Tax Bill and College Athletics

[bjf123]

From what I understand, the new tax law drops the deductibility of 80% of the “donation” we are required to pay with our season tickets. Did any of you, or your companies, prepay your 2018-19 ticket “donation”?


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[sweet6teen]

From what I understand, the new tax law drops the deductibility of 80% of the “donation” we are required to pay with our season tickets. Did any of you, or your companies, prepay your 2018-19 ticket “donation”?


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Yes, along with my real estate taxes as well. If you contact XU and specifically ask them what they intend to do about "seat donations" as they relate to tax law changes it's clear they have no idea at this point.

[bjf123]

I don't think most colleges know how they're going to deal with it. They're looking at serious drops in revenue when their corporate seat owners can no longer deduct the donations for suites and high end seats. My company (I just work there!) have seats with donations totaling tens of thousands of dollars. That's a lot of cash, so we're still debating paying it. Got one more day to decide.

Personally, I'm not in a position to pay my RE taxes or seat donation early. Lots of things broke around the house and in the garage over the last 6 weeks. And then there's Christmas to pay for.

[vee4xu]

Be careful with prepaying those property taxes. The IRS has issued a clarification about them having to be assessed in 2017 to be deductible in 2017. So, if your state assesses in arrears, then you could be okay. However, if not, then prepaid real estate taxes run the risk of not being deductible. Ohio assesses in arrears, so taxes payable in January 2018 are assessed for 2nd half of 2017, thus are deductible. However, if taxes due in the first half of 2018 are for the first half of 2018, then prepaying them will not be deductible in 2017.

http://time.com/5080756/irs-prepay-property-tax-deduction-2017-2018-limit/

[Olsingledigit]

For a business the premium might have been deductible as an entertainment expense, which was and is deductible atv50%

[Muskie]

First in-depth article I have seen.

(link (https://www.usatoday.com/story/sports/ncaaf/2017/12/20/college-sports-impact-new-tax-bill-millions/968741001/))

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.

[PeteXU]

I think for a school like X, the effect of seat licenses no longer being deductible will be limited compared to other schools. First, while Xavier has a pretty small fan base, the median Xavier fan is far more engaged than the median fan at most other schools. Secondly, there are about 2500-3000 seats that have a seat donation of at least $1,000 and probably only a few hundred that have more than a $2,000 donation. Finally, the cash savings isn't as lucrative as many would think. Take someone in the 25% bracket paying a $1,000 seat license, they would reduce their tax liability by $200. (Seat licenses were only 80% deductible under the prior law) Certainly not nothing, but for someone who is in the position of being able paying about $1,500 to watch college basketball, not a number that is going to give them much hesitation when it comes for renewal.

As far as the excise tax goes on coaches salaries it will interesting to see if this effects the type and structure of the compensation coaches receive. These two changes certainly hurt the bottom line of basically any competitive athletic department, but also starts to treat college athletics like the business it really is.

[bjf123]

Though he doesn’t flat out say this, the way I read it, sports tickets are no longer deductible in any way, whether it’s the 50% deduction as an entertainment expense, or the 80% deduction as a charitable contribution for the seat license fee. Is that right?


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[Muskie]

Though he doesn’t flat out say this, the way I read it, sports tickets are no longer deductible in any way, whether it’s the 50% deduction as an entertainment expense, or the 80% deduction as a charitable contribution for the seat license fee. Is that right?


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That was my interpretation as well.


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[bjf123]

Guess I’ll email our CPA firm at work in the morning.


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[Muskie]

While I don't think the tax changes will effect total season ticket sales, I think it could change the way people make their decisions on which seats to purchase. In the past, I have been willing to invest in certain seat levels because of the tax advantages to me personally and business. While in some years this had very little tax advantage to me, I did consider it. I'd be hard pressed to consider some of those same seating options now without those benefits (depending on the year and cost). I think that's where you'll see the most action. X was fortuitous they did the re-seating last year.

[bjf123]

Just heard back from our CPA firm at work. Meals and entertainment expenses are no longer deductible for federal tax purposes. That’s going to have an impact on ticket, suite, luxury box, and seat license sales, along with general lunches and dinners. There’s still the customer relations value of taking them to games, but the cost just went up a bunch.


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[Muskie]

Just heard back from our CPA firm at work. Meals and entertainment expenses are no longer deductible for federal tax purposes. That’s going to have an impact on ticket, suite, luxury box, and seat license sales, along with general lunches and dinners. There’s still the customer relations value of taking them to games, but the cost just went up a bunch.


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Yeah, pretty much what our CPA's said as well. Won't keep me from getting tickets, but will affect the tiers I consider. I had debated (albeit shortly) about look out tickets because of the "entertaining" portion. But if I can't use any of it on my taxes that's a firm no-go (besides the fact that you apparently can't see from the seats).

[GoMuskies]

The effects are what they are, but I'd say this is much better tax policy. I don't want to subsidize your ticket purchases and "business" meals and entertainment.

[GoMuskies]

Also, most people's tax bills should be down (particularly for businesses), so it's odd economic thinking to say that you can no longer make the same expenditures just because they're not deductible. You're fooling yourself a bit there.

[Muskie]

Also, most people's tax bills should be down (particularly for businesses), so it's odd economic thinking to say that you can no longer make the same expenditures just because they're not deductible. You're fooling yourself a bit there.

I'm sure that's the case. That's why I don't think it will affect my purchasing overall, just the amount I would have considered spending.

[GoMuskies]

I'm sure that's the case. That's why I don't think it will affect my purchasing overall, just the amount I would have considered spending.

This is the part I don't understand. If you spend the exact same dollars on Xavier tickets in 2017 and 2018, you'll actually have more dollars left over in 2018 than you would have in 2017. All else (other than change in tax law) being equal, of course.

[Muskie]

This is the part I don't understand. If you spend the exact same dollars on Xavier tickets in 2017 and 2018, you'll actually have more dollars left over in 2018 than you would have in 2017. All else (other than change in tax law) being equal, of course.

Through a unique "quirk" of the re-seating process I am actually paying less this season for basketball tickets. So I've probably over analyzed it from a tax standpoint. I'll wait to see if my taxes actually reduce.

[GoMuskies]

I'll wait to see if my taxes actually reduce.

That's certainly fair. I'm a recovering CPA, and I"m not sure about my taxes, either. I "think" they'll go down a nice amount, but it's not an incredibly simple analysis (or maybe it is and I'm just stupid).

[Emp]

The Tax Accountants and Attorneys Full Employment Act.

I agree with Go on the policy issue. But a whole host of high end businesses.....power lunch restaurants, luxury box purveyors, business caterers..... may take a hit.