Coyle Blog: Scholarship Seating and Tax Changes

[BleedGopher]

per Coyle:

In light of recent news that the federal tax reform bill has been passed through both houses of the legislature on its way to potentially becoming law, today we reached out to every fan who has invested in our student-athletes by supporting Scholarship Seating with their Gopher season ticket purchases to outline how one change in the tax code may impact their ability to write-off that contribution.

One of the many changes this bill will put into effect – should it become law – will remove what was commonly called the “80/20 rule,” which allows taxpayers to write-off 80 percent of charitable contributions attached to event tickets. In our case specifically, this deduction has been available to fans who owned season tickets in Scholarship Seating areas for football, men’s and women’s basketball, men’s hockey and volleyball.

This change to tax law would mean Scholarship Seating contributions will no longer be 80 percent tax-deductible. Should this become law, you will not be able to write-off any of your Scholarship Seating donations next year.

While tax law may change, what has not and will not change is the impact your investment makes in the lives of Gopher student-athletes. You were part of investing more than $11 million in our department last year. Those Scholarship Seating donations made up approximately 10 percent of our total operating budget, critical to providing more than $12 million in scholarship support for Gopher student-athletes.

Something else that has not changed is the people supported by your investment, some of the brightest student-athletes in the country. We have been the No. 1 public school in the nation for student-athlete academic performance each of the past four years according to the NCAA’s Public Recognition Awards for academics. We finished last year with a department-record GPA across our student-athlete population (3.24), we announced a department-record Graduation Success Rate this year (92 percent), and all of this with 700-plus students pursuing more than 80 different majors.

The new federal tax code may change how you account for your Scholarship Seating investment, but it will not change the significance of your investment to current and future Gophers.

http://www.gophersports.com/genrel/121817aaa.html

Go Gophers!!

 

[Pewterschmidt]

per Coyle:

In light of recent news that the federal tax reform bill has been passed through both houses of the legislature on its way to potentially becoming law, today we reached out to every fan who has invested in our student-athletes by supporting Scholarship Seating with their Gopher season ticket purchases to outline how one change in the tax code may impact their ability to write-off that contribution.

One of the many changes this bill will put into effect – should it become law – will remove what was commonly called the “80/20 rule,” which allows taxpayers to write-off 80 percent of charitable contributions attached to event tickets. In our case specifically, this deduction has been available to fans who owned season tickets in Scholarship Seating areas for football, men’s and women’s basketball, men’s hockey and volleyball.

This change to tax law would mean Scholarship Seating contributions will no longer be 80 percent tax-deductible. Should this become law, you will not be able to write-off any of your Scholarship Seating donations next year.

While tax law may change, what has not and will not change is the impact your investment makes in the lives of Gopher student-athletes. You were part of investing more than $11 million in our department last year. Those Scholarship Seating donations made up approximately 10 percent of our total operating budget, critical to providing more than $12 million in scholarship support for Gopher student-athletes.

Something else that has not changed is the people supported by your investment, some of the brightest student-athletes in the country. We have been the No. 1 public school in the nation for student-athlete academic performance each of the past four years according to the NCAA’s Public Recognition Awards for academics. We finished last year with a department-record GPA across our student-athlete population (3.24), we announced a department-record Graduation Success Rate this year (92 percent), and all of this with 700-plus students pursuing more than 80 different majors.

The new federal tax code may change how you account for your Scholarship Seating investment, but it will not change the significance of your investment to current and future Gophers.

http://www.gophersports.com/genrel/121817aaa.html

Go Gophers!!

More non-revenue sports will be cut. Obviously there will be a decrease in revenue as many will either drop to lower donation levels or drop their tickets completely. For some this tax change is like having a $500 increase in ticket price overnight.

 

[Gopher07]

I mentioned it in the other thread, but you can't necessarily take the elimination of the write-off as a loss for everyone who is buying season tickets. In reality, not everyone who purchased scholarship seating in the past was taking an itemized deduction on their returns, and fewer people in the future will take an itemized deduction because of the increases in the standard deduction and decreases in other deductions from 2018 through 2025 (if the current version of the bill passes). Everyone's situation is unique, but there will likely be less impact than it appears at face value.

How to market the change is definitely an interesting situation. If the deduction goes away, athletics almost has to just consider that "cost of the ticket" moving forward, right? And as a result, just roll it into one price structure? Unless for whatever bookkeeping reason the U has to collect those funds separately but I can't imagine a good reason for that.

