Archive for Saturday, March 16, 2013

Simons’ Saturday Column: Tax breaks for college athletic ‘charity’ spur scrutiny

March 16, 2013


Earlier this week, Fox News had a story that should be of great interest to fans of Kansas University athletic programs and those who are generous in their fiscal contributions to the KU Endowment Association.

The story told of a $250 million renovation of the football stadium at the University of Washington in Seattle. According to the Fox News report, the current nationwide race for the best football stadiums is the “rage” among universities and their athletics departments. However, “some might be surprised to learn that taxpayers are footing a part of the bill.”

The University of Washington athletic director said, “Our fans are passionate and they love this place, but the tax benefit is huge.”

He added, he “isn’t sure if faithful fans would have donated toward the renovation if they were not also receiving a tax break.” The Washington renovation alone is costing the U.S. Treasury $154 million over 30 years. But even that’s a small sum when you consider U.S. colleges have spent nearly $17 billion on stadium upgrades over the last decade.

The story continued “state legislatures are refusing to fund the building boom, so universities are going to wealthy alums who write big checks — but then, in return, get a tax write-off. Their donations are considered charity, exactly the same as money given to a soup kitchen. Critics say the tax code has too many giveaways.”

(It might be noted, these “charitable” gifts also help assure donors the best seat locations in the stadiums and fieldhouses.)

The University of Washington situation should be of interest to Jayhawk fans because Kansas Athletics is about to award contracts for a massive renovation/remodeling of KU’s Memorial Stadium. No dollar figures have been released, but it will be sizable, costing many millions, and include removing the track, lowering the football field (making it possible to add seven to 12 additional rows of seats), changing the north end of the stadium to have a large section of seating at a right angle to the field rather than the current “bowl” configuration and then adding two angled seating sections connecting the east and west sides of the stadium to the north end zone seats,

Also, a renewed attempt will be made to finance a new “touchdown club” atop the east side of the stadium, plus additional suites. There may be a plaza or meeting/gathering area joining the suites on the west side of the stadium and the new suites on the east side.

The stadium project is a big one with athletic department officials and university administrators fanning across the country to identify and seek individuals who could write sizable checks or make generous pledges to help pay for the remodeling.

The Fox story reports, “According to the Office of Management and Budget, charity write-offs cost the U.S. Treasury more than $36 billion in 2011. Ten percent of that was given to universities.”

For years, KU officials have pointed out that the level of private giving to the university has made a significant difference in helping elevate KU from an average state-aided university to one of excellence. KU alumni and friends have a record of being generous, but possible abuses could well hasten efforts by some in Congress to take a more serious look at the definition of “charity.”

Montana Sen. Max Baucus, chairman of the Finance Committee, is scheduled to hold more hearings this year in hope of reforming the tax code. According to the Fox story, “He wants to encourage charity aimed at those who are truly in need.”

Kansas State University officials are proud to report approximately $100 million currently is being spent on new or remodeled facilities for their athletic program. It’s doubtful that the state is paying for these projects. Rather, many loyal Wildcat fans will be making large “charitable” write-offs — just as will be the case at KU’s Memorial Stadium effort.

(How many of the millions of dollars being spent at the Rock Chalk Park — for land, buildings and facilities such as the track, soccer field and softball diamond and even the basketball courts — will qualify as charitable contributions and thereby serve as a tax write-off?)

The arms race among NCAA division I schools for more handsome, attractive facilities to help lure top athletes and pay millions-dollar coaches’ salaries is huge, but what will happen if the nation’s tax laws are changed to eliminate such gifts as tax write-offs? Also, how would this affect private giving for academic programs at a university?

Many are asking how long the athletic arms race will continue. College curators, presidents and chancellors, athletic directors and interested and concerned private citizens all claim to be concerned, but have lacked the courage or commitment to bring some common sense to the runaway situation.

Maybe a change in the tax law could be the answer.

Such actions related to the tax code could result in severe cutbacks in the millions or billions of dollars now being spent on college sports. However, it could have a damaging impact on fiscal gifts to entities such as the KU Endowment Association. This being the case, could college sports be classified as a separate category or activity not eligible for tax write-offs while gifts to an endowment association for programs tied directly to teaching and research remain eligible for tax deductions?

The airing of the University of Washington football stadium story could prove to be a milestone relative to the federal tax code as well as private financial support for education and/or so-called “charity.”


WilburM 5 years, 1 month ago

Yes, yes, yes. Thi is essentially a pro sports franchise sucking up tax deductible contributions, with benefits to boot. Contributions for academics, yes, for stadiums, no!

just_another_bozo_on_this_bus 5 years, 1 month ago

Not often I agree with Dolph-- yes, it's time to remove the tax deduction for the vanity-driven contributions to athletics, which have absolutely nothing to do with the academic purposes of a university.

But if you want a reliable source about the corruption of big-time sports, try Dave Zirin.

Fox makes way too much money from big-time sports to be worth quoting about them.

1julie1 5 years, 1 month ago

Can we assume, then, that Mr. Simons has never taken any tax deductions for contributions to KU athletics?

weeslicket 5 years, 1 month ago

  1. dolph begins with references to fox entertainment. always a questionable strategy.

