- The House just passed the Tax Cuts and Jobs Act, which calls for a number of reforms.
- The bill would strip ticket-related donations to universities of their tax-deductible status, which could cost athletic departments millions.
The House passed the Tax Cuts and Jobs Act on Thursday, and college athletic administrators across the country are worried that the proposed reforms could have major effects on their programs.
Section 1306 of the bill, which passed 227 to 205, would bring an end to tax deductions on charitable donations related to tickets. Currently, many athletic programs rely on these contributions, which often bring in far more money than the tickets themselves.
“If that deduction goes away, what you will see is a dramatic sea change in the college sports landscape,” Duke athletic director Kevin White told ESPN’s Darren Rovell. “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.”
Under the current system, fans are often required to make a substantial donation before they are allowed to purchase season tickets for premium seats. This allows athletic programs to sell their tickets for huge sums while giving their customers a nice tax break.
Rovell provided an instructive example: at LSU, a 2017 season ticket for a seat on the 50-yard line required a $US1,025 donation, which allowed the fan to then purchase the ticket itself for $US425. The latter figure is fully taxable, but the donation that facilitated the purchase of the actual ticket is deductible by 80%.
Many officials are concerned that without the tax break, consumers will stop making the donations. LSU athletic director Joe Alleva put the situation in stark economic terms.
“We take in $US50 million to $US65 million a year in donations related to tickets,” said LSU athletic director Joe Alleva. “If even 10 per cent of people say, ‘We’re not going to do that anymore,’ that’s at least $US5 million to us. We have no other place to make that money up.”
Critics of the provision are concerned that the student-athletes may be the ones who end up most negatively affected. White said the reforms would “significantly compromise the opportunities for young people” to receive athletic scholarships. Some worry that the NCAA’s less popular sports, such as bowling, rowing, and rifle shooting, could be especially impacted.
Still, others insist that ending the deduction is long overdue, asserting that it benefits only the deep-pocketed benefactors who can afford the hefty donations.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.