Athletic Departments and Taxes

[Buff_since76]

I clicked through ESPiN, and read the following article:

http://www.espn.com/college-sports/...ege-administrators-worry-funding-new-tax-plan

Rather than discuss whether you like the tax plan or not (political forum), I was curious to see if the change in tax policy would truly alter anyone's decision on whether or not they buy season tickets. I am not sure if athletic departments across the country would change their sales strategy (increase individual ticket price while reducing the seat cost), but this could alter many different aspects of college sports (if it passes of course).

Personally, I will buy tickets no matter what, and the tax break has been a 'nice to have'. I'm interested to learn what, if any, impact it would have to other fans.

 

[Buffnik]

Won't impact tickets. Would reduce any of my stand-alone donations to the AD.

 

[buffgal]

Won't impact tickets. Would reduce any of my stand-alone donations to the AD.

Same for me.

 

[skibum]

The more interesting and, probably impactful, part of the tax plan as it relates to college ADs (and to a lesser extent, colleges in general) is the new 20% excise tax on >$1mm salaries paid by non-profits.

 

[Buffnik]

The more interesting and, probably impactful, part of the tax plan as it relates to college ADs (and to a lesser extent, colleges in general) is the new 20% excise tax on >$1mm salaries paid by non-profits.

Yep. Could we see a rise of booster clubs as outside charitable organizations that start paying a big chunk of salaries through an agreement that makes the coach the spokesperson for the charitable initiatives?

 

[sackman]

The more interesting and, probably impactful, part of the tax plan as it relates to college ADs (and to a lesser extent, colleges in general) is the new 20% excise tax on >$1mm salaries paid by non-profits.

Huge impact on the NFL, which is technically a non-profit but it pays Goddell some ungodly sum like $50MM per year.

 

[Dark Bohner]

Huge impact on the NFL, which is technically a non-profit but it pays Goddell some ungodly sum like $50MM per year.

Allegedly. Grab the popcorn for the Jerry Jones NFL battle.

 

[Buff_since76]

Huge impact on the NFL, which is technically a non-profit but it pays Goddell some ungodly sum like $50MM per year.

Not if Jerry Jones gets his way

I know it will impact non-profits as a whole, but I kind of wonder the impact this will have on the college landscape. Paying $4k as a donation to have the ability to pay $500 for the tickets has definitely been a way that athletic departments have increased revenue based on the tax system. Trying to guess the consequences of this is somewhat fun for me. I have wondered if this ends up knocking down some of the big budget/revenue programs, or adds a touch of parity in a way.

 

[Daaah]

Huge impact on the NFL, which is technically a non-profit but it pays Goddell some ungodly sum like $50MM per year.

NFL isn't a non-profit anymore.

 

[sackman]

NFL isn't a non-profit anymore.

When did that change?

 

[Daaah]

When did that change?

TO: All Owners
All Presidents
FROM: Commissioner Goodell
DATE: April 28, 2015
SUBJECT: Tax Exempt Status

As you know, for several years the NFL has discussed the tax exempt status of the league office and the Management Council, and more than a year ago the Finance Committee began a study of whether to relinquish the exemptions. That study has now concluded, and has confirmed that a change in the tax status will not alter the function or operation of the league office or Management Council in any way. At the Annual Meeting in March, the full ownership granted the Finance Committee and Management Council Executive Committee (CEC) the authority to change the tax status of the league office and the Management Council. I write to report to you that last week each committee exercised that authority and voted to have the league office and Management Council file tax returns as taxable entities for our 2015 fiscal year.

The league office was first granted tax-exempt status by the IRS in 1942, and the IRS has repeatedly confirmed that status over the years. The Management Council has a similar tax status and organizational structure. As you know, the effects of the tax exempt status of the league office have been mischaracterized repeatedly in recent years. The fact is that the business of the NFL has never been tax exempt. Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business. As a result, the Committees decided to eliminate this distraction.

Recently Congress has questioned whether sports league associations should, as a matter of federal tax policy, be tax exempt. We will notify interested members of Congress of this decision by NFL ownership.

 

[sackman]

TO: All Owners
All Presidents
FROM: Commissioner Goodell
DATE: April 28, 2015
SUBJECT: Tax Exempt Status

As you know, for several years the NFL has discussed the tax exempt status of the league office and the Management Council, and more than a year ago the Finance Committee began a study of whether to relinquish the exemptions. That study has now concluded, and has confirmed that a change in the tax status will not alter the function or operation of the league office or Management Council in any way. At the Annual Meeting in March, the full ownership granted the Finance Committee and Management Council Executive Committee (CEC) the authority to change the tax status of the league office and the Management Council. I write to report to you that last week each committee exercised that authority and voted to have the league office and Management Council file tax returns as taxable entities for our 2015 fiscal year.

