I’m betting you didn’t realize this, but you helped strangers buy some really great season tickets to Georgia football, Duke basketball and Ohio State Buckeyes games.
Hopefully you won’t have to do it again next year.
I’m a big fan of college sports. But I don’t expect the federal government and taxpayers to help me pay for the best seats at games. (I’m too cheap to buy them anyway).
Yet, as nutty as this sounds, Uncle Sam gives a juicy tax deduction — tax welfare, really — to people who “donate” to college athletic programs in order to qualify to buy season tickets. Which means you and I —and other taxpayers — are subsidizing their good time.
Big money
Lots of universities and their booster clubs are in on the game, but maybe not for much longer.
The ticket deduction would be eliminated under Republican tax plans being hashed out in Washington, D.C., this week.
The ticket issue is a relatively small piece of sweeping changes envisioned by the GOP. But that one loophole is an annoying example of the broader inconsistencies in the tax code.
And for the big business of college sports, it could be a pricey change.
“Basically, how can the proposed tax plan not negatively impact intercollegiate athletics?” Bob Vecchione, the executive director of the National Association of Collegiate Directors of Athletics, wrote in an email to me.
Tossing the deduction might cut the value of some of the hottest college tickets in the nation, or at least that’s the guess of some tax law professionals.
I suppose there might be exceptions. The University of Georgia’s recent football success might goose up demand and limit any dropoff for at least the short term.
Fans’ “donations” for UGA’s football season tickets funnel into the William C. Hartman, Jr. Fund, which logged nearly $27 million in contributions in the last fiscal year.
The required minimum donation in 2017? Anywhere from $550 to $4,500 for a pair of football season tickets to six home games, depending on the seating area. The donation only gets you the right to buy your seats — you still have to pay the $50 per seat, per game ticket price.
I tried to get UGA athletic director Greg McGarity to chat about the subject. He wouldn’t.
The system is a little different at Georgia Tech. “Donations” are required only if you want to get season packages for the best seats.
A spokesman emailed me that the “Georgia Tech athletics is strongly opposed” to the changes being contemplated in D.C. and that it would “have a drastic effect on the ability for athletics departments to raise money for scholarships and further limit access to a college education for many students — particularly students from underrepresented populations.”
‘Donation’ is the wrong word
But here’s the problem. These are not really “donations.”
You want the tickets, you pay up.
Normally, taxpayers are limited in being able to claim a charitable deduction for a “donation” in which they get something valuable in return. But in the 1980s, Congress set up a gaping loophole for college athletics, allowing season ticket holders to deduct 80 percent of required ticket “donations” on their federal income taxes. They can’t, though, take a charitable deduction for the face value of the tickets themselves.
Eliminating that loophole could generate about $2.5 billion over 10 years, according to estimates compiled during the Obama administration.
Impact on ticket prices
So without a subsidy of potentially hundreds of dollars or more a year, would fans be willing to “donate” as much in the future?
Kevin Butler, the legendary Georgia kicker who went on to play for the Chicago Bears, told me he wouldn’t be surprised to see some season ticket holders rethink their purchases without the deduction.
“In this day and age, people like to be incentivized to invest,” Butler said. “If that tax deduction goes away, which it probably should, it will change the face of college football.”
It would factor into the thinking of Bob Hope, an Atlanta public relations veteran who shells out about $2,000 a year in donations for four UGA season tickets.
“Now, sports are so expensive that you always have a second thought,” Hope told me. Long ago, he was the Atlanta Braves’ head of public relations, promotions and ticket sales.
“Once you start losing momentum on attendance, it is very hard to get back.”
Richard Schmalbeck is a fan of Duke basketball. As a Duke faculty member, he gets a big discount on the required donation level for for tickets. But he still lays out a four-figure sum — and claims most of it as a charitable deduction on his income taxes.
He also happens to be a big critic of that very same deduction.
“It’s really not a contribution and shouldn’t be treated as such,” said the professor, who specializes in tax law.
If it goes away, Schmalbeck predicted Duke will have to cut its ticket prices if it wants to keep its arena filled.
Sounds like a winner to me.
Story written by Matt Kempner of The Atlanta Journal-Constitution