 

[short ornery norwegian]

Gopher 07 is dead on. One of the major impacts of the tax bill will be that far fewer people will take itemized deductions.

I guess I would hope that people are buying season tickets because they are Gopher fans, want to see the games, and also want to help support the program. If the tax deduction is a big enough deal that it means dropping your season tickets, then that is just another indicator of the relative level of support for the program.

"I'm a Gopher fan - but only if I get a tax write-off."

Oh well, if Fleck wins, there will hopefully be more fans out there who will want to buy tickets. (and if Fleck doesn't win, it won't matter, because the Twins could be drawing larger crowds than Gopher football).

 

[pharmacygopher]

I mentioned it in the other thread, but you can't necessarily take the elimination of the write-off as a loss for everyone who is buying season tickets. In reality, not everyone who purchased scholarship seating in the past was taking an itemized deduction on their returns, and fewer people in the future will take an itemized deduction because of the increases in the standard deduction and decreases in other deductions from 2018 through 2025 (if the current version of the bill passes). Everyone's situation is unique, but there will likely be less impact than it appears at face value.

How to market the change is definitely an interesting situation. If the deduction goes away, athletics almost has to just consider that "cost of the ticket" moving forward, right? And as a result, just roll it into one price structure? Unless for whatever bookkeeping reason the U has to collect those funds separately but I can't imagine a good reason for that.

I could be 100% wrong but I thought the B1G split revenue from ticket sales but schools kept the 'donation/seat fees'

 

[hello-world]

Gopher 07 is dead on. One of the major impacts of the tax bill will be that far fewer people will take itemized deductions.

I guess I would hope that people are buying season tickets because they are Gopher fans, want to see the games, and also want to help support the program. If the tax deduction is a big enough deal that it means dropping your season tickets, then that is just another indicator of the relative level of support for the program.

"I'm a Gopher fan - but only if I get a tax write-off."

Oh well, if Fleck wins, there will hopefully be more fans out there who will want to buy tickets. (and if Fleck doesn't win, it won't matter, because the Twins could be drawing larger crowds than Gopher football).

Some of the biggest Gopher fans that I have ever met go to one game per year. Many of the ticket holders I meet go just to tailgate. If sales drop off because tickets become more expensive for some portion of the population, it doesn't say anything other than "the tickets are overpriced."

In the DQ club scholarship donations exceed $1000. If some rich dude out there doesn't want to spend $4000 donation + $1200 face-value for 4 tickets when he used to spend $800 + $1200 for face value then I can't blame him.

It doesn't impact me personally, but for some of the better off Gopher fans out there, this could lead to a 2x or more increase in cost.

 

[Gopher07]

I could be 100% wrong but I thought the B1G split revenue from ticket sales but schools kept the 'donation/seat fees'

Well I’ll be damned, looks like you’re right about the split of ticket sales (or at least, you were right in 2013): https://www.athleticbusiness.com/mo...ique-football-gate-revenue-sharing-works.html

Feels like you could flip it on its head (at least from a marketing perspective) by offering a gopher ticket price that explicitly goes to the university and then a B1G fee tacked on that accounts for the 35% per conference home game that goes into the rev share. B1G probably wouldn’t like it but at least it’d be clear who’s getting the money.

 

[Dano564]

I don't know this but maybe someone else can comment.

If you purchased as an individual and itemized, they weren't deductible.

If you are a business and buy them as an entertainment expense for clients, I would assume you can still mark it as an expense reducing your profits and thus lowering your taxable income, correct?

 

[PoockItInfor6]

Since I’m a CPA, figure I’ll throw in my 2 cents:

The number of people expected to itemize is dropping to about 7 percent (from 33 percent). However, most people will still have a bigger deduction through the standard deduction than what they used to have through itemizing. Additionally reduced rates are potentially putting thousands of extra dollars in the majority of people’s pockets. For a person that buys 4 season tickets and loses the scholarship deduction, they likely are going to come out ahead through the reduced rate and higher standard deduction. Additionally for families that previously have not been able to afford tickets, many will now have a few thousand more dollars available which may just make tickets affordable.

This should really end up having minimal impact either way on attendance.

 

[Word]

I guess now more than ever it will be a "donation".

 

[saintpaulguy]

Gopher 07 is dead on. One of the major impacts of the tax bill will be that far fewer people will take itemized deductions.

I guess I would hope that people are buying season tickets because they are Gopher fans, want to see the games, and also want to help support the program. If the tax deduction is a big enough deal that it means dropping your season tickets, then that is just another indicator of the relative level of support for the program.

