Donations

[brianstl]

7 minutes ago, bauman said:

Actually, I view this business expense deduction as holding down (if anything) the price of tickets for sporting events rather than inflating the price.  Assuming the fact that many of the Div 1 programs' expenses are fixed, administrators will need to replace at least a portion of the revenue lost due to corporations ending a significant portion of their entertainment outlays.   While I'm not privy to how much SLU MBB takes in on the fee required to be eligible to buy seats in the prime areas of Chaifetz, lets just assume it is $1,000,000 and that half of that amount is needed for fixed type costs.  How is that $500,000 loss going to be replaced?  You and I are going to be part of the solution, even if we aren't aware of it.  Rather than lowering our ticket price, as you suggest, I think just the opposite is going to take place.  To make this revenue loss even more significant we need to acknowledge that even more revenue will be lost due to company's not buying the tickets anymore.

One benefit for those of us who have season tickets in the arena sections not requiring an additional donation is that we might finally be able to afford upgrading our seats to sections which now require the fee.  It is a crime to come to every game and see large numbers of Blue Seats vacant-either not sold or sold but not used.

They are going to have to lower their fixed cost. SLU can’t raise their normal ticket cost.  SLU can’t raise their ticket price to average joe fan.  If SLU could they wouldn’t have been pushing $99 season tickets.  

You can’t price tickets beyond the demand for the product.  Elimination of tax deductibility of tickets for business is going to lower the demand for those tickets at both the pro and major college level.

[bauman]

3 minutes ago, brianstl said:

They are going to have to lower their fixed cost. SLU can’t raise their normal ticket cost.  SLU can’t raise their ticket price to average joe fan.  If SLU could they wouldn’t have been pushing $99 season tickets.  

You can’t price tickets beyond the demand for the product.  Elimination of tax deductibility of tickets for business is going to lower the demand for those tickets at both the pro and major college level.

Not sure what business you are in brian, but fixed costs are called "fixed" because you will have them no matter what your business does.  Yes you can lower fixed costs if you make somewhat drastic changes to your business but absent such changes your fixed cost will not change in any significant amount.  One way to reduce fixed costs is to shrink the size of your business e.g. sell  less cars allowing you to close a plant and you will lower your fixed cost, but keep producing a similar number of cars (or any other product) and your fixed costs will stay pretty much the same i.e. property rental and taxes, utilities etc

Looking at the SLU MBB product, I view fixed costs to be things such as scholarships, and all building related expenses, including a minimal level of staff personnel.  Sure you can lower some of these expenses by not giving 13 scholarships and/or not having so many home games (or my pet peeve not having an usher whose sole responsibility is to bring cups of water to the officials during time outs).  However, if we are going to continue as a D1 program we would likely not reduce the number of scholarships or home games.  Of course we can reduce variable expenses such as travel, amounts paid to coaches and the number of coaches but even these variable expense reductions will have a noticeable impact on the success of the team

Going back to my earlier post, I concede that up to 1/2 of the revenue from these ticket lugs might be able to be covered by reducing some expenses, but not all.  Therefore, other sources of revenue must be developed.  I assume that we are milking as many $$$ as possible from advertising, so not much help there, if any.  What is the other major source of funds for the Athletic Department-you got it, Men's Basketball ticket revenues.  I do agree with you that there might not be much chance to raise ticket prices for the fan looking to pay $99 for season tickets, but I think there is a meaningful number of season ticket holders who would be willing to pay something above what they are paying today, IF they could get better seats for their additional costs.  I would be more than willing to pay $100 more for my season tickets if I could make a move to better seats, which now require the seat license fee.  Even for people who are not looking for a major seat upgrade, I think many would continue to buy season tickets if they were $25 more next year.

Obviously, I am making some assumptions in the above, but I get back to my main point in my earlier reply to you,  don't expect ticket prices to go down because these seat license fees will no longer be tax deductible.  In fact, just the opposite will happen as a way for SLU to recoup some of the lost revenue.

[The Wiz]

In addition to the business deduction disappearing, and the excise tax on salaries over a million dollars....there is the larger hidden issue.  Less money donated to charities because of.. 1.  less people itemizing  and 2.  lower tax brackets.  Both of these items lower the incentive to give. People may  still give but in lesser amounts.

[cheeseman]

33 minutes ago, bauman said:

Not sure what business you are in brian, but fixed costs are called "fixed" because you will have them no matter what your business does.  Yes you can lower fixed costs if you make somewhat drastic changes to your business but absent such changes your fixed cost will not change in any significant amount.  One way to reduce fixed costs is to shrink the size of your business e.g. sell  less cars allowing you to close a plant and you will lower your fixed cost, but keep producing a similar number of cars (or any other product) and your fixed costs will stay pretty much the same i.e. property rental and taxes, utilities etc

