While Congress sets its focus on overhauling the nation's tax code, one provision of plans introduced in both the U.S. House and Senate could have unexpected and far-reaching implications for LSU fans.
LSU officials say that potentially as much as $50 million for the university's heralded athletic programs could be lost if Congress eliminates a little-known tax deduction that helps bring in millions to pay for its highly-ranked football, baseball, basketball and gymnastics programs, among others.
"It could be disastrous — for not just us, but every athletic department in the country," LSU athletic director Joe Alleva said.
Currently, many fans are required to donate hundreds or thousands of dollars to the university for the ability to purchase tickets to LSU games. The process is similar at schools with major athletic programs across the country. But the donation comes with a benefit: If they submit itemized income tax filings, they can claim up to 80 percent of the "donation" as a deduction because it's considered a charitable contribution.
No government entity has ever tracked just how much the deduction has actually cost the federal government in the three decades that is has been on the books. But the Joint Committee on Taxation has estimated that eliminating the provision would generate $1.9 billion in federal revenue over 10 years, putting the current figure at about $190 million a year.
About 45,000 football season tickets require a donation to LSU’s Tradition Fund for the right to purchase those tickets. The amount is on top of the ticket face value that fans pay.
Additional tickets on the suite and club levels require contributions made to the Tiger Athletic Foundation.
Donation levels range from roughly $200 to $3,000 each year per seat in Tiger Stadium, according to the university.
LSU Athletics and TAF records indicate that there are about 16,000 individual account holders, most of whom have multiple seats and some with multiple seats in multiple sports.
Can't see video below? Click here.
Every January, the university mails out invoices to each of the donors — documentation as they prepare to file their income taxes.
LSU officials say that the university brings in up to $50 million each year through the ticket-linked donations. It's impossible to know how many might scale back their giving if the deduction is eliminated, but they fear the worst.
"Frankly, even a small percentage of them, would represent a multi-million dollar hit to our organization," assistant athletic director Robert Munson said. "Even just 20 percent of that – $10 (million) to $12 million a year – is not something we can absorb. Not anywhere close."
LSU prides itself on having one of the very rare self-sustaining athletic programs. The athletic side "donates" a portion of its revenue to academics each year.
Officials say they worry that set-up could be threatened if the tax deduction is eliminated.
Further, LSU and TAF rely on bonds to finance major construction projects, including athletic facility upgrades that are based around the assumption that they will have money coming in that fans know is tax deducible. It's unclear what impact the loss of the deduction could mean for those bonds or their bond ratings in general, but Alleva said he is concerned there could be "serious implications" for them.
There are also scholarships for student athletes that could be threatened, according to officials.
The National Association of Collegiate Directors of Athletics declined to comment on the proposal, citing the varying circumstances of member schools.
A spokesman for University of Texas athletics said that, like LSU, the university is keeping a close eye on the issue.
“In general, the university benefits from incentives that encourage philanthropic support because of its positive impact on our students and faculty," the university said in a written statement.
Other schools contacted by The Advocate didn't respond to requests for comment.
The language eliminating the deduction appears in both a House version of the proposed tax overhaul that passed through the Ways & Means Committee this week and a Senate version that has been introduced.
To become law, either version would still face several steps and could be amended along the way.
Birth of a tax deduction
Though it's used by schools across the country with major athletic programs, the law that makes the ticket-tied donation deduction possible was born in Tiger Stadium, delivered by an eminent lobbyist who is a die-hard LSU fan and season-ticket holder who never attended the university.
Ted L. Jones, 83, has served as an adviser to Louisiana governors, congressmen, U.S. senators and presidential campaigns, and his quick mind has given him a bit of a reputation as being a go-to in Louisiana for lucrative arguments, as has been the case for the ticket-linked tax deduction. Jones, who helped spearhead the construction of the Superdome in New Orleans, said he was approached by former athletic directors Paul Dietzl and Bob Brodhead for help with the tax deduction issue.
LSU for years had tested the idea of arguing that donations made to its athletic programs should be considered charitable because of the link to education.
