Opinion: Tax Hit Will Filter Down to College Sports Fans

Far too many times these days, we see something that Congress has done and we have to just shake our heads. What were they thinking? The bad ideas reached a true low point in December when Congress decided to hit college and professional sports with a massive tax increase.

Every Tennessee Republican member of the House and Senate voted for the much-ballyhooed tax bill that became law on Jan. 1, and part of what they voted for was the elimination of tax deductions for ticket purchases for college and pro sports and a tax on the salaries of college coaches to be paid by the schools at which they coach.

We've all heard time and again that increased costs get passed along to the consumer. We can reasonably assume then that our so-called conservative members of the Tennessee Congressional delegation knew that they were driving up the costs of sports tickets and merchandise when they enacted these tax increases of hundreds of millions of dollars. In fact, they hit many sports fans with a double whammy by eliminating their tax deduction on top of driving up prices.

The reality is that this ill-conceived tax hike will hit colleges and universities coming and going. Under current law, 80 percent of contributions to not-for-profit entities can be deducted from income taxes. That's where ticket purchases for college sports come into play. However, this deduction covers all giving, and most college athletic programs take in far more in contributions than they do in tickets sales.

Many athletic departments now fear that donors will simply stop giving without the deduction, and what do ADs do then? As we know, they'll raise prices for tickets and merchandise, but that will cover only so much. Will programs then look to athletic equipment companies and the like to cover the shortfall? Will they have to ask the taxpayers?

But colleges and universities also get hit on the other end. The tax law enacts a 21 percent excise tax on the top five employee salaries over $1 million at every college and university. To give a few examples from Tennessee:

The University of Tennessee, Knoxville now owes excise tax on head football coach Jeremy Pruitt ($3.8 million salary; $798,000 in taxes), head men's basketball coach Rick Barnes ($2.25 million salary; $472,500 in taxes), and football offensive coordinator Tyson Helton ($1.2 million salary; $253,050 in taxes).

Vanderbilt University now owes excise tax on athletics director David Williams ($1.5 million salary; $315,000 in taxes), head football coach Derek Mason ($2.7 million salary; $567,000 in taxes), head men's basketball coach Bryce Drew ($2.7 million; $567,000 in taxes), and head baseball coach Tim Corbin ($1 million; $210,000 in taxes).

The University of Memphis now owes taxes on head football coach Mike Norvell ($2 Million; $420,000 in taxes) and head men's basketball coach Penny Hardaway ($1.5 Million; $315,000 in taxes).

Let's also not forget the economic impact of college sports. UT athletics has a $618.3 million annual economic impact on Knox County alone, according to a 2017 study released by the school's athletic department. In fact, home football games average $42 million. Hundreds of thousands of people each year come to Knoxville to see UT's 500 student athletes play in 20 different sports. These fans spend money at local hotels, restaurants, bars, stores and other businesses. Why would our elected representatives give them an incentive to stay home and watch games on television rather than coming out to see them live?

What was Congress thinking? The very same representatives and senators who are running around crowing about how they cut taxes are the very ones who voted to increase taxes on the millions of Tennesseans who love college and professional sports. To be specific, they are Reps. Diane Black, Marsha Blackburn, Scott DesJarlais, Jimmy Duncan, Chuck Fleishmann, David Kustoff and Phil Roe and Sens. Lamar Alexander and Bob Corker. Think of them every time that you pay more to see your favorite team play.

Tim Roberto is a graduate of the University of Tennessee, Knoxville and a local attorney in private practice.

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