  2. dolph then apparently counters his previous arguments that lowering the tax burdens of the wealthy job creators through charitable giving is a good thing.

  3. question: is dolph not getting his fair share of the rock chalk pie?

Ryan Gerstner 5 years, 1 month ago

What Mr. Simons doesn't mention is athletics donations aren't the same as donating to the academic side of the university. Only 80% of athletics donations are deductible. So if you donate $1000, if it's athletics, you write $800 on your tax return. If it's to the academic side, you write $1000 on your tax return. If you're in the 35% tax bracket, you save $280 on your tax by giving to athletics. If you give to the School of Business, you save $350 in taxes (in this example).

And KU fans had better hope the tax law doesn't change any time soon because it'll severely impact a very badly needed renovation and KU would have to explore all options including bonding from the City of Lawrence or moving the stadium to a more generous municipality. Football is the most popular sport in the country and KU's future in one of the big 4 conferences depends on competing at a higher level in football. A renovated stadium is vital to KU's effort to compete at the highest levels of college sports.

just_another_bozo_on_this_bus 5 years, 1 month ago

Reducing or eliminating the tax deduction would affect all athletic departments, not just KU's, as you seem to believe.

elliottaw 5 years, 1 month ago

dump all tax credits for giving to collegiate sports, it is a hot bed of corruption

Hudson Luce 5 years, 1 month ago

KU's mission is education and research, not entertainment.

JayhawkFan1985 5 years, 1 month ago

Government of the rich, by the rich and for the rich. If contributors get preferential seating, than its a something for something situation. How could that be tax deductible? It ain't charity...

voevoda 5 years, 1 month ago

While I would rather that donors channel their money towards academic programs or helping students afford an education, I don't have a problem with donations to collegiate athletic programs being tax deductable. That money ultimately benefits the institution, the public, and the community, and any personal benefit for the donor is minimal. If we as a country want to encourage donations to academic programs or charities that directly help the needy, we can alter the provisions on tax deductions, so that donations to non-athletic non-profit organizations are credit at 3 or 4 times the rate of donations to athletic non-profit organizations.

elliottaw 5 years, 1 month ago

how do you figure that they benefit from that? University lose money by the millions on football programs every year with only maybe a dozen schools finishing in the black.

Steve Jacob 5 years, 1 month ago

After the housing tax deductions go away, charities will be next. Can't raise taxes, can't cut government spending. So taking away all deductions and taxing our insurance benefits are also coming.

Richard Heckler 5 years, 1 month ago

According to David Cay Johnston taxpayers donate billions annually to corporate sports activities which helps pay those millions of $$$$$ in salaries.

Then taxpayers get duped into providing large stadiums. With no guarantee a team will stay forever. Why should taxpayers pay in the first place?

Lawrence taxpayers are getting duped on the westside field house.

The super duper stadiums don't help win games nor are they necessary.

It is my belief these large donations should fund fund public education and higher education with no strings attached.

Richard Heckler 5 years, 1 month ago

Don't depend on Max Baucus for any reform........ without large loopholes.

Stop_the_Madness 5 years, 1 month ago

A reasonable change to the tax law might be to only allow a partial deduction (let's say 50% of the amount donated) for athletic dept donations since you are receiving perks. My company does not match donations to the Williams Fund at 100%. Just an idea.

TheRaptor 5 years, 1 month ago

I don't see a problem with the contributions being tax deductible. These projects create many jobs and for the government they're working with $0.35 dollars. Win win arrangement.

jayhawklawrence 5 years, 1 month ago

I thought this column had a strange quality because of the number of times Dolph references Fox news as if they are a reputable news source. In fact, they are approaching low standards of integrity on par with The National Inquirer. You know the paper that keeps us informed of the latest alien abductions.

So with a little research I learned that Fox News is in serious trouble. The lowest Nielson ratings in 12 years.

We are learning more about the wealthy conservative elite through revelations regarding Mitt Romney and learning more how these people have banded together against a common enemy, average Americans.

kcarroll04 5 years, 1 month ago

Problem: Educational values have been at odds with athletic values for well over 100 years in this country. Educational values have been lowered as a result of athletics and the influence it has directed towards the leaders in educational institutions.

Solution: Separate education and athletics! Convert athletic programs to not-for-profit entities in the communities they serve. Write not-for-profit by-laws to work out the details of participant eligibility including academic pursuits among much more. Adopt a community 2 board structure as such: Board of Directors to vote on strategic agenda only (think Executive Branch), Officer Board for operational (i.e. “day-to-day” management) agenda only (think Legislative Branch). Now, if you’re wondering about Judicial Branch, think IRS scrutiny! The IRS is very clear regarding violations and punishment for the leaders in not-for-profits.

Benefits and Advantages: Educational leaders can better concentrate on educational values, which are a MUCH MORE important value to society (indeed any community) at large vs athletics. If each not-for-profit athletic program cannot get the support from a community to survive with adequate funding, leadership and compliance then the program, or a certain sport, will fail. In other words, the community or “market”, if you will, will decide what it values enough to sustain. The way it should be! And again, the educational leaders are left to concentrate on educational values, the unquestionable benefit to our society and individual communities.

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