Colleges worry about funding with new tax bill

A group of college athletic administrators say they’re extremely concerned that a proposed measure in the House’s tax bill that passed on Thursday will greatly impair college sports funding.

In the proposed measure, Section 1306 would cut deductions associated with charitable contributions for tickets. Not allowing fans to deduct for donations that give them the right to buy tickets would immediately cost college programs hundreds of millions of dollars, according to athletic directors who spoke with ESPN.

“If that deduction goes away, what you will see is a dramatic sea change in the college sports landscape,” said Duke athletic director Kevin White. “We need to put speed bumps up now to slow this thing down, because I don’t think the politicians have any idea how much this will pull apart our system.”

For years, college athletic programs have relied on donations associated with season tickets to fuel their budgets. While the price of the season tickets themselves are not tax deductible, fans have been able to write off up to 80 percent of the donation that was required to buy those tickets, a fact that has been heavily marketed by the programs themselves. If the provision winds up in a final tax bill that passes, the ability to write off anything related to the donation would disappear.

The prevailing thought is that a significant number of people will stop making the donations.

“We take in $50 million to $65 million a year in donations related to tickets,” said LSU athletic director Joe Alleva. “If even 10 percent of people say, ‘We’re not going to do that anymore,’ that’s at least $5 million to us. We have no other place to make that money up.”

Alleva said LSU president F. King Alexander has communicated with state legislators to express their displeasure with the proposed change.

At LSU, a seat at the 50-yard line this year came with a required $1,025-per-seat donation to the Tradition Fund, which gives the fan the right to purchase a season ticket in that location for $425.

At Duke, a new season-ticket holder would have had to pay $4,000 a seat for the right to buy season tickets to Duke basketball games this season, which cost around $3,000.

A $4,000 donation also gave Alabama fans this season the right to buy a seat in the highest-end suite area, the Ivory Club, at Bryant-Denny Stadium.

“While we certainly do not know the exact repercussions, we expect that it would have a damaging effect,” said Alabama athletic director Greg Byrne. “The philanthropic support of donors is instrumental, and although the amount of contributions from institution to institution varies, it is of equal importance across the board when you look at financial structures. Very few college athletics programs actually make a profit. Take that funding away, and it will be difficult to operate without making dramatic changes.”

The effect on not being able to deduct the donation might be more severe with the higher donations. NC State, for example, asks for a $25,000-per-seat donation for the best center-court seats for its basketball games for life. However, it comes with the promise of an additional donation of $7,200 per year, and that doesn’t even include the season tickets.

Duke’s White says that losing season-ticket donations could immediately affect scholarships in Olympic sports.

“We have over 500 student-athletes at Duke in 24 Olympic sports,” said White, who is a member of the United States Olympic Committee board of directors. “This would significantly compromise the opportunities for young people in those sports across the entire student athletics system.”

Going after the season-ticket donation deduction doesn’t come as a complete surprise. Many in political circles believed the deduction was unfair because the donation included the rights to get season tickets, which is something of significant value.

“I don’t believe the deduction was ever intended to apply to donations related to season tickets,” the bill’s author, Representative Kevin Brady (R-Texas), told ESPN.

Brady said that the majority of season-ticket holders in college athletics don’t have to pay for the rights to their seats; they just pay the cost of the ticket. Since deductions technically cost the taxpayer at large, Brady reasons that the average fan is actually disadvantaged by the deduction at the hands of the wealthy, who deduct the price of their large donation for the right to sit in the best seats.

Brady also said that if the federal government doesn’t provide the deduction, the individual states could choose to give individuals that right to deduct their donations.

The House Tax Bill, which represents a $1.5 trillion cut, passed 227-205 on Thursday. The Senate has its own bill, which does not have a similar provision. If the Senate bill passes, and that is not a foregone conclusion, the two bills will be married together into a new bill, and the House and Senate will vote on it again. If the Senate does not pass a bill, the current tax code applies.

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