Luxury Suites: Pro v. College
It has been a while since my last post, sorry! Ohio University has been very busy with the annual Sports Administration and Facility Management Symposium as well as frequent events celebrating the achievements of the undergraduates. The following is based a little bit on my own research, but is mostly the sharing of my own opinion.
As we all suffer through this downturn in the economy, high ticket prices and corporate spending on sports has caught the attention of everyone. The $800,000 Yankees suites got the media talking about corporations that are benefiting from Federal bailout money, yet are still purchasing high priced suites and other forms of premium seating for their clients while we all support their lifestyle. In the realm of college sports, we’ll have to see if any of this discussion trickles over into next season with regard to bad P.R. for any companies identified as spending big bucks for football tickets while they cut jobs, receive Federal funds from all of us, and their clients are trying to put food on their tables.
However, there is one big difference between pro and college sports and luxury suites. In professional sports, through research, I found that over 85% of pro teams have more than 75% of their suites owned by businesses. Conversely, college sports have a much greater percentage of individual ownership (I wish I had numbers.. maybe that can be my next project). Individuals are more likely to buy suites in college venues because of the non-profit status of institutions of higher education. In fact, 80% of the contribution (after the cost of tickets and “amenities”) made to purchase the suite can be deducted annually. That is not an option for suite holders in pro sports.
*On a side note, if the college sports donation goes to scholarships, capital projects, or other purposes, 100% of the contribution is deductible.
My good friend, Dr. Ridpath, would argue (and I’m sure he will) that the tax exempt status of many college athletic departments should be eliminated because they function in principle as for profit entities. But, there is something to be said for the ability of a booster to contribute to the institution (the money does go to support the athletics program and athletics is made up of students) and retain their ability to deduct much of their contribution. If this exemption were eliminated, would existing boosters move their donations to other non-profits for the deduction and thus, support athletics less? Could intercollegiate athletics even survive if this were to happen given escalating costs and decreasing State support?
So, as we (at least I) begin the countdown to college football season, premium seating sales probably won’t see the economy impact them as much as in the professional sports ranks. Our fans are too loyal and the tax benefits are too great.
By the way…No surprise to anyone reading this, Myles Brand and the NCAA would like to keep this tax exemption for college athletics as well. His letter to the House Ways and Means Committee from 2006 when this was a really hot issue within the grand scheme of higher education can be found here.