The House tax reform bill could cost college athletic programs millions

  • 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.

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NASHVILLE, TN- SEPTEMBER 10: Safety Karl Joseph #42 of the Oakland Raiders deflects a pass intended for wide receiver Eric Decker #87 of the Tennessee Titans in the first half at Nissan Stadium on September 10, 2017 In Nashville, Tennessee. (Photo by Wesley Hitt/Getty Images) )
FOXBORO, MA - SEPTEMBER 07: Kareem Hunt #27 of the Kansas City Chiefs stiff arms Duron Harmon #30 of the New England Patriots as he runs for a 4-yard rushing touchdown during the fourth quarter against the New England Patriots at Gillette Stadium on September 7, 2017 in Foxboro, Massachusetts. (Photo by Maddie Meyer/Getty Images)
CLEVELAND, OH - SEPTEMBER 10: DeShone Kizer #7 of the Cleveland Browns rushes for a touchdown in the first half against the Pittsburgh Steelers at FirstEnergy Stadium on September 10, 2017 in Cleveland, Ohio. (Photo by Justin K. Aller/Getty Images)
SANTA CLARA, CA - SEPTEMBER 10: Cam Newton #1 of the Carolina Panthers is tackled by Eric Reid #35 of the San Francisco 49ers at Levi's Stadium on September 10, 2017 in Santa Clara, California. (Photo by Ezra Shaw/Getty Images)
MINNEAPOLIS, MN - SEPTEMBER 11: Jerick McKinnon #21 of the Minnesota Vikings carries the ball in the first quarter of the game against the New Orleans Saints on September 11, 2017 at U.S. Bank Stadium in Minneapolis, Minnesota. (Photo by Adam Bettcher/Getty Images)
BALTIMORE, MD - SEPTEMBER 17: Tight end David Njoku #85 of the Cleveland Browns celebrates his touchdown against the Baltimore Ravens in the second quarter at M&T Bank Stadium on September 17, 2017 in Baltimore, Maryland. (Photo by Rob Carr /Getty Images)
INDIANAPOLIS, IN - SEPTEMBER 17: J.J. Nelson #14 of the Arizona Cardinals makes a juggling catch in the second quarter of a game against the Indianapolis Colts at Lucas Oil Stadium on September 17, 2017 in Indianapolis, Indiana. (Photo by Joe Robbins/Getty Images)
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"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 $1,025 donation, which allowed the fan to then purchase the ticket itself for $425. 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 $50 million to $65 million a year in donations related to tickets," said LSU athletic director Joe Alleva. "If even 10 percent of people say, 'We're not going to do that anymore,' that's at least $5 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.

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