Chris Bahn and Robbie Niswanger wrote in the Arkansas Democrat-Gazette this morning about the increasing revenue realized for University of Arkansas athletics from rentals of luxury skyboxes in Razorback Stadium, as well as in basketball and baseball venues. The take is more than $5 million in a year.
The article didn’t delve into a subject of interest to me — whether any of that revenue flows first through the nominally private Razorback Foundation before it flows into athletic department uses. So-called priority seating elsewhere in the stadium requires contributions to the Razorback Foundation. It’s a strict dollars-for-improvement system. A $20,000 contribution gets you 18 tickets in any section outside the suites. If you seek tickets from the UA website and are interested in suite seating, it says to contact the Razorback Foundation.
This is an old hobby horse of mine. The Foundation operates in virtual secrecy, though it benefits from and controls seating in publicly owned venues operated by a public institution. Even today in the D-G article, the UA claimed a competitive “disadvantage” in refusing to reveal who leases suites at the baseball stadium, though not the football and basketball contributors. Strange business that a public institution says it’s entitled to secrecy about cultivating big spenders on baseball tickets. The Foundation scheme perverts the Freedom of Information Act in larger ways, too, with its shield on contracts with coaches and a former coach, use of a private jet and other matters.
But even that’s not my real point. The point is this: Priority seating at college football games is subsidized by taxpayers, including the poorest.
Here’s an instructive article I just read last week in the Chronicle of Philanthropy: “How the Billion-Dollar College Football Industry Acts Like a Charity.”
It details something I’ve long known. Preferred college football seating generates more than a half-billion dollars a year for the schools sports teams. Here’s the rub, drawn from a new book, “Billion-dollar Ball” by Gilbert Gaul:
The Internal Revenue Service in 1984 issued regulations that seat donations did not qualify for a tax deduction because fans received something material in return. Congress, however, intervened: Led by football-loving lawmakers in Texas and Louisiana, it passed a law in 1988 making 80 percent of seat donations deductible. When Mr. Gaul questioned the propriety of such deductions, Representative J.J. Pickle of Texas responded, “Aw, Mr. Gaul, it’s just football is all it is. We can’t go messin’ with football, can we?”
At some universities, donors can pay for scholarships and get a deduction. “It is now possible,” Mr. Gaul writes, “to endow a linebacker or quarterback the same way you might endow a chair for a Nobel Prize-winning economist or a Pulitzer Prize winner.”
At the University of Georgia in 2012, tickets for two-thirds of its 92,000 stadium seats required a donation. “We’re not in the business of curing cancer,” an athletics-department official told Mr. Gaul. “But we are a charitable organization.”
Thus the 501C3 (tax-exempt) Razorback Foundation. It is also not in the business of curing cancer. But it does provide a way for the Waltons, Tysons, Stephenses, Dillards and so on to defray some of the cost of the good seats. In the high-income brackets, a tax deduction is worth a savings of about a third of the cost of the seating beyond the relatively small face-value charge. That’s money that would otherwise flow to the general public benefit, if college football didn’t claim it first.