Bill Schmausser became a Colorado Buffaloes football fan during World War II as a kid watching leather helmet games with his father at Folsom Field. As an adult, Schmausser started purchasing season tickets more than 50 years ago. This past fall you could spot the 81-year-old Denver resident sitting 35 rows up from the 40-yard line in the west stands.

As a loyal Buffs fan, he’s dismayed that tax reform legislation might hurt programs like the one he’s supported nearly all his life. Included in the sweeping legislation passed last month is a provision ending tax deductions for ticket-related donations to universities. Colorado and Colorado State combined to generate roughly $12 million annually through these specific gifts, and as of Jan. 1 the federal government no longer picks up a percentage of the tab come tax season.

“I think it’s a terrible mistake,” Schmausser said.

Those donations help to fund general operations, facility improvements and scholarships. A significant drop may have significant consequences to athletic departments across the country, especially for sports that don’t generate revenue.

Despite multimillion-dollar salaries doled out to high-profile coaches, NCAA athletic departments function as nonprofits, and before the 1980s, donations required by schools for premium ticket options were entirely tax deductible. The IRS later argued they were not gifts, but rather part of the ticket cost, because fans could not purchase prime seats without also making a donation.

Lobbying efforts resulted in legislation that led to the former deduction rate, however, the debate over its merit continued. And, the skepticism is nonpartisan. Republicans authored the 2018 tax plan, but Democrats also proposed cutting the deduction in 2015. The recent tax change will save the federal government $1.9 billion over the next decade, according to the Joint Committee on Taxation. But at what cost to CU, CSU, the University of Denver and the Air Force Academy?

Colorado representatives in the House and Senate were split by party line voting for the tax overhaul. U.S. Rep. Jared Polis, a Boulder Democrat whose district covers CU and CSU, was a staunch opponent.

“Good tax reform would have eliminated loopholes and giveaways for Wall Street and special interests; instead, the new law attacks educational institutions and hurts their ability to provide a well-rounded experience and valuable financial aid to students,” Polis said in an email to The Denver Post.

U.S. Rep Ken Buck, a Windsor Republican who voted in favor of the tax plan, did not respond to a request to comment. The Colorado Department of Higher Education declined to elaborate on the bill’s impact on major-college athletics in the state. “We have no authority over institutions’ sports programs because they are auxiliary, self-funded programs,” a department spokesman said.

Dean Dunn has 35 years of experience in tax practice, teaches a master’s-level course at CSU and broke down the rift in the simplest terms possible.

“One side on this argument says this money is going to fund scholarships,” Dunn said, “and the other side says it’s giving a tax break to the wealthy.”

Price of a getting a good seat

CU and CSU require donations to the Buff Club and Ram Club, respectively, for fans to purchase premium season tickets for football and men’s basketball. Annually, CU gets about $7 million and CSU brings in roughly $5 million through those gifts, according to figures provided by each school.

Folsom Field has 14 tiered annual donation levels based on seat location that range from $50 corner views to $1,850 club boxes to $41,000 for an east-side suite. At the Rams’ new on-campus stadium, donation levels fall between $50 and $500, but a parking spot just outside the stadium entrance requires a $10,000 gift.

CU sold 1,281 club tickets last fall, including 90 percent of its allotted seats in its Championship Club and Touchdown Club sections. All premium seating options for CSU football are sold out for the next two seasons. So, as a major incentive to renew those tickets and get donations, both athletic departments acted quickly to make sense of the tax changes late in 2017.

CU assistant vice chancellor Ben Broussard oversees the Buffs’ athletic department fundraising arm and said the school received roughly a month’s notice to inform fans of the deduction elimination before it took place. Programs across the nation sent letters to premium season-ticket holders with a variety of tactics to help navigate the change. The University of Oklahoma set up a “Pay it Forward” program that allowed fans to make donations for their next three years of football season tickets, according to The Washington Post, to still receive the 80 percent tax deduction before it expired.

But not all schools were as forward thinking.

CSU athletic director Joe Parker penned the Rams’ explanation of the tax code to CSU boosters and wrote: “We can also accept (donation) payment towards your future year commitments, in addition to your 2018 renewal.”

Broussard informed Buff Club members, and, like Parker, he emphasized the need to seek outside financial guidance. “Please keep in mind nothing is for certain yet and we are not tax professionals; tax reform can be an incredibly complex process. We will be in touch as things become more final,” Broussard wrote.

It’s difficult to predict how the new law might impact the bottom line for either athletic department, with season ticket donations one of several revenue streams available for donations and overall funding. At CU, $7 million in annual ticket-related gifts make up about 8 percent of the Buffs’ $89 million budget. At CSU, $5 million in donations make up roughly 12 percent of the Rams’ $40.8 million budget.

“Some institutions on that annual level where that’s a significant portion of athletic department budgets, if they see a 10 or 15 percent reduction in support due to the tax law, that’s a big impact,” Broussard said. “This bill is directed at football if you take a look at it, but ultimately where it hurts institutions are sports that don’t produce their own revenue. At CU specifically, that’s scholarship dollars. That’s money that ultimately pays a kid’s tuition.”

Not every athletic department in the state relies on a similar donation structure. The only gift required for premium season tickets at Air Force is $20 annually for selected hockey seats. While DU also requires donations for some ticket levels for its primary sports, the school did not send a letter to boosters outlining the changes. Brandon MacNeill, DU’s vice chancellor for external affairs, told The Denver Post: “We do not see this as a significant challenge.”

Still sorting out the impact

CU and CSU remain optimistic the changes won’t impact their bottom line or the willingness of their fan bases to give back. Neither school has immediate plans to reorganize its donation structure.

“This is a complex issue that all of us in intercollegiate athletics are sorting out,” CU athletic director Rick George said. “We are still in the process of reviewing the new tax laws and their impacts. It is causing us concern, but we are committed to doing what is best for our department and our constituents.”

Parker posted another statement Tuesday regarding the tax law changes on CSU’s athletic department website. At the end he wrote: “With or without the advantage of a tax deduction, we need your unwavering commitment to CSU student-athletes as we remain fully dedicated to providing the necessary support so all current and future students can reach their potential.”

Financial incentive or not, Schmausser will keep walking the concrete steps to his seat at CU’s Folsom Field on fall Saturdays. He figures to have missed only a handful of games, riding the highs of a national championship and the lows of the Buffs’ difficult transition to the Pac-12.

Schmausser can’t pinpoint the exact dollar amount he’s provided CU with season ticket donations over the decades, but is proud to have done his part to help. He made his donation before the new year and hopes the next tax legislation won’t stop others from joining him.

“I don’t like this,” Schmausser said, “but I don’t know how to undo it.”

Big business

New tax legislation may hurt college athletic department budgets across the nation, but money will continue to flow in from a variety of sources. Here is a look at the top 10-highest revenue producing athletic departments nationally, and where CU and CSU rank, as compiled by USA Today with the latest available financial documents from 2015-16.

1. Texas A&M: $194,388,450

2. Texas: $187,981,158

3. Ohio State: $170,789,765

4. Alabama: $164,009,745

5. Michigan: $163,850,616

6. Oklahoma: $150,373,216

7. LSU: $141,651,460

8. Florida: $141,441,109

9. Tennessee: $140,448,955

10. Auburn: $140,070,593

…

50. Colorado: $77,276,889

71. Colorado State: $39,767,363