Gopher Football Seating Fees - Obama's Budget Would Remove Deduction

[Gopher Warrior]

The White House dropped their budget off to the public today... included in it is Obama's desire to remove the 80% deduction for seating fees / required donations.

With the Gophers planning to jack up the fees considerably over the next few years, how do you think they would/will respond if Obama's wishes come to pass?

You'd hope this would be a top risk management topic they have a plan for already, but I don't know what it would be.. "oh well, people don't get a tax deduction"?... "let's lower the amounts"?... "let's delay the timeline"??

LNH: President Obama vs. the University of Minnesota

Today the White House released 2016 budget documents for the United States Government. Included within those documents was at least one measure that may have college sports fans on opposite sides of the political spectrum agreeing with each other.

Currently, seat donation fees and similar “required donations” to universities as a prerequisite to buying tickets to sporting events are generally 80% deductible as deemed charitable contributions.

President Obama’s budget would eliminate this, as he puts it, “loophole.”

 

[proudgopher]

There will be significant negotiations on the new budget proposal. Its too early to predict what will or will not survive the process.

 

[Sparlimb]

There will be significant negotiations on the new budget proposal. Its too early to predict what will or will not survive the process.

With the Republicans in solid control of the house and senate, there is no doubt the president's wishes will remain just that. Although, as far as seat licensing deductions go, I'm not sure either side of the aisle cares too much about the folks who can afford it. I've already settled into watching the games on tv and am used to a half full stadium. So what's not to like?

 

[MGGopher]

Politics aside, I've always wondered why these fees were called "donations" in the first place. They're not donations in the sense I understand the word. I know the IRS and lawyers feel differently, but in my mind donations are given out of a spirit of charity with no expected benefit or quid pro quo. These seat licenses are fees paid explicitly for the right to purchase seats in a certain area.

That said, if people have to continue to pay them, I'd rather they were tax deductible than not

 

[MinneStoa]

Politics aside, I've always wondered why these fees were called "donations" in the first place. They're not donations in the sense I understand the word. I know the IRS and lawyers feel differently, but in my mind donations are given out of a spirit of charity with no expected benefit or quid pro quo. These seat licenses are fees paid explicitly for the right to purchase seats in a certain area.

That said, if people have to continue to pay them, I'd rather they were tax deductible than not

Great post, and agreed on pretty much all fronts. I've wondered the exact same for years.

Obviously I'd like for them to be tax-deductible, but it will not affect my decision to buy season tickets in the slightest going forward.

 

[alchemy2u]

Too many of these things are tax deducible. It is a scam for schools to shift the expenses into the license fee.


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[Ski U Master]

Politics aside, I've always wondered why these fees were called "donations" in the first place. They're not donations in the sense I understand the word. I know the IRS and lawyers feel differently, but in my mind donations are given out of a spirit of charity with no expected benefit or quid pro quo. These seat licenses are fees paid explicitly for the right to purchase seats in a certain area.

That said, if people have to continue to pay them, I'd rather they were tax deductible than not

Agree. They call them donations so that the 80% deduction helps soften the blow to the customer, but it's not really a charitable donation in the spirit of charity.

 

[dlw4gophers]

Depends how you look at it. Before seat license fee's at the U, we always donated $1,000-$1,500 a year to the Gopher fund. Since we now pay (last years rates and going up ) $1,600 a year in license fee, we no longer make that donation. The U really isn't getting any more from us, it is just given a different label.

 

[Gopher Warrior]

Interesting responses.

Quick math... in the 28% fed tax bracket...the cost of 4 tickets in Zone 3 in 2017 would rise by $448 due to the proposed change in tax law... 4 in Zone 2 would take a hit of $672 per year.

