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House Tax Bill Could Cost Athletic Departments Hundreds of Millions of Dollars
A new House tax bill passed on Thursday that would prevent wealthy donors from taking tax deductions on charitable contributions associated with athletic tickets; a decision that could lead to fewer donations and cost college athletic departments hundreds of millions of dollars. Under existing law, athletic tickets are not tax deductible, but up to 80% of “donations” made for the right to buy those tickets can be written off. There is a feeling among politicos that the existing deduction should be outlawed as the individual making the “donation” receives something of tangible value (i.e. tickets).
Howie Long-Short: The consensus is that should this provision make the final bill, a significant portion of the “donations” will end. I don’t see it that way. These aren’t donations, they are personal seat license fees required to purchase the best tickets. A tax deduction is nice, but wealthy alumni buy these tickets as a status symbol (and because they’re fanatical about their school). I don’t foresee any loss of revenue.
Fan Marino: LSU A.D. Joe Alleva said his school brings in $50 million to $65 million annually in “donations” related to tickets and that even a 10% decline would mean “at least $5 million to us”; adding that “we have no other place to make that money up.” Cry me a lazy river, Joe. Look at the wasteful spending around college football (Texas, Clemson); if there is a drop in revenue, I’m certain they’ll find some areas where they can save.
Fox Sports Implicated in Corruption Scandal, Alleged to Have Paid Bribes for Media Rights
Fox Sports (FOXA) is among the media outlets that have been implicated in a widespread corruption scandal. The company allegedly paid bribes to FIFA executives to guarantee future media rights and expand its reach from Argentina to the U.S. Alejandro Burzaco, a government witness and the former CEO of sports marketing company Torneos y Competencias SA, testified that Fox Sports executives were aware of the bribery. The accusations stem from a 2015 corruption case, brought by the FBI and IRS, accusing three former FIFA executives of wire fraud, racketeering and money laundering. Those accusations forced the resignation of FIFA president Sepp Blatter and have resulted in guilty pleas from 12 officials to date. Fox Sports and Televisa have yet to comment, while Globo has denied any wrongdoing.
Howie Long-Short: The U.K. Competition and Markets Authority is currently taking a deep dive in to FOXA’s culture, before it decides if it will allow the proposed $15.4 billion acquisition of the remaining interest in Sky Plc (SKYAY); so, these allegations could be costly. The three accused FIFA executives are facing jail time. FOXA “won” (there was no bidding process) the right to pay $200 million to broadcast the 2018 World Cup in English — a tournament that won’t include the United States. There are no winners in this story.
Fan Marino: Speaking of the World Cup, Italy, Chile and Holland also failed to qualify and their unexpected absence means that Adidas (ADDYY), not Nike (NKE), will outfit the most teams in Russia. Germany, Argentina and Spain will be among a dozen squads wearing the three stripes. Nike will still have a large presence at the quadrennial event, with 10 teams including; England, Brazil and Portugal sporting the swoosh. Puma would have had the 3rd largest representation (now they’ll share that spot) had Italy and Ghana qualified as anticipated; Uruguay and Switzerland are also aligned with Puma and will participate.
Editor Note: The summary for this story was co-written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.
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Jerry Jones Threatens “Severe Retaliation” Against League Owners, Compensation Committee Rejects Jones’ Request for Special League Meeting
NFL owners sent a disciplinary letter to Jerry Jones (and his lawyer) accusing the Cowboys’ owner of “conduct detrimental to the league’s best interests”; stirring up talks that Jones could be removed (through a forced sale of his team) as a league owner. Jones has been trying to void Roger Goodell’s contract extension, which was unanimously agreed upon in May; threatening “severe retaliation” against the league and its owners if they were to pursue his removal. On Thursday, Jones formally requested a special league meeting to discuss the Commissioner’s contract extension negotiations — just one day after his fellow league owners told him to drop the issue. The compensation committee (Blank, Hunt, Kraft, Mara, McNair and Rooney) rejected his request and will meet on December 13 to work “diligently to fulfill its mandate.” (i.e. propose extension)
Howie Long-Short: When Jones bought the Cowboys in 1989, no American sports franchise had ever sold for more than $100 million; Jones paid $140 million for the Dallas football team. The most recent Forbes valuation had the franchise worth $4.8 billion. Forbes tends to undervalue franchises (valued Nets at $1.8 billion, team sold for $2.3 billion; valued Rockets at $1.65 billion, sold for $2.2 billion), so if Jones were to sell, the team would likely fetch $5 billion; an ROI of 3,371%.
Fan Marino: Jones is on an island here and he’s fighting a losing battle. Daniel Snyder is the only other owner who fully supports his efforts. With that said, he’s not being forced out of the league (this isn’t a Frank McCourt situation). They could suspend him (see: George Steinbrenner) and if he goes far enough, perhaps they could justify a lifetime ban (see: Donald Sterling), but no American professional franchise owner has ever been made to part with their team.
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What is JohnWallStreet?
JohnWallStreet is not a person or location, but a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.