Season tickets for your favorite college football or basketball team could be missing one perk next year — a tax deduction.
Under the tax reform bill introduced Thursday by U.S. House Republicans, the large donation typically required to get your hands on those tickets would no longer be tax deductible.
It is among the provisions tucked in the 76-page bill that touches on nearly every aspect of tax law, taking on sacred cows such as the mortgage rate deduction, charitable giving – and even college and pro sports.
College athletic department revenues and cities’ abilities to finance stadiums for professional sports teams could take a hit from the removal of tax breaks in the bill.
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In order to purchase season tickets at many schools, fans must first make a donation to the athletic department’s booster group, making those donations a large source of income for athletic departments. The money is passed back to the departments from the booster club.
Currently, those donations are tax deductible up to 80 percent.
Donations to college athletic departments and related booster clubs totaled $1.2 billion in 2015, eclipsing the $1 billion mark for the fourth time in five years, according to the Council for Aid to Education.
To purchase season tickets for North Carolina’s men’s basketball team, the reigning national champions, fans must be high-level members of The Rams Club. It requires a donation of at least $6,000 for the right to purchase two season tickets and $25,000 for the right to purchase four season tickets.
How important is the 80-percent deduction to booster clubs?
It is the first benefit of giving listed on the Wolfpack Club’s website. The Wolfpack Club is N.C. State’s booster organization. To reach the top level of the club, Lone Wolf Level, requires a $30,000 donation.
The Iron Dukes, the booster club for Duke University, list all of the benefits associated with membership. The first benefit listed: your donation comes with a receipt for tax purposes. At Duke, you’re required to donate at least $8,000 for the right to purchase two season tickets. To earn top status in the club and the right to purchase six season tickets, boosters must donate at least $100,000 — and that’s before you pony up for the actual tickets.
University of Idaho Athletic Director Rob Spear said most donors give because they love the program or want to give back to the school. But, he added, the tax incentive certainly can play a role.
“When you get in front of that prospective donor and you lay out the tax deduction, sometimes it seals the deal,” said Spear, who estimated that about 50 percent of Idaho’s donations came from what he called “seat backs” — donations that allowed for the right to buy tickets. “Schools that have lived by increasing seat back prices will see significant changes ahead.”
The price of the tickets is not tax deductible, which is one reason why schools structure the pricing that way. It allows the athletic department and booster club to reap benefits, while allowing the donor or booster to get a tax deduction.
“I went to Wake Forest. We’ve got a great field house out there,” said Rep. George Holding, a Republican from North Carolina who helped write the bill as a member of the Ways and Means Committee. “Rams Club, the Wolfpack Club, all these things are a big deal. But at the end of the day, aren’t you willing to give up all these little tax preferences in exchange for not only a lower rate, but a growing economy?”
Congressional Republicans are eliminating many tax deductions to help pay for lowering personal income and corporate tax rates.
Another part of the bill hits professional sports. It would end the practice of using tax-free bonds to help finance “professional sports” stadiums. The provision would make interest on bonds issued to finance those stadiums subject to federal tax.
“A professional sports stadium is any facility that is used as a stadium or arena for professional sports exhibitions, games or training for at least five days in any calendar year,” according to the bill.
The practice of publicly financing stadiums has long been derided by many, who consider it welfare for billionaire sports owners. The use of tax-free bonds has cost the federal government $3.7 billion since 2000, according to the Brookings Institution.
Sens. Cory Booker, D-New Jersey, and James Lankford, R-Oklahoma, introduced a bill earlier this year to do away with the federal tax exemption for municipal bonds used for stadium construction.
“Why should we, the people, incur a tax expenditure for stadiums?” Holding said. “If you give someone a tax preference and give them a non-taxable vehicle to finance one of those things, everybody pays for that.”
Brian Murphy: 202.383.6089, Twitter: @MurphinDC