LSU officials are worried the proposed House GOP tax reform bill would be “disastrous” for college athletics, with one key provision that would hit a more than $50 million-per-year revenue stream at the university.
At issue in the Tax Cuts and Jobs Act is one obscure but significant clause that gets rid of a tax break for people who donate to colleges in exchange for seating rights.
LSU, like many other schools throughout the country, requires a donation for people to obtain most season tickets. Currently, people who make those donations can write off 80% of the gift on their taxes, something LSU officials say is a vital incentive for fans.
“It’s impossible to tell how people would react but potentially it really could be disastrous to intercollegiate athletics in the form we know it now,” LSU Athletic Director Joe Alleva says. “I don’t have any way of making that money up.”
LSU athletics, largely on the coattails of the powerhouse football program, has been able to remain insulated from controversy surrounding cuts to higher education in recent years, mainly because it is profitable. In fact, university officials often point out that LSU athletics gave nearly $50 million to academics over the past five years.
Although the House bill is making its way through the process, the Senate could unveil its version of a tax plan as early as today.
But Alleva says that even if the tax plan doesn’t pass in its current form—and leaders at the school have been conveying their concern to Louisiana’s delegation—athletics is on a trajectory that will see those contributions to the school vanish in the coming years. With the tax bill passing, it could happen much more quickly.
It’s unclear exactly what the impact the tax bill would have, says Philip Hackney, a tax policy expert at the LSU Law School, because it all depends on how fans and season ticket holders would react.
“That would have an impact,” Hackney says. “The reality of it is it would be more expensive for people to contribute to (universities) before they get season tickets.”
More broadly, organizations benefitting from charitable donations—and that includes universities—should be concerned about the bill, Hackney says. Aside from specific deductions and carve-outs, the bill reduces taxes on many wealthy people, which makes charitable donations by those people worth less.
Robert Munson, senior associate athletics director at LSU, says there are few options for athletics to find new revenue or cut costs if the school loses out on a chunk of that $50 million to $60 million per year in donations. Athletics services could potentially have to look to student fees or public dollars, at a time of great uncertainty for college funding.
“The bottom line is if there are any questions about whether or not we could absorb something of this nature,” Munson says, “we could not.”