AMPed Up Education Sports/Outdoors

Mr. Broyles goes to Washington — to save the football-seat tax deduction

Arkansas coach Frank Broyles leaves the field a hero in December 1975 after the Razorbacks beat Texas A&M in Little Rock. (AP file photo by Ferd Kaufman)

Why Broyles blitzed Congressmen to preserve a longstanding tax loophole in college sports.

This is Part 2 in our ongoing series of stories about tax write-offs and college athletic programs. Read Part 1.


For most of modern college football history, the purchase of premium stadium seats has been tax deductible to varying degrees. Decades ago, the leaders of the biggest college football programs realized they could add fees for their best seats on top of the actual cost of the seat. These surcharges came to be known as “seat donations” as if they were gifts — not payments required to secure a commodity, as author Gilbert Gaul points out in Billion-Dollar Ball: A Journey Through the Big-Money Culture of College Football.

The most serious threat to this write-off came during sweeping tax reform in middle of the Reagan administration. Former Arkansas senator David Pryor, a Democrat, was highly influential on multiple fronts within these reforms. In 1986, the Democrats had regained a Senate majority and Mr. Pryor was chairman of the Senate Subcommittee on Oversight of the Internal Revenue Service, an arm of the Senate Finance Committee. From this position, Mr. Pryor could monitor the IRS “in all its questionable, overreaching activities,” as he put it in A Pryor Commitment: The Autobiography of David Pryor.

In many realms outside of college football taxation, Pryor pushed for reform. In his autobiography, he recalls reducing tax shelters for the wealthy and expanding provisions for pensions and Individual Retirement Accounts.  His subcommittee heard from more than 200 witnesses of IRS abuse from 1987 to 1989, he wrote. “We received repeated details of IRS agents employing over-zealous, heavy-handed, and often illegal methods.”

In the mid-1980s, the IRS did something else Pryor perceived to be an overreach: Its leaders decided football seat donations did not meet their definition of a gift. A gift is a donation without expectation of a tangible return. But paying a premium to secure a seat with a view is something different. That’s essentially “a transaction between a buyer and a seller, with the amount set based on the quality of the view and other amenities [e.g. seatside service],” Mr. Gaul writes. “The more you give, the better the seat, service, and view.”

So the IRS tried to tax these transactions, once in 1984 and again in 1986. The thrust of the two attempts was similar. The first attempt was withdrawn. The second — titled Revenue Ruling 86-63 — said that contributions to an athletic scholarship fund weren’t tax deductible as contributions to charities (such as booster clubs attached to college sports departments) if the donor was granted preferential treatment in the purchase of tickets to events of any type.

The National Association of Collegiate Directors of Athletics, which included then Arkansas athletic director Frank Broyles, vigorously fought the IRS’ rulings. This association of collegiate athletics administrators enlisted the elite legal counsel of Philip Hochberg, a D.C.-area lawyer who for decades has represented the interests of professional sports leagues like the NFL, NBA, and NHL.

In Arkansas’ case, Mr. Broyles contacted his longtime friend David Pryor. “Coach Broyles and some members of the UA board of trustees — maybe one or two or three — came to Washington to basically try to convince members of the Senate Finance Committee, of which I was a member, to allow these deductions for I guess you would call private boxes in stadiums” across America, Mr. Pryor told me in a September telephone interview.

In late April 1986, Mr. Pryor wrote a letter to his colleagues asking them to repeal the IRS’ latest efforts at taxation of college football seats. “I remain very concerned over attempts to define what is or is not tax deductible when a donation is made to any college or university in this country,” he wrote. “Many colleges and universities around the country use these scholarship funds to provide much-needed aid to student-athletes. All of us want to do all we can to maintain and strengthen our educational system.”

Mr. Pryor, a University of Arkansas law school graduate, was one of a few senators working on behalf of a host of college coaches. By 1986, 19 athletic directors across the nation had visited their representatives for face-to-face meetings, according to Mr. Hochberg.

Early on in his legislative push, Mr. Pryor teamed up with his close friend, the late Pennsylvania senator John Heinz III. “He had been lobbied by his people, maybe Joe Paterno,” Mr. Pryor said. Mr. Paterno, who died in January 2012, was the longtime head football coach at Penn State.

Mr. Gaul’s research at Pennsylvania archives confirms that Mr. Paterno was contacting Mr. Heinz. Mr. Gaul also found a memo by a Heinz staffer that shed light on thinking of many athletic administrators and coaches: “While the revenue ruling is probably correct, it will have a severe impact on Athletic Associations, and athletic scholarships.”

Mr. Pryor confirmed to me the primary reason he pushed to keep the deduction was to protect funding for athletic scholarships.

Other coaches and congressmen subscribed to a similar line of defense in the mid-1980s. College sports broadcasting was in a state of flux after a 1984 Supreme Court decision, and the nascent Cable TV industry had not yet flooded athletic department coffers with broadcast contract dollars.

Television revenues were down, and a deep cut in tax write-offs for tickets would have hurt already struggling athletic programs, according to 1986 testimony by former Idaho senator Steven Symms. These “donations” tied to preferred or priority seating provided anywhere from 20 percent to 35 percent of many athletic department’s entire budget, according to research Mr. Pryor cited in his Senatorial papers, which are held by the University of Arkansas Libraries’ special collections department.

In his testimony, Mr. Symms echoed a common NACDA rallying cry: Full taxation of seat donations likely would cause one of two unpopular results:

  • Certain collegiate sports programs, especially non-revenue Olympic sports and women’s sports, would have to be dropped.


  • The athletic department of public universities would be forced to tap into its university’s general funds, meaning more taxpayer money would go toward footing the bill.

Part 3 will continue our examination of this seat-taxation write-off. Subscribe to our newsletter below to be notified of its publication.





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