I was on vacation last week, and while out, I purposely chose to ignore a lot of the news happening around the world. For example, I hear the Grammy’s happened and Kanye West did something…don’t tell me. I’m still catching up on things.
That’s why I’m just now finding out some news that, if you haven’t heard already, may be interested in as a venue manager. U.S. President Obama released his budget proposal on Monday, February 2. In it, tax breaks would be eliminated that are associated with city-funded professional sports stadiums. Here’s the proposal:
The proposal eliminates the private payments test for professional sports facilities. As a result, bonds to finance professional sports facilities would be taxable private activity bonds if more than 10 percent of the facility is used for private business use. By removing the private payment test, tax-exempt governmental bond financing of sports facilities with significant private business use by professional sports teams would be eliminated. The proposal would be effective for bonds issued after December 31, 2015.
“According to the proposed budget, as much as $542 million could be raised by 2025 through the elimination of the so-called private payment test, which allows governments to use proceeds from tax-exempt bonds for stadium projects unless more than 10 percent of the debt service comes from a private business and more 10 percent of the facility’s usage is dedicated to private interests,” Jared Dubin reported for CBSSports.com.
There’s also a proposal in the budget that would stop the deduction available to fans for donations made to get seats at college sporting events. Here’s the proposal:
Current Law
Under current law, donors who receive benefits in exchange for their contribution must reduce the value of their charitable contribution deduction by the fair market value of the benefits they receive. However, the law currently provides that donors to colleges and universities that receive in exchange for their contributions the right to purchase tickets for seating at an athletic event may deduct 80 percent of the contribution.
Reasons for Change
Some colleges and universities give exclusive or priority purchasing privileges for sports ticket sales to donors, with the priority often dependent on the size of the gift. Donors may deduct 80 percent of the contribution, even when the value of the right to purchase tickets is far in excess of 20 percent of the contributed amount.
Proposal
The proposal would deny the deduction for contributions that entitle donors to a right to purchase tickets to sporting events. The proposal would be effective for contributions made in taxable years beginning after December 31, 2015.
This change could seriously affect how U.S. universities generate revenue from sports.
“Contribution totals, and season ticket policies, vary significantly across the NCAA’s top division,” Margaret Collins and Richard Rubin reported for BloombergBusiness. “The University of Washington, which requires a donation for its premium football season tickets, reported $19.1 million in football contributions in 2013-14. Rival Washington State’s program reported $2.1 million by comparison.”
As in the past, these proposals are just that, proposals, and often do not get passed. However, it’s wise to keep an eye on the subject.
(Image: Official White House Photo by Amanda Lucidon)