"I'm a Gopher fan - but only if I get a tax write-off."

Oh well, if Fleck wins, there will hopefully be more fans out there who will want to buy tickets. (and if Fleck doesn't win, it won't matter, because the Twins could be drawing larger crowds than Gopher football).

The tax write off was part of the selling point by the university. It was never a universal benefit, only to people who itemized, who were wealthier. However you look at it, for some, it is yet another price increase to an elastic product.

 

[Dano564]

Since I’m a CPA, figure I’ll throw in my 2 cents:

The number of people expected to itemize is dropping to about 7 percent (from 33 percent). However, most people will still have a bigger deduction through the standard deduction than what they used to have through itemizing. Additionally reduced rates are potentially putting thousands of extra dollars in the majority of people’s pockets. For a person that buys 4 season tickets and loses the scholarship deduction, they likely are going to come out ahead through the reduced rate and higher standard deduction. Additionally for families that previously have not been able to afford tickets, many will now have a few thousand more dollars available which may just make tickets affordable.

This should really end up having minimal impact either way on attendance.

Not to go total tax chat, but I think I'm going to get screwed in this new tax deal.

 

[BilldGopher]

As noted in another thread hard for me to imagine the tax deductibility in itself was a decider for many households.

Certainly a marketing point for the University (and all NCAA institutions) but not a driver in the purchasing decision for most.

The bill just passed the US Senate so back to the US House tomorrow and the President's desk after that. Bye, bye deduction.

 

[mplsbadger]

Since I’m a CPA, figure I’ll throw in my 2 cents:

The number of people expected to itemize is dropping to about 7 percent (from 33 percent). However, most people will still have a bigger deduction through the standard deduction than what they used to have through itemizing. Additionally reduced rates are potentially putting thousands of extra dollars in the majority of people’s pockets. For a person that buys 4 season tickets and loses the scholarship deduction, they likely are going to come out ahead through the reduced rate and higher standard deduction. Additionally for families that previously have not been able to afford tickets, many will now have a few thousand more dollars available which may just make tickets affordable.

This should really end up having minimal impact either way on attendance.

I don’t think most people look at it that way. The answer to the question, “What is the after tax cost of my seats?” just got worse.

People generally don’t ‘allocate’ tax savings found elsewhere to unrelated items.

Said differently, the after tax cost of Gopher tickets just went up vs. the after tax cost of Viking tickets. This is irrespective of whether you are better or worse off as a taxpayer overall.

 

[Word]

I don’t think most people look at it that way. The answer to the question, “What is the after tax cost of my seats?” just got worse.

People generally don’t ‘allocate’ tax savings found elsewhere to unrelated items.

Said differently, the after tax cost of Gopher tickets just went up vs. the after tax cost of Viking tickets. This is irrespective of whether you are better or worse off as a taxpayer overall.

Agreed.

 

[PoockItInfor6]

I don’t think most people look at it that way. The answer to the question, “What is the after tax cost of my seats?” just got worse.

People generally don’t ‘allocate’ tax savings found elsewhere to unrelated items.

Said differently, the after tax cost of Gopher tickets just went up vs. the after tax cost of Viking tickets. This is irrespective of whether you are better or worse off as a taxpayer overall.

It is true that cost relative to other things like Vikings tickets went up. However with more disposable income there is a bigger pot to draw from. Therefore it will have minimal impact to overall season ticket holders. The advantage of a season ticket over single game tickets has been reduced though, so there should be some change to that pricing structure.

 

[Lakeville Goldy]

It is true that cost relative to other things like Vikings tickets went up. However with more disposable income there is a bigger pot to draw from. Therefore it will have minimal impact to overall season ticket holders. The advantage of a season ticket over single game tickets has been reduced though, so there should be some change to that pricing structure.

I guess for me, whether I actually come out ahead with the new tax deal or not, I'm still only willing to pay X for Gopher season tickets. I truly do take the total cost to be my after deduction cost of the donation + ticket price. That will increase my ticket by about $60 (give or take) next year. Will I still buy them? Not sure. Probably, or I could just donate the donation portion to the U so it's fully deductible and stay home and watch on TV and buy single game tickets for a game or two.

 

[PoockItInfor6]

You’re welcome to do with as your money as you please - My point is that for everyone in that fact pattern there is likely another person who can finally afford tickets (who never itemized deductions anyways).