Looking at the SLU MBB product, I view fixed costs to be things such as scholarships, and all building related expenses, including a minimal level of staff personnel.  Sure you can lower some of these expenses by not giving 13 scholarships and/or not having so many home games (or my pet peeve not having an usher whose sole responsibility is to bring cups of water to the officials during time outs).  However, if we are going to continue as a D1 program we would likely not reduce the number of scholarships or home games.  Of course we can reduce variable expenses such as travel, amounts paid to coaches and the number of coaches but even these variable expense reductions will have a noticeable impact on the success of the team

Going back to my earlier post, I concede that up to 1/2 of the revenue from these ticket lugs might be able to be covered by reducing some expenses, but not all.  Therefore, other sources of revenue must be developed.  I assume that we are milking as many $$$ as possible from advertising, so not much help there, if any.  What is the other major source of funds for the Athletic Department-you got it, Men's Basketball ticket revenues.  I do agree with you that there might not be much chance to raise ticket prices for the fan looking to pay $99 for season tickets, but I think there is a meaningful number of season ticket holders who would be willing to pay something above what they are paying today, IF they could get better seats for their additional costs.  I would be more than willing to pay $100 more for my season tickets if I could make a move to better seats, which now require the seat license fee.  Even for people who are not looking for a major seat upgrade, I think many would continue to buy season tickets if they were $25 more next year.

Obviously, I am making some assumptions in the above, but I get back to my main point in my earlier reply to you,  don't expect ticket prices to go down because these seat license fees will no longer be tax deductible.  In fact, just the opposite will happen as a way for SLU to recoup some of the lost revenue.

Good explanation but I doubt raising the tix price $100 for the blue seats will raise enough money that will be lost.  I understand that those seats go for $2500 - somebody correct me if I am wrong.  No, the loss of this deduction will hurt the AD more than I think most think.  

[cheeseman]

5 minutes ago, The Wiz said:

In addition to the business deduction disappearing, and the excise tax on salaries over a million dollars....there is the larger hidden issue.  Less money donated to charities because of.. 1.  less people itemizing  and 2.  lower tax brackets.  Both of these items lower the incentive to give. People may  still give but in lesser amounts.

Excellent point - I have made that argument with others.  What will happen is people will only donate to those charities that they have ownership in.  Many smaller organizations will be left out in the cold since people don't mind giving them $25 or 30  and getting a deduction but now they will say maybe not particularly since they will be loosing the incentive for the ones they have ownership.  Big $ donors may not change their attitude but the smaller dollar donors will think twice.

[brianstl]

34 minutes ago, bauman said:

Not sure what business you are in brian, but fixed costs are called "fixed" because you will have them no matter what your business does.  Yes you can lower fixed costs if you make somewhat drastic changes to your business but absent such changes your fixed cost will not change in any significant amount.  One way to reduce fixed costs is to shrink the size of your business e.g. sell  less cars allowing you to close a plant and you will lower your fixed cost, but keep producing a similar number of cars (or any other product) and your fixed costs will stay pretty much the same i.e. property rental and taxes, utilities etc

Looking at the SLU MBB product, I view fixed costs to be things such as scholarships, and all building related expenses, including a minimal level of staff personnel.  Sure you can lower some of these expenses by not giving 13 scholarships and/or not having so many home games (or my pet peeve not having an usher whose sole responsibility is to bring cups of water to the officials during time outs).  However, if we are going to continue as a D1 program we would likely not reduce the number of scholarships or home games.  Of course we can reduce variable expenses such as travel, amounts paid to coaches and the number of coaches but even these variable expense reductions will have a noticeable impact on the success of the team

Going back to my earlier post, I concede that up to 1/2 of the revenue from these ticket lugs might be able to be covered by reducing some expenses, but not all.  Therefore, other sources of revenue must be developed.  I assume that we are milking as many $$$ as possible from advertising, so not much help there, if any.  What is the other major source of funds for the Athletic Department-you got it, Men's Basketball ticket revenues.  I do agree with you that there might not be much chance to raise ticket prices for the fan looking to pay $99 for season tickets, but I think there is a meaningful number of season ticket holders who would be willing to pay something above what they are paying today, IF they could get better seats for their additional costs.  I would be more than willing to pay $100 more for my season tickets if I could make a move to better seats, which now require the seat license fee.  Even for people who are not looking for a major seat upgrade, I think many would continue to buy season tickets if they were $25 more next year.

Obviously, I am making some assumptions in the above, but I get back to my main point in my earlier reply to you,  don't expect ticket prices to go down because these seat license fees will no longer be tax deductible.  In fact, just the opposite will happen as a way for SLU to recoup some of the lost revenue.

You missed a big fix cost for the athletic department that can be immediately addressed if revenues drop.  Scholarships to non revenue sports.  

Plus, you aren’t raising ticket prices if the new cost of the ticket is less than the previous cost of the ticket and donation combined.  That is a ticket price reduction no matter what the face value was the season before.

[brianstl]

2 minutes ago, cheeseman said:

Excellent point - I have made that argument with others.  What will happen is people will only donate to those charities that they have ownership in.  Many smaller organizations will be left out in the cold since people don't mind giving them $25 or 30  and getting a deduction but now they will say maybe not particularly since they will be loosing the incentive for the ones they have ownership.  Big $ donors may not change their attitude but the smaller dollar donors will think twice.