In 1980, Jones sought out a private ruling from the IRS to ensure that LSU could give donors the assurance that deductions were available. When that was threatened, he sought help from then-U.S. Sen. Russell Long to put the tax provision into law into 1986. When it was first written, it applied only to Louisiana and the University of Texas (Long and Jones had gotten Congressman J.J. Pickle, who represented Austin, Texas on board). It was written to be limited to universities that were mandated by state constitutions in 1876, established by state legislatures in March 1881 and located in state capitals, among other provisions that excluded every school at the time except LSU and UT.
Jones says that he and Long, now deceased, brought Pickle, also deceased, on board so that it would not be Louisiana-only legislation. Some give credit to Texas for also spearheading the legislation, though Jones argues that the university wasn't behind it and that it was masterminded by LSU supporters.
Other schools complained at the special tax-deduction privilege, and in 1988 it was extended to all major college athletic programs, setting off an arms race that many argue has infused college athletics with funding that has taken it to new heights.
"I knew what it would do if given the opportunity," Jones said. "I don't have any qualms about what I did."
"I just happened to be the tax lawyer in town who knew how to do things," he added.
Jones said he wouldn't take any of it back and he hopes the tax benefit isn't eliminated.
"I did what I thought was in the best interest of the state," Jones said. "I was happy to do it for LSU."
He argues that the deduction, and the arms race that it set off among college athletics, has helped finance Title IX, the federal law that requires equal opportunity in athletics for women.
"It is what financed the Title XI sports," Jones said. "We now have every major sport covered for women."
"It's a shame when the country says 'You we are going to take that from you, you don't need it,'" Jones said. "It's not like the money is being squandered."
Jones, borrowing a phrase from his long-time friend Long, likens the deduction to the three-martini lunch in the business community.
"It increases the yield," he said.
Congress failed to repeal the Affordable Care Act despite muscular efforts by U.S. Sen. Bill Cassidy and many other Republicans, but President…
Critics question deduction; Congressional delegation demurs
This isn't the first time that the ticket-tied tax deduction has found itself in the crosshairs.
President Barack Obama called for its elimination, and his Republican rival Mitt Romney in 2012 also floated its elimination in his tax policy proposals.
When talk of eliminating the deduction has reared its head in the past, Jones has largely brushed it aside.
"I'm not the president, but I wouldn't want to take on all the athletic directors in the country," he said with a chuckle.
Alleva said he thinks that the elimination would be immensely unpopular.
"Every time it's come up in the past, it's been defeated, because of the drastic impact it could have on intercollegiate athletics," Alleva said.
It's a big concern for LSU, but as of yet, no one from Louisiana's congressional delegation is raising an issue over it.
U.S. Sens. John Kennedy, R-Madisonville, and Bill Cassidy, R-Baton Rouge, didn't respond to requests for comment.
U.S. House Majority Whip Steve Scalise, a Jefferson Republican who is the third in the Republican House leadership order and most powerful member of the delegation from Louisiana, has been a champion of the over-arching tax proposal.
Scalise, a graduate of LSU, has been getting around the U.S. Capitol in an LSU-decorated scooter since he returned in September after recovery from critical injuries he received during a mass shooting in the summer.
With a reputation as a die-hard Tigers fan, Scalise made his first post-shooting public appearance in Louisiana at LSU's homecoming football game. He also popped up at the team's recent game against Alabama in Tuscaloosa.
A spokeswoman said he wasn't available for interview this week, but defended the legislation as having an overall positive impact on Louisiana residents.
"This bill will put more money back in the pockets of people in Louisiana, who can choose to spend it how they want, whether it be on football tickets, or anything else," Scalise spokeswoman Lauren Fine said. "A growing economy is what most directly results in folks’ ability to purchase tickets, and that’s exactly what will happen with this plan."
John Colombo, a University of Illinois emeritus law professor who specializes in tax law, has been a vocal critic of the ticket tax deduction policy.
"This has always been a special tax break for college athletic programs that was never justified by any sort of theoretical approach to taxes," he said. "Why should the federal government make it cheaper for these folks to buy tickets to what are essentially semi-professional football games? It doesn't make any sense."
Fans should be willing to pay whatever the going market rate is for tickets, he said, whether it comes with tax perks or not.
"People who really want 50-yard-line seats to LSU's football game are going to buy them whether there's a deduction or not," Colombo said.
"The notion that getting rid of this deduction is going to destroy western civilization as we know it is wrong," Colombo said. "And, if it reduces the amount of money that flows into big-time athletic programs, all the better."