All of this money is tax free for the schools. And thanks to Congress, fans get to deduct 80 percent of their mandatory payments, just as if they were writing a check to the Salvation Army or the local food bank.
In the 1980s, the Internal Revenue Service moved to tax football ticket contributions in two rulings. The agency said the mandatory payments weren’t charitable gifts to the universities; instead, they represented the cost of securing a highly coveted season ticket. Therefore, the onus should be on the donors to prove otherwise, agency officials argued, just as with any other charitable donation involving a quid pro quo.
Athletic directors turned to Congress for help. And lawmakers in Louisiana and Texas obliged, inserting language into legislation exempting the University of Texas and LSU. Other football schools lobbied that they should be exempt as well, and in 1988 Congress agreed, crafting language allowing fans to deduct 80 percent of the cost of buying season tickets, including mandatory donations, thus ensuring that the ticket schemes would not only survive but thrive.
In the two-plus decades since Congress intervened, college football has been transformed into a cash cow at many large athletic powers, accounting for half or more of all revenues. That money helps to subsidize less lucrative sports, athletic officials stress. But little of the money goes to support the academic mission.
California’s seat plan, which includes nearly 3,000 of the best seats in the house, was designed to pay for $350 million in renovations at 60,000-seat Memorial Stadium. The school touts the VIP seats as providing “unprecedented benefits for decades to come.” For $40,000 to $225,000, fans can secure seats with catered food, premium beverages, flat-screen TVs and priority parking, among other amenities.
Cal officials call the payments a “pledge,” as opposed to a personal seat license.
There is another difference between the plans: “Significant tax deductions may be available” for Cal donors, a brochure notes.
The rush to cash in on college football is not new. But with spending on athletics at epochal levels, the search for funds is becoming ever-more creative, fueling concerns that the tax breaks and ticket schemes are helping to fuel an unprecedented increase in athletic spending at the expense of education.
“The mission of the university is being subverted by the focus on athletics,” contends Nathan Tublitz, a biology professor at the University of Oregon and a member of a national organization hoping to reform college sports. Spending on athletes at Oregon has soared 244 percent in the past decade, according to the university’s website.
At No. 1 ranked Alabama, demand for season tickets is so great that there is a waiting list of 26,000 fans, according to Chris Besanceney, who oversees the TIDE PRIDE donor program. Only about 40 new fans managed to get tickets this season. Contribution levels run up to $2,000 per seat inside 101,000-seat Bryant-Denny Stadium. Overall, contributions have doubled in the past decade, to more than $25 million, records show.
Turnover is also rare at Georgia’s 90,000-seat Sanford Stadium. That causes “the minimum donation level to go through the roof,” said Jay Lowe, head of the donor program. “In 2008, for a new football donor, our cutoff was $10,651 (for a season ticket). Basically, it’s supply and demand.” Georgia collects about $22 million annually in donations.
For years, Penn State had one of the lowest ticket donation requirements — $100 a seat. But last year athletic department officials increased contributions for their best seats, up to $2,000 a seat. They also allowed longtime fans to transfer their tickets to family members and friends — but at a hefty cost. Fans had to make a mandatory donation of up to $2,000 for each ticket they transferred.
Associate Athletic Director Greg Myford said Penn State opted to include the transfer fee after realizing the athletic department needed more revenue to cover growing costs. Even with an athletic budget of $116 million annually, Penn State was at risk of falling behind.
“It was an opportunity for us to develop a new revenue source,” Myford said. The transfer fees raised about $3.8 million, with ticket contributions increasing to $17 million.
Fans, of course, got to take a charitable deduction.
Gaul, a two-time Pulitzer winner, is a freelance writer living in New Jersey and a McClatchy special correspondent. He formerly worked for The Philadelphia Inquirer and The Washington Post.