If by “everyone”, you mean the usual wallets, well, yeah.
Iowa State AD Jamie Pollard estimates his school is facing $700,000 in additional cost from this provision.
“That figure will have to either be passed on to ticket holders and donors, or taken out of the budgets of sports that are not … being targeted by the federal government,” Pollard said in an e-mail. “It is ironic that the compensation paid in those two sports, by sheer market pressure, will actually now generate an additional financial burden for athletics directors to try and solve in our industry. It will be interesting to watch the new wave of creative ideas and suggestions that will be developed by lawyers, agents and financial advisors, to try and get around the new excise tax.”
That process already is underway, according to Roger Denny, a St. Louis-based lawyer with Spencer Fane LLP whose practice areas include representation of coaches, AD’s and schools.
“Our athletic director/university clients are certainly asking about this and other issues in the bill, and we’ve been asked to start consider ways to mitigate the effects of the tax,” said Denny, who assists USA TODAY Sports with the compilation of its coaches’ compensation surveys.
Pollard said he believes many ticket buyers will retain their seats even with the elimination of the deduction for donations connected to those purchases. He said that the increase in the standard deduction might offset the loss of the itemized deduction.
But Marc Ganis, a sports business consultant who used to work with colleges but now focuses on pro sports, had concern not only about the mathematic effect, but also about what he called “the perceptive effect.”
“Certainly one of the things used to market (season tickets and suites) is the deductability,” he said. The loss of the deduction “may chill the sale to some people even more than the actual additional cost,” which, for businesses, may not be that significant because business-tax rates are being lowered.
Even before the legislation passed in Congress, some athletics departments were reaching out to donors to act while the deduction remains available. In a posting Tuesday on Baylor’s athletics website, AD Mack Rhoades wrote: “(W)e encourage you to consider completing your 2017-18 Bear Foundation commitment and/or pre-paying for 2018-19 before December 31, 2017, in order to claim the maximum deductions from your giving.”
Add that colleges will be responsible for paying a 21% excise tax on annual compensation above $1 million that goes to any of the organization’s five most highly compensated employees and a change in the rules governing taxation of income from non-profit organizations’ unrelated businesses, and you’re talking about some real money, peeps. Get ready for the pass through. That reserve fund ain’t gonna save itself.