Donors to college athletic programs will no longer be able to deduct money paid for seating rights from their federal taxes under terms of the compromise tax bill that emerged from the House and Senate on Friday.
The Tax Cuts and Jobs Act is expected to be approved by Republican majorities in both the Senate and House next week and signed into law by President Donald Trump.
Presently, donors can deduct up to 80 percent of donations made to athletic departments for the right to purchase tickets. Most schools require a donation for the right to purchase season tickets.
Eliminating the deduction is expected to bring in $200 million per year, according to House Ways and Means Committee estimates released Friday evening.
In order to buy two season tickets for the Duke men’s basketball team, donors must give $8,000 to the Iron Dukes, the fundraising arm for Duke athletics.
The Rams Club, which supports UNC athletics, requires a $6,000 donation in order to purchase two season tickets for men’s basketball.
To reach the top level of the Wolfpack Club, N.C. State’s booster organization, requires a $30,000 donation.
Schools often use the deduction as a selling point for boosters.
The change would take effect for any donations made after Dec. 31. At least one school is trying to beat the clock.
Florida State sent a letter to boosters informing them of the proposed changes and offering to take donations for future seasons before the end of the year, according to a post by ESPN’s Darren Rovell.
Sen. Lindsey Graham, a South Carolina Republican, had an amendment to keep the deduction but it did not get included in the Senate’s version of the bill.
“You mess with college football, you’re going to get creamed,” said Graham, whose state is home to defending national champion and current No. 1 team Clemson.
Not enough of his fellow lawmakers felt that way as the removal of the deduction was in the House, Senate and compromise versions of the tax legislation.
Lead1, an association of about 130 athletic directors at college football’s highest level, said the change would harm Olympic or non-revenue sports and athletes at universities, which count on football and men’s basketball to fund other programs.
“Unfortunately the area that will get cut here are the non-revenue teams,” Tom McMillen, Lead1’s president and CEO, said last month.
Colleges would also be charged a 21-percent excise tax on employee compensation over $1 million for any of their five highest-paid employees, a change that is expected to generate $1.7 billion over the next 10 years. At least 78 college football head coaches made at least $1 million in 2017, according to USA Today’s annual survey.
The tax would also be levied on “parachute payments,” which includes buyouts to fired coaches. More than 100 schools would owe their coach a buyout of more than $1 million if he was fired, according to USA Today.
The compromise legislation does not appear to include a tax on royalties generated by nonprofits from the sale of merchandise using their names or logos. The Senate version of the bill included the new tax, which would hit college athletic departments. The compromise version does not include the same language.
Brian Murphy: 202-383-6089, @MurphinDC