Sources - SEC mulls luxury tax for overspending on players - ESPN

The SEC is considering imposing a luxury tax on member schools that spend more on players than the allotted revenue-sharing cap under the House v. NCAA settlement, sources told ESPN on Friday.

A working group of athletic directors, university presidents and general counsels have been considering the issue the past few weeks, and the league may vote on the issue in the near future, sources said.

The SEC would like to approve the luxury tax before the early signing period for football (Dec. 2-4).

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.

«Some schools want it to be where the penalty is as low as possible, so it's cheap enough to where you're more motivated just to pay it directly and report it, and everybody's on the same page and people stop playing games,» a source told ESPN.

The SEC hopes a luxury tax would not only discourage schools from exceeding the revenue-sharing cap, but also create more transparency so schools would know exactly what their competitors are spending. The goal would also be to limit or eliminate the need for third parties to «wash» the money, which is an expensive and