Smaller donors historically tend to be those that never itemized their taxes according to the research I read on this issue.  They will keep donating the same amount because their donation amount was never impacted by the tax deductiblity of the donation.  This will hit big donations far more.  Those donations will now have a far greater actual cost than before.

[The Wiz]

Much of this thread is about how the new tax law will impact college finances in a negative way. Athletic depts have a number of  non revenue generating sports...many set up to create gender equality....As schools look to save money they may try to dump some of them...which then may put them in violation of.....wait for it.....Title IX.   

Your tax dollars hard at work.

[brianstl]

8 minutes ago, The Wiz said:

Much of this thread is about how the new tax law will impact college finances in a negative way. Athletic depts have a number of  non revenue generating sports...many set up to create gender equality....As schools look to save money they may try to dump some of them...which then may put them in violation of.....wait for it.....Title IX.   

Your tax dollars hard at work.

This will be a bigger issue at schools with football.  SLU could reduce the scholarship number to men’s soccer and baseball along with the same number of reductions to the women’s soccer and softball program.  

[JMM28]

Some of the corporate tickets are bundled with promotions. I wonder how that will be accounted for. 

[almaman]

empty good seats bad visual. seems like not just a SLU thing

[cheeseman]

24 minutes ago, brianstl said:

Smaller donors historically tend to be those that never itemized their taxes according to the research I read on this issue.  They will keep donating the same amount because their donation amount was never impacted by the tax deductiblity of the donation.  This will hit big donations far more.  Those donations will now have a far greater actual cost than before.

I am not talking about a few dollars - I am talking about the ones that give $1k or $800.  A big donor is the $5K and above - they will continue to donate because they will itemize.  If you give a $1k you may not have deductions enough to itemize with the new limits.  How many donors will give at the minimum level to maintain their Billiken Club status - that is what I am talking about.

[brianstl]

52 minutes ago, cheeseman said:

I am not talking about a few dollars - I am talking about the ones that give $1k or $800.  A big donor is the $5K and above - they will continue to donate because they will itemize.  If you give a $1k you may not have deductions enough to itemize with the new limits.  

Two things......

First, my guess is a large number of the people who donate $500-1000 to SLU don’t itemize.  

Second, for even those who currently itemize the real dollar cost to stay at that donation level is not that high.  The real dollar cost for someone who currently gives $5,000 and will now be taking the standard deduction will be much higher.

[Old guy]

2 hours ago, cheeseman said:

I am not talking about a few dollars - I am talking about the ones that give $1k or $800.  A big donor is the $5K and above - they will continue to donate because they will itemize.  If you give a $1k you may not have deductions enough to itemize with the new limits.  How many donors will give at the minimum level to maintain their Billiken Club status - that is what I am talking about.

Agree cheeseman, we are entering a brave new world and a lot of going businesses, including colleges, will have to adapt or just perish. I think a fair amount will ultimately depend upon the rate of return of their endowment combined with the size of their endowment. SLU's endowment may be large enough to succeed in doing this, other schools may just have to close down.

[kshoe]

If revenues drop for athletic departments, there are two straightforward ways to reduce costs: lower coach salaries and fewer expenditures on facilities. Does every school need to have the new $100mm football stadium renovation or private dorms for the players? Does every coach, even those that are losing or unproven, need $2mm salaries?

[slu72 fan]

What happens if we stay in the A-10 for basketball, and everything else moves to a more local conference. I’m not talking the Valley, I mean a new conference of schools like Bradley, Loyola, Belmont who are in the same boat and need to control expenses?

[The Wiz]

3 hours ago, brianstl said:

This will be a bigger issue at schools with football.  SLU could reduce the scholarship number to men’s soccer and baseball along with the same number of reductions to the women’s soccer and softball program.  

Ah....I think I am beginning to understand trickle down economics.  Large  D-1 schools with football programs and expensive nondeductible tickets and million dollar coaches will be hurt the most and  cut non revenue programs . Those athletes then will trickle down to SLU who will turn them away because the Bills will have cut their programs too. Sounds like the government plan is to get rid of non revenue programs.  Gee I hope Congress doesn't look into history and math.

[Old guy]

Wiz, I do not think the government, any government, has ulterior motives to crush this or that program when they enact any laws. Like the military refers to things like this what we have here is an example of collateral damage. This does not mean that schools will not be able to find a way to maintain their programs, it means it will be a real challenge to do  so.

[cheeseman]

4 hours ago, brianstl said:

Two things......

First, my guess is a large number of the people who donate $500-1000 to SLU don’t itemize.  

Second, for even those who currently itemize the real dollar cost to stay at that donation level is not that high.  The real dollar cost for someone who currently gives $5,000 and will now be taking the standard deduction will be much higher.

You may be surprised at who itemize and who doesn't.  People make decisions based on how they see it economically  impacts them and when the system changes so will their decisions to some extent.