News and analysis
September 24, 2015

How the Billion-Dollar College Football Industry Acts Like a Charity


A new book by investigative reporter Gilbert Gaul makes the case that "seat donations" and other tax-deductible gifts to athletic programs make a mockery of the tax code.

Investigative reporter Gilbert Gaul got a call from his 82-year-old mother-in-law a few years ago to talk football. A Penn State graduate and longtime season-ticket holder for the Nittany Lions, she had received offers from the university to upgrade her seats or transfer them to family. Both offers involved charges of thousands of dollars — payments that could be deducted as charitable gifts, Mr. Gaul discovered to his surprise.

The phone call launched a reporting journey that Mr. Gaul recounts with rollicking humor and an arched eyebrow in "The Unlikely Charity Known as College Football," a chapter in his new book, Billion-Dollar Ball. Though stone-walled by most university officials, the two-time Pulitzer Prize winner pulled together a revealing analysis of "seat donations" — surcharges for football tickets that athletic departments have deemed, with blessing from Congress, gifts to charity.

Here are a few highlights from Mr. Gaul’s reporting:

  • Various estimates suggest seat donations generate more than half-a-billion dollars each year, chiefly for major university football programs. They account for as much as 30 percent of athletic-department budgets at universities such as Alabama and Texas.
  • Gator Boosters, the nonprofit booster club that manages football ticket sales for the University of Florida, raised more than $30 million in seat donations in 2013 — up from less than $5 million in 1990. (Coincidentally or not, Gator Boosters ranked No. 386 on the Chronicle of Philanthropy’s latest ranking of America’s 400 largest charities.)
  • 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."

Send an e-mail to Drew Lindsay.