This Congressional Budget Office (CBO) paper, which was prepared at the request of the Ranking Member of the Senate Finance Committee, compares athletic departments' share of revenue from commercial sources with that of the rest of the schools' activities to assess the degree of their commercialization. It also discusses the benefits of intercollegiate sports programs and some of the issues that might arise if the Congress decided to alter the treatment of those programs in the tax code. In accordance with CBO's mandate to provide objective, impartial analysis, the paper makes no recommendations. The CBO concludes that: (1) Athletic departments in NCAA Division I schools derive a considerably larger share of their revenue from commercial activities than do other parts of the universities; (2) In the case of Division IA schools (a subset of schools in Division I that meet NCAA requirements for football programs), 60 percent to 80 percent of athletic departments' revenue comes from activities that can be described as commercial. That proportion is seven to eight times that for the rest of the schools' activities and programs, suggesting that their sports programs may have crossed the line from educational to commercial endeavors. Revenue from commercial activities accounts for a much smaller share of athletic department revenue (20 percent to 30 percent) for schools in the rest of Division I; and (3) Nonetheless, removing the major tax preferences currently available to university athletic departments would be unlikely to significantly alter the nature of those programs or garner much tax revenue even if the sports programs were classified, for tax purposes, as engaging in unrelated commercial activity. As long as athletic departments remained a part of the larger nonprofit or public university, schools would have considerable opportunity to shift revenue, costs, or both between their taxed and untaxed sectors, rendering efforts to tax that unrelated income largely ineffective. Changing the tax treatment of income from certain sources, such as corporate sponsorships or royalties from sales of branded merchandise, would be more likely to affect only the most commercial teams; it would also create less opportunity for shifting revenue or costs. Appended is research on certain benefits of intercollegiate sports. (Contains 3 tables, 1 box, and 35 footnotes.)