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Throw Out Skybox Tax Subsidies? New York Times Op-Ed Suggests Dropping Dedcutions For Luxury Suites

The federal government is giving unfair subsidies to corporations that buy sports tickets and luxury boxes in the form of tax deductions and helping to drive up ticket costs according to Richard Schmalbeck of Duke and Jay Soled of the Rutgers Business School.

In this New York Times Op-Ed, the writers postulate that the Federal Government, through section 274 of the IRS Tax Code, unfairly subsidizes corporations by allowing them to take deductions on purchases used for client entertainment.  The writers then infer that this is a major factor in driving sports ticket prices up as well as for the recent boom in luxury suites and clubs in sports.

Unfortunately they do not have tangible numbers to back this assertion.  The majority of corporations do not take advantage of  available deductions for sports and event tickets.  Spotlight Ticket Management currently works with over 200 corporations and a dozen pro teams and can say, from experience, the majority of the firms consulted lack(ed) the resources or process to track and report on what they are purchasing, how they are using tickets, and to what business end.  Counter to the public perception reputable firms do not take unsubstantiated write-offs when it comes to their sports marketing and entertainment event purchasing or any other expense.   Deductions are more prevalent in certain industries but the numbers show tax benefits are not high on the drivers of corporate sports ticket purchasing.

Data collected by Spotlight shows overwhelmingly that using sports tickets and luxury suites is far from “little more than an excuse for corporate executives to consume luxury items at a discount, distorting markets and cheating the public out of substantial tax revenue.”  Each dollar spent on tickets and suites shows an influenced revenue ROI of well over 3 to 1 – in successful companies with centralized processes and clearly stated goals (much less in firms with disparate Excel sheets and redundant forms).  All political views aside on the role of government in business, the tax payer is not funding a worthless venture by any means and the numbers prove it.

Are there firms and executives who abuse their ability to attend games? Absolutely.  Shareholders would be horrified with the stories of corporate theft, bribery, and dishonesty.  However, there are too many factors to simply peg the escalation in costs of sports and event tickets to tax subsidies.  Companies differentiate their brand and improve their bottom line when they properly manage and track sports and event tickets but corporate involvement in sports and entertainment is not fueled by IRS 274 – although looking for new ways to tax US businesses appears to be fully in-season…