Not insignificant... but then again the donation for 4 tix in Zone 3 are jumping 500% over the next couple years v's 2014... tax change would only push the increase to 644% (28% bracket)

 

[bemidjigopher]

This probably won't pass congress but it will be interesting to see if the pres and the republicans can come together on something

 

[bleedsmaroonandgold]

Politics aside, I've always wondered why these fees were called "donations" in the first place. They're not donations in the sense I understand the word. I know the IRS and lawyers feel differently, but in my mind donations are given out of a spirit of charity with no expected benefit or quid pro quo. These seat licenses are fees paid explicitly for the right to purchase seats in a certain area.

That said, if people have to continue to pay them, I'd rather they were tax deductible than not

I think the basic rationale is that the "donation" is earmarked towards educational expenses which would be tax deductible if you donated separately to them, so it differs from a pro seat where the money is revenue of a for-profit team. The idea is that the school can make it tax deductible as long as all of the money that is tax deductible goes towards paying some kind of academic expense for the university or an amateur athlete.

I'm not passing judgment on the wisdom or fairness of the system, but I believe that is it.

 

[Ski U Master]

Depends how you look at it. Before seat license fee's at the U, we always donated $1,000-$1,500 a year to the Gopher fund. Since we now pay (last years rates and going up ) $1,600 a year in license fee, we no longer make that donation. The U really isn't getting any more from us, it is just given a different label.

That 1,000-1,500 was donated without expectation of any kind of benefit or compensation to you though, now it is to acquire better seats that cannot be had without the donation. It has gone from something that was 100% voluntary to a semi-required payment.

To me that is a different kind of giving and I can see why there is a thought that it shouldn't be granted the same privileges to the donor.

 

[NNerland]

Without getting overly political in my statement - can a supporter of this president's policies explain to me how a "fee" that goes to pay for scholarships for the Women's Rowing Team, Men and Women's Track and Field be a "Rich Person's" tax loophole. With a stadium going to 85% seats with "fees" for "scholarships" how is this a rich person's problem. The lack of insight and class warfare with a popular tag line is crazy. It won't go anywhere, but makes ZERO sense to me other than to have a popular tagline that those sitting on the 50 or in our case in the stadium are rich who don't deserve credit for their support.

I will agree 100% that these fees should be unnecessary when the Athletic Departments take in record revenues and the administrations and staff's have a bubble to burst raise in costs versus the costs of the actual student athletes. These fees are only a problem because for these greedy entities and arms race leaders can't stop them and it is out of control. If they aren't careful they are all going to ruin a good thing. We "common" folk are along for the ride these days and we ALL pay for it in the end.

 

[stocker08]

Don't click on this links. lnh is nothing but garbage. GW still thinks that free throws don't matter!!! LOL!!!

 

[Ron Johnson Super Fan]

I think the basic rationale is that the "donation" is earmarked towards educational expenses which would be tax deductible if you donated separately to them, so it differs from a pro seat where the money is revenue of a for-profit team. The idea is that the school can make it tax deductible as long as all of the money that is tax deductible goes towards paying some kind of academic expense for the university or an amateur athlete.

I'm not passing judgment on the wisdom or fairness of the system, but I believe that is it.

That would be my best guess at the logic behind it. It would seem to me that where the "donation" ends up going should be the determining factor. If the donation goes to a scholarship fund that helps to get more student athletes through school, than I have no problem with it being tax deductible. If the donations go straight to paying Jim Harbaugh $47 million dollar salary, than trying to claim that it should be deductible would seem to be more difficult.

Personally I hope this gets nixed. Deciding to pay the top level donation for hockey tickets was definitely made easier by being allowed to make the deduction.

 

[mplsbadger]

The reason only a portion is tax deductible is precisely because you are getting something in return. The difference between the price you pay for the seats, donation included, less the fair market value of the seats, is what should be deductible. If the president wishes to remove this, he should also address $500 / plate charity dinners where $450 is deductible.

For those who say what it pays for should determine deductibility, that's not good enough. If it were, you'd be able to deduct raffle tickets and silent auction bids, which you cannot, because you received something in return.

