Fifteen Eighty Four

These gifts don’t get mentioned much when we hear talk of the excess costs of college sports, but they play a surprisingly large role in the college athletics business, and at considerable cost to the taxpayer.

Every university with a sizable sports program has a booster club, whose main purpose is to collect tax-deductible donations to support its athletic department. Examples include Stanford’s Buck/Cardinal Club, Florida’s Gator Boosters and Ohio State’s Buckeye Club .

You might think that the donations collected by such booster clubs aren’t a very big share of the income earned by college powerhouses. Not when the top college stadiums routinely seat 90,000 or more, or when conferences are inking multimillion-dollar TV contracts.

But donations account for a lot of revenue. In fact, for some of the nation’s top college sports programs, they are the largest source of income, bigger than ticket sales, advertising and royalties, and bigger even than distributions from conferences and the NCAA for TV and participation in bowls and tournaments. In 2008, for example, contributions were 40 percent of all athletic revenue at Florida and 45 percent at the University of Kansas.

Unlike the budgets of less successful college programs, which must rely on revenue-sharing or student fees to pay the bills, the nation’s top intercollegiate programs increasingly look to tax-deductible donations to cover their escalating costs.

[pullquote]But donations account for a lot of revenue. In fact, for some of the nation’s top college sports programs, they are the largest source of income, bigger than ticket sales, advertising and royalties, and bigger even than distributions from conferences and the NCAA for TV and participation in bowls and tournaments.[/pullquote]

Why are boosters so generous? One reason is simply that many college boosters have the financial resources to make sizable gifts. Among the affluent Americans whose fortunes have mostly ballooned over the past three decades are many ardent college sports fans.

Another reason is that these fans want to witness the excitement firsthand. And top college athletic departments have figured out how to convert excess demand for season tickets and good seats into donations. Say you want to buy a couple of season tickets to watch NCAA champion Duke in its tiny, iconic basketball arena. Duke will sell them to you, for their face value of about $1,000, but only if you first make a contribution of at least $7,000 to its booster organization. Because this donation allows you to buy tickets, the IRS will let you deduct only 80 percent of it for tax purposes.

These “donations” are made possible when frenzied demand meets fixed supply. While this profitable coincidence applies to basketball for the likes of Duke and the University of North Carolina, it is football that drives contributions at schools such as Ohio State and Florida.

Read the rest at the the Washington Post >>