College athletic program administrators are dreading the implications of a specific provision in the recently passed House tax bill. Section 1306 of the measure would stop taxpayers from claiming charitable contributions that give them the ability to buy tickets, a move that could cost colleges hundreds of millions of dollars.
Currently, some colleges require a donation be made to the school before a person has the option of buying tickets to select prime season games.
One such example is Duke, where the university requires a $4,000 per seat minimum donation for parties to have the option of purchasing season tickets, which can run several thousand dollars on top of the contribution.
LSU, another school that mandates a minimum donation for fans to purchase certain tickets, takes in “$50 million to $65 million a year in donations related to tickets,” according to Joe Alleva, the LSU athletic director.”
Alleva added, “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 up that money.”
The concern is largely that removing the ability to deduct the donation on their taxes may discourage previous participants from continuing to provide funds, as they will receive no tax benefit for doing so. This makes one potential funding solution – adding the mandatory donation amount to the price of the ticket – possibly ineffective for recouping the lost funds, as a tax deduction would still not be allowed.
Often, the ability to deduct up to 80 percent of the donation, which can represent a significant portion the total cost associated with acquiring the tickets, was considered a major selling point for athletic programs.
If the provision from the House tax bill is added to the final version of the legislation, then the ability to deduct this form of donation disappears. The change is not featured in the Senate tax bill, so the two bills would have to be reassessed to form a single new measure, should the Senate bill pass as well.
There are also farther-reaching implications of the provision remaining in the final bill since, if colleges receive less funding after the deduction is removed, they may have to scale back their programs or reduce athletic scholarship offerings to compensate.
At this time, how ticket-related donations would change isn’t fully known, as officials and athletic programs can only speculate how the taxpayers will respond if the provision becomes law.