Tuesday, October 23, 2007

Sending Our Tax Money To The Buckeyes

By Bryan O'Keefe

As most people know, I am a rather avid Pennsylvania sports fan – just this past weekend, I spent a good part of Saturday watching the Penn State/Indiana football game and Sunday evening I was parked in front of the television again, this time for the Steelers/Broncos game. In addition to my affection for the Nittany Lions and the Steelers, I also follow George Washington University basketball (my alma mater) and have been a season ticket holder since graduation. So, I come to this blog posting with no particular animus towards sports in general – quite the contrary.

Never the less, the Wall Street Journal had an excellent piece on Friday detailing the excesses surrounding the Ohio State football program and athletics department. Most of the details would be expected from an elite Big 10 program, but some even surprised me – for example, the athletics department has some sort of exercise equipment that even a professional sports team said was out of their league. Furthermore, the total budget for the athletics department is an astounding $109 million dollars.

The story defends the program somewhat, with the claim that most of the extravagance is funded by alumni donations. Others have told me that Ohio State deserves credit because its athletic department is self-sufficient and does not draw on general university resources. Those are points well-taken.

But the story misses a major topic: namely that those same alumni donations that help fund the program are subsidized by taxpayers. Donors receive nice tax deductions for their support of these programs, so, in essence, all of us are helping to fund today’s collegiate sport excesses.

Our friend Wick Sloane wrote a paper a couple of months ago which touched on this subject – why are we always griping about the lack of student loans, grants, etc. when we allow donations to sports stadiums to be tax deductible? Is that the proper role of the tax code? Should donors lose part of their tax deduction if they donate to the stadium instead of say, the school library? Instead of just blindly increasing loan amounts, maybe we should tinker with the tax deduction for donations to athletic programs, so any new loans or grants would at least be revenue neutral.

I also think this story makes it painfully clear that we need a new model for collegiate sports in general. The day of athletes being students first and competitors second – especially in the high level basketball and football programs – is over. (It still does exist when you get into the more obscure sports like fencing, but they are not really the problem here) Maybe instead of treating athletics as we do now, we should force universities to spin them off as separate businesses. Let them raise capital and actually pay their players. These are just ideas that we should be seriously considering in the future.

I certainly don’t have all of the answers for this problem, but something seems seriously wrong when we spend most of our time working on how to make the educational component of college (the reason we go to college in the first place) more affordable and productive and yet thousands of alumni donors across the country are getting hefty tax breaks for putting their names on stadiums.
One final note – I know I am picking on Ohio State here – that has nothing to do with the fact that the Buckeyes do in fact play Penn State this weekend. (I would love to see Penn State pull the upset) Ohio State just had the misfortune of being profiled for the Journal. I am sure that the same situation exists at Penn State and many other big-time college football and basketball programs.


sciencedoc said...

In the state where I work, good luck ever selling the idea of ending tax emptions for donations to big-time collegiate athletics. You will get torn limb-from-limb. Even suggesting that the money donated to athletics would be better spent on academics -- even specifying for scholarships -- will get you tarred and feather, figuratively.

TC said...

Is a donor not free to do with their money what they want? I should think so. I agree that the spending on athletics is absurd, but I think there's some cherry picking and mild donor bashing going on here.

I visited OU last November and had the privilege to be taken on tour around the campus by Rich. We visited a magnificent new building. It had a name on it just like the stadium and the new Ping Recreation Center (although Ping is an honorary building name for Charles Ping who was the University President when I attended OU). The name on the magnificent new aforementioned building was something like "Margaret M. Walter Hall".

So a thought comes to mind. Of all the donors that contribute to athletic programs, how many also contribute to the academic side?

The other thought that comes to mind is that I have read CCAP blogs about universities not spending their endowment money. So if I want to donate money and feel comfortable that it will be used; should I donate the money to the college endowment or the athletic program?

I also disagree with your assertion that because donors get a tax break, the athletic programs are subsidized by taxpayers. How so? Is it because taxpayers don't get a deduction if they don't donate? Well, I guess life isn't fair - and neither is our tax code.

There are other considerations that I believe are relevant. One example is that good football and basketball teams give brand name recognition to a school and may influence a prospective student's decision to attend the college with brand name recognition.

Maybe universities should ask a donor before they make a donation to athletics if they would like part of the donation to go to academics. I don't have the answer, but solely putting the onus on donors because they get a tax break is in my mind a narrow view of the problem.

Any donation I may make to my alma mater, will have very specific instructions regarding how and when any donation would be used, or there would be no donation.

I can assure you I have no intention of donating money to any athletic program.

Jeff said...

I thought your point about OSU's facilities even being the envy of professional sports teams is an interesting one.

At the collegent level, no large player salaries are needed, so of course they can pay for more expensive, capital equipment.

I guess the problem isn't so much that athletics gets so much money or that academics doesn't. (Although it is a problem!) But rather, do you patron the advertisers who "support" the big schools via the TV Contracts, etc.? Do you feed the frency (I do!) that is OSU or any other sucessful franchise? Do you pay for tickets to Professional sporting events or watch them on Monday or Sunday or Tuesday night sports?
This is a free market economy. (sort of) The reason OSU or any other large school HAS that much revenue is that it IS important to somebody. The reason the Networks show the sporting events on TV is because it will generate viewers which is what their advertisers demand.

I lived in NC for a while and got Season Tickets for $50. Try to go to a Duke basketball game for that little.

If you are really turned off of this, then don't support it. Do things like organize boycotts, don't watch it, refuse to purchase things, write your congressman about making revising the tax code.

This is business.