New Tax Law Creates Much Uncertainty for Sports Industry

 

The new tax reform legislation is creating uncertainty for both professional teams and collegiate athletic departments. For colleges, the concerns center first on donations to their athletic teams’ development clubs, the 80% write-off having been eliminated by the new law.

As a result, it has been speculated that annual giving could decrease by 20%-30%, prompting some athletic directors to say they would have to cut some non-revenue generating programs if donations slowed.

The new tax law also affects a 21% excise tax on compensation above $1 million for a university's five highest-paid employees, a group that includes football and basketball coaches at many big schools.

Applicable to both colleges and pro teams, businesses can still deduct 50% of business meals, but no longer can deduct 50% of entertainment or recreation activities, including rounds of golf and luxury suites in a sports venue.

As an industry, we’re all still trying to figure out what the lasting effects of tax reform are and will be. Look for loopholes and realities to emerge as the year progresses.

 

Source
Crain's Cleveland Business
Source URL
http://www.crainscleveland.com/article/20180206/blogs06/151026/tax-law-could-hit-home-major-way-collegiate-athletic-departments