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.”