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Razorback Foundation Braces for Tax ImpactLock Icon

4 min read

It didn’t take long for Arkansas Rep. Steve Womack to hear from his friends and fellow Arkansas Razorback fans.

Womack, a Republican who has represented the state’s 3rd District since 2011, voted for the tax bill that President Donald Trump signed into law in December. One of its provisions eliminates the deductions for contributions to university athletic foundations; the donations provide major bucks for athletic departments and give fans an inside track to buy tickets. (Unlike most charitable donations, only 80 percent of such gifts were deductible.)

Several athletic directors told ESPN in December that eliminating the deduction would cost universities hundreds of millions of dollars as donors lost an incentive to give. Womack, who was a colonel in the Army National Guard, heard concerns from West Point Athletic Director Boo Corrigan before the vote; he heard more from others after.

“I had a text message one day from one of my closest friends who is a big supporter of Razorbacks athletics that was like: ‘What the heck?’” Womack said. “As I explained to him, there are going to be casualties of a tax reform plan this big. We think the greater good of our country is served by passing what we passed.”

Womack said the tax plan, the first major alteration since 1986, was meant to eliminate the “hundreds and hundreds” of special-interest deductions that have been added to the tax code during the past 30 years. Womack said he didn’t agree unconditionally with all of the new tax provisions, but he favored ending the ticket-donation deduction.

“In order to accomplish the broader goals of our tax reform agenda … obviously you’re going to have to eliminate special interest credits and deductions that have appeared in the tax code over the last several decades,” Womack said. The congressman said the deduction for gifts that facilitate better tickets to sporting events “was a victim of this particular tax reform.” He added that he didn’t think everyday taxpayers should have to “provide the subsidy necessary for people to be able to have that kind of access to certain athletic foundations.”

Razorback Foundation Executive Director Scott Varady said 13 of the 14 SEC schools — excluding only Vanderbilt — sent a letter to members of the U.S. Senate in an attempt to save the deduction. He said the tax law is only a few weeks old, so it’s impossible to determine what the actual effect on fans’ contributions will be.

“I think a lot of our members of the Razorback Foundation and supporters of Razorbacks athletics understand the true philanthropic purpose of our organization in terms of helping our student-athletes all they can; they support it for that reason,” Varady said. “We do not know with any certainty what the overall impact would be any more than anyone else does at this point across the country. We are looking at the best way to structure our program so that our donors can maximize — whether it is tax deductions or benefits they receive — to thank them for what they do.

“We are in the wake of the tax law and we are re-examining all aspects of that and looking to see what the best way to proceed is. I know my colleagues in the Southeastern Conference are doing the exact same things.”

Womack said the tax bill put “the ball in the court” of the universities to figure out how to proceed without the special interest provision in the code.

He and other supporters of the tax bill argue that by cutting rates and raising the standard deduction, it will leave people with more money to spend.

“Far be it from me to predict or direct where the discerning citizen is going to take the windfall they are going to keep in their paycheck,” Womack said. “That’s a decision they have to make, and it’s a case any university will have to make in order to attract the fan base they’re looking to attract: how to appease them in the selection of seats. No question that allowing people to keep more of their paycheck is going to enhance their ability to enjoy a lot of things.”

Varady said he has heard that argument as well.

“Some have made the point to me that once the tax cuts are implemented people will have more money to pay for their tickets rather than having to use it through a deduction,” Varady said. “That point has been highlighted to me, and I suppose that is true. They’ll say people will have more money in their pockets and, if they truly want to do that, they can still afford to. Is that accurate or inaccurate? It remains to be seen.”

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