 

[saintpaulguy]

The reason only a portion is tax deductible is precisely because you are getting something in return. The difference between the price you pay for the seats, donation included, less the fair market value of the seats, is what should be deductible. If the president wishes to remove this, he should also address $500 / plate charity dinners where $450 is deductible.

For those who say what it pays for should determine deductibility, that's not good enough. If it were, you'd be able to deduct raffle tickets and silent auction bids, which you cannot, because you received something in return.

The fair market value of the seats is now face value + required donation less tax deduction. If this is not true, you have to really believe the market is absolutely in elastic due to love four the U. There is no way that the seat fees are not incorporated into the marginal propensity to purchase tickets.

 

[Ron Johnson Super Fan]

The reason only a portion is tax deductible is precisely because you are getting something in return. The difference between the price you pay for the seats, donation included, less the fair market value of the seats, is what should be deductible. If the president wishes to remove this, he should also address $500 / plate charity dinners where $450 is deductible.

For those who say what it pays for should determine deductibility, that's not good enough. If it were, you'd be able to deduct raffle tickets and silent auction bids, which you cannot, because you received something in return.

I may be completely wrong about this but my understanding is that if your silent auction bid exceeds fair market value of the item received you can deduct the amount you paid over fair market value. Any tax experts out know if this is correct?

 

[IDFM]

I used to work in politics and I have quite a few friends on both sides of the aisle, so I tossed this one out to them and let them feed on it. As of today, nobody is taking it very serious and it will be taken out in committee in both houses. Even the Congressional Democrats believe that the President is going to use no political capital to keep it in the budget. I figured this was the case; but wanted to run it up the flag pole just to make sure I was not missing anything that is being talked about internally. Now with anything in politics, the rules could change tomorrow and this could change; but honestly I believe this provision will not pass if they even pass a budget.

 

[Gopher Warrior]

I may be completely wrong about this but my understanding is that if your silent auction bid exceeds fair market value of the item received you can deduct the amount you paid over fair market value. Any tax experts out know if this is correct?

In the case of a qualified charity's silent auction... this is true. The IRS does require that you be able to show that you knew the amount bid/paid was in excess of the value of the item "won"

 

[dlw4gophers]

Isn't one of the reasons the license fee is so popular with schools, that license fee's fees stay with the school. Ticket money is shared with the opponent? I am not sure how this works.

 

[Ski U Mah Gopher]

Seat fees are a way to disguise the price of a ticket to make part of the ticket price deductible for those who are not owners of a trade or business. By moving some of the cost as a donation, it moves that portion from a 50% Schedule C (or form 1065, 1120, or 1120S) deduction into a 80% Schedule A deduction.

 

[mplsbadger]

The fair market value of the seats is now face value + required donation less tax deduction. If this is not true, you have to really believe the market is absolutely in elastic due to love four the U. There is no way that the seat fees are not incorporated into the marginal propensity to purchase tickets.

Fair point. The spot market the week before the game is what I'm considering "fair market". The idea being that the market is pretty open with stubhub and Craigslist, and that a season ticket holder could simply buy seats every week instead of up front. This leaves out the benefit of a guaranteed seat, same location, predictable price, reserved parking, etc. The true value is probably somewhere between the spot market price and the "all-in-less-deduction" price.

 

[saintpaulguy]

Fair point. The spot market the week before the game is what I'm considering "fair market". The idea being that the market is pretty open with stubhub and Craigslist, and that a season ticket holder could simply buy seats every week instead of up front. This leaves out the benefit of a guaranteed seat, same location, predictable price, reserved parking, etc. The true value is probably somewhere between the spot market price and the "all-in-less-deduction" price.

Imagine a situation where the laws were what they were in the 1980s--when tickets were mandated to be sold at or below face value. There certainly was a robust black market back then, but the overall secondary market was much smaller. The seat licenses would require all tickets to be sold at a loss.