As part of tax reform in Washington, Congress is considering whether to eliminate the tax deductibility of donations to collegiate charitable sports foundations, worth 80 percent off income. Interestingly, LSU pioneered the idea three decades ago and now rakes in tens of millions of dollars a year by having a surcharge for tickets to seats to contests for several of its athletic squads.
The effort to do so has sent LSU Athletic Director Joe Alleva into apoplexy, telling anyone who will listen that it would cost $50 million a year and send LSU athletics into the poorhouse. He and other flaks also remind anyone who will listen that athletics contributes millions a year to the academic side of the school.
The contention that eliminating the break seriously would impair LSU athletics is utter nonsense. Given the rabidity of fan support for LSU, only a small portion on ticketholders likely would alter their behavior not to buy without the deduction, which for all but the wealthiest individuals that may buy more than two season tickets brings a deduction of around a couple of thousand dollars, which may then carry a tax shield of around $500 for a middle-class income. The impact to LSU athletics’ bottom line would be minor.
Of course, tax experts argue nothing about this break makes economic sense. At best, it extremely inefficiently funds education, as a pass-through to the academic side. Cutting out the middleman would do a much better job of getting the money to genuine educational purposes, rather than building sports facilities (which may include academic support services for athletes), subsidizing sports and ancillaries, and the like.
Therein lies the appropriate policy. Instead of sending the surcharges to athletics, have these go to academics. The deductibility remains and then if administrators wish to dole some out to athletics, that’s their prerogative.
Regardless of whether tax law changes to strip deductibility from athletic donations, all Louisiana universities should pursue this. Why not use athletics to leverage increased academic funding?
It’s telling that, regarding the LSU System, among Southeastern Conference schools reporting data, it receives the second highest per capita donations for athletics and second lowest for academics, probably in part encouraged by charging seat licenses diverted to athletics. Redirecting this flow will restore proper balance to priorities in Louisiana’s higher education system.