Baycrest Consultants White Paper - Mike Scully - Managing Director

Fort Myers, FL 

October 22, 2025

Mike Scully - Managing Director 

Converting Coaching Compensation into Long-Term Assets  

A White Paper on the Endless Money Loop Deferred-Compensation Solution for University Athletic Departments  

Executive Summary  

University Athletic Departments nationwide face escalating costs for coaching salaries, bonuses, and retention incentives. Traditional compensation models strain annual operating budgets and can trigger costly excise taxes under the “75% rule” for top earners. The Endless Money Loop program, developed by Baycrest Consultants, offers an innovative remedy: convert a portion of a coach’s compensation expense into a loan-financed life insurance asset. Coaches reduce current taxable income and gain tax-efficient access to cash value, while athletic departments transform deferred pay into a long-term balance-sheet asset, recover principal after 15 years (or at the coach’s passing), enhance net income, and improve recruitment and retention.  

The Budgetary Challenge in College Athletics  

• Rising market demand for “winner-maker” coaches has driven compensation packages into seven figures.  

• Annual budgets are often fixed or limited by institutional policies, NCAA regulations, and donor expectations.  

• Departments risk excise taxes on excess benefit payments to highly compensated individuals.  

• Traditional bonus structures reward success but exacerbate year-to-year cash flow pressures.  

Introducing the Endless Money Loop: A Deferred-Compensation Loan Program  

The Endless Money Loop repurposes a portion of a coach’s salary or bonus as an employer-structured loan. Instead of paying 100% of compensation in cash, the department “lends” the deferred portion to the coach and invests those funds in a corporate-owned life insurance (COLI) policy on the coach’s life. Over time, the policy’s cash value grows on a tax-deferred basis, and both coach and department realize significant advantages:  

How the Endless Money Loop Works  

4.1 Compensation Deferral and Loan Origination  

• Coach agrees to defer X% of annual salary/bonus—e.g., 30% of a $1 million bonus.  

• Athletic department issues a non-recourse, non-qualified loan to the coach for the deferred amount.  

• Deferred dollars are no longer reported as taxable income in the year of deferral.  

4.2 Investment in Life Insurance  

• Department uses the deferred funds to purchase a permanent life insurance policy on the coach.  

• Policy is owned by the university, with the coach as insured.  

• Cash value accrues tax-deferred, often via indexed or universal life products.  

4.3 Coach Access and Distribution Options  

• After a 90-day holding period, the coach may access up to 60% of the policy’s cash value tax-free via policy loan or withdrawal.  

• Remaining value can stay invested for retirement, estate planning, or supplemental income. 

4.4 Department Recovery Event  

• After 15 years, or upon the coach’s death, policy surrender or death benefit proceeds are remitted to the department.  

• Principal deferred is fully recovered; any excess death benefit accrues to the university.  

Benefits to the Coach  

• Immediate tax savings by deferring high-marginal-rate income.  

• Tax-free access to a portion of cash value shortly after deferral.  

• Continued upside growth within the life insurance vehicle.  

• Supplemental retirement or estate-planning tool without impacting qualified-plan limits.  

Benefits to the Athletic Department  

• Converts recurring expense into a non-depleting asset, improving balance-sheet strength.  

• Principal recovery after 15 years offsets future budget needs.  

• Potential death-benefit upside supplements departmental funding.  

• Mitigates or eliminates excise-tax exposure on top compensation.  

• Enhances competitiveness in coach recruitment and retention by offering a unique total-compensation structure.  

Financial Modeling: Example Case Study - Assume a head coach with a $500,000 bonus:  

• Deferral: $250,000 (50%) into Endless Money Loop loan.  

• Tax savings (coach at 45% bracket): ~$112,500 immediate.  

• Policy growth: conservative illustrated rate of 4%–6% per annum.  

• Coach access: up to $150,000 tax-free after 90 days.  

• Department recovery: $250,000 principal plus accrued death benefit after 15 years.  

This structure effectively converts a $250,000 cash expense today into a $250,000 asset, with potential upside, while improving the coach’s net cash flow by over $112,000 in year one. This principal can also be followed in the case of a Coach Buy-out where the University can recoup all the money, and the Coach can avoid major tax implications.   

Implementation Considerations  

• Loan documentation, policy ownership, and cash-value provisions require coordination among legal, actuarial, and benefits-administration teams.  

• Actuarial illustrations should stress-test various growth scenarios, policy costs, and liquidity needs.  

• Communication and buy-in from coaches, compliance officers, and board members are critical for smooth rollout.  

Regulatory and Accounting Treatment  

• Deferred loans are not subject to FICA/Medicare withholding at origination, but interest or deemed‐interest rules under § 409A must be observed.  

• Policy cash value accumulations are tax-deferred; policy loans are generally not taxable income.  

• Upon recovery, the department recognizes return of principal and any gain under standard insurance accounting. 

Conclusion  

The Endless Money Loop offers a strategic, win–win approach for university athletic departments and their coaches. By transforming compensation expense into a balance-sheet asset and providing coaches with tax-efficient deferred income, institutions can preserve annual budgets, reduce tax liabilities, and strengthen long-term financial health. Athletic directors, finance officers, and human-resources teams are invited to evaluate the Endless Money Loop program with Baycrest Consultants to determine suitability for their department’s goals and fiscal constraints.  

For more information or to schedule an in-depth modeling session, contact Baycrest Consultants at info@baycrestconsultants.com or visit www.baycrestconsultants.com.