The league office was first granted tax-exempt status by the IRS in 1942, and the IRS has repeatedly confirmed that status over the years. The Management Council has a similar tax status and organizational structure. As you know, the effects of the tax exempt status of the league office have been mischaracterized repeatedly in recent years. The fact is that the business of the NFL has never been tax exempt. Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business. As a result, the Committees decided to eliminate this distraction.

Recently Congress has questioned whether sports league associations should, as a matter of federal tax policy, be tax exempt. We will notify interested members of Congress of this decision by NFL ownership.

It’s almost as though they saw this coming. I don’t know how that’s even possible, but the letter is correct when it describes how the individual teams have been taxed. The NFL can still pass through all it’s income, pay zero taxes and not have to pay the surcharge on Goddells income. Brilliant.

 

[MiamiBuffs]

Won't impact tickets. Would reduce any of my stand-alone donations to the AD.

Maybe for the average joe. How does this impact the Club Seat buyer? The Executive Suite buyer?

This seems to be old since it refers to 2013 menu;

The Stadium Club and Suites (18 chair-back seats) at Folsom Field
...with seat donations starting as low as $500 a seat...

Floor Seating at Coors Events Center
....floor seating at basketball requires a $2,000 contribution per seat per season...

http://www.cubuffs.com/sports/2008/12/12/1615410.aspx​

Maybe this is up to date?

	Buff Club	Ticket	Total
	Contribution
Price Level 1	$400/seat	$425	$825
Price Level 2	$250/seat	$425	$675
Price Level 3	$125/seat	$295	$420
Price Level 4	$50/seat	$225	$275
Price Level 5	No Donation	$175	$175
TD Loge Box	$1,530*	$470	$2,000
Touchdown Club	$375*	$470	$845
Champions Club	$255*	$470	$725
West Side Covered	$425	$470	$895
Flatirons Club	$1,275	$470	$1,745
Club - Price Level 7	$1,850	$470	$2,230
Club - Price Level 8	$1,225	$470	$1,695
Club - Price Level 9	$925	$470	$1,395
Club - Price Level 10	$550	$470	$1,020
East Side Suites			$50,000

[TBODY] [/TBODY]

http://www.cubuffs.com/sports/2013/2/20/folsom-seating-pricing-map.aspx​

 

[skibum]

The deduction acts as an escalating discount based on your income level. If you have a high income, you get a larger discount for the same ticket than someone at a lower income.

This plan eliminates that discount: if ADs don't change the total price for their tickets, they're raising the effective price of their tickets 15-35%.

What I think will happen is that a simple and transparent system: if you want these tickets, pay this much and this portion of the total price is tax deductible, will become a much more complicated system: if you want access to this bucket of "perks" (which includes being on the "priority list" to buy from this bucket of season tickets), you need to be this level of donor. Not all of the donation will be tax deductible as we have to deduct the market value of any benefits you receive, but since there really isn't a market for this, we're going to assign a low value to being on the "priority list," so almost all of your donation will remain tax deductible.

The gov might get a little more taxes, university ADs might get a little less revenue, but tax lawyers everywhere will get to increase their billing hours.

 

[NeverGiveIn]

It sounds like they're trying to prevent colleges from giving perks to people who donate a lot of money, by dissociating donations from ticket sales?

A little annoying...the whole tax-deductible system was put in place so that people could have more of a say over where their tax dollars went, and support social systems (defined by tax-exempt status) that they like directly, instead of relying on the government to distribute it in a way that represents their interests, which makes sense. But now they're saying basically "ok, if we're going to do that, a tax-exempt organization then can't give perks back to the donors"....which is the annoying part.

I mean, access to football tickets are a far cry from corruption, if a tax-exempt organization was giving out plutonium contracts after getting donations (ahem*Clintons*ahem), that's one thing. Anyone ever wielded socially unjust power from getting season tickets to their alma mater because they donated back to give future students a leg-up? Or their stadium a new Jumbotron? While I don't think it's healthy to put too much money into and celebrity associated with college sports (I'm happy to elaborate), I don't think it should be the gubmints job to pick and choose different people and organizations to single out and dictate piddly stuff like this. I mean if you give a big chunk of change to a university, I think giving an inside track on football tickets is the least they can do to say "thanks".