known that the program accepts tax-deductible donations.
The AAU coach doesn't have to directly ask for any money; the college coach understands the message.
"You say, 'Let's talk,' " the college coach said. "You keep it going as long as you can until you can figure out a way around it or until you decide to donate maybe less than what they want just to stay in the equation. As soon as you say, 'No,' you are out. You have to do what you have to do to get the player."
The funneling of cash recruiting inducements between colleges and AAU programs in the form of tax-deductible donations, usually made by college athletic boosters at the behest of a coach, has become common, according to 11 Division I head coaches and five AAU coaches, located throughout the country, interviewed for this story.
Two AAU coaches said college recruiters offered them donations without being prompted. One AAU coach said that over the past decade almost two dozen college coaches, including some from the Pacific-10 and Big Ten conferences, have offered to arrange for donations, ranging from $20,000 to $50,000, to his foundation.
"Everyone is doing it," one prominent AAU coach said. "But if there is a seller, there is a buyer, too, and it involves everyone from agents, runners, college coaches and boosters. AAU coaches say, 'This is a better, easier way.' It may seem right, but ethically it is laundering money. While it is different from handing someone a bag full of cash, the intent is the same."
Sonny Vaccaro, a prominent shoe company representative who helped create the current youth summer basketball league system nearly two decades ago, confirmed that the practice is popular, calling it "brilliant." "It is a unique, newer and cleaner way of getting money to people who have players who may or may not end up at your school," said Vaccaro, who now works for Reebok.
NCAA rules prohibit a college to pay, or arrange for its boosters or coaches to pay, any portion of a recruit's expenses for any period before he enrolls in college. Donations to a recruit's AAU team violate that prohibition, the NCAA ruled in a June 2005 decision involving Baylor University. An IRS spokesman declined to comment on whether the practice violated tax laws.
Vaccaro estimated 10 to 15 colleges arrange for booster donations of more than $20,000 to the foundations in a given year. In exchange, they get an inside track on recruiting players. "Why would you remember someone who did not help you, as opposed to someone who did help you?" Vaccaro said. "The person who gave the money would not give the money unless they thought it helped them. There is no benevolence on this level for saving mankind."
Over the past year, The Washington Post has written more than a dozen articles about the shortcomings in the troubled U.S. basketball player development system. A common theme has been that AAU programs have surpassed the high school game and become the dominant force in youth basketball despite operating with little or no oversight on or off the court. Because AAU coaches can offer players free clothing and shoes and travel to high-profile national tournaments, they control the pipeline to colleges and the NBA.
The Post spent six months investigating the financial practices of the AAU programs. It reviewed hundreds of pages of tax documents and spoke to more than two dozen college and AAU coaches. In addition, the newspaper sent 30 AAU coaches a request for additional documents with postage-paid return envelopes.
In interviews, four AAU coaches and two college coaches denied knowing about the donations. The Post found many lower-level AAU programs whose players aren't good enough to warrant such a practice and their foundations serve as a way to gather legitimate contributions so children can play basketball.