Obama’s budget proposal sent to Congress Monday would end the deduction available to some fans for donations they make to get seats at college sporting events. This is a new proposal by the administration.
By closing what the White House calls a loophole in the system, people would pay about $2.5 billion over the next decade in higher taxes. Currently, college sports fans can deduct 80 percent of the cost of such donations.
It’s not going to be the taxpayer who’s going to be screaming about this. It’s the schools.
While some alumni and fans would give money to schools regardless of tax benefits, ending the deduction would hurt revenue at some sports programs, said Robert Spielman, a senior tax partner at Marcum LLP who advises high-net-worth clients.
Some U.S. colleges use the tax benefit to generate more revenue from sports. They set a price for season tickets and then demand donations in the hundreds or thousands of dollars on top of that cost as a condition of the sale. Part of the pitch is that fans can claim the expense as a charitable deduction when they itemize their tax return.
At certain universities, fans can’t buy tickets unless they make a donation, and at other schools the donations help people get premium seating on the 50-yard line.
One athletic department that uses the donation is the University of Louisville, whose men’s basketball team made $40.5 million in revenue in 2013-2014, about $15 million more than the next closest program.
Louisville requires a donation to the Cardinal Athletic Fund for most of its season tickets — contributions that range from $2,500 to $250 a seat. Of the university’s $40.5 million in men’s basketball revenue, $21.7 million come from donations, according to the school’s annual report to the NCAA.
Yeah, that could leave a mark.
Given the make up of the current Congress, it’s not like Obama’s budget proposal is going anywhere soon. But as a marker for how the President feels about college athletics administration, it’s worth keeping in the back of your mind when the NCAA gets serious about lobbying for that antitrust exemption it’s shuffling towards.