Attendance at Major League Baseball games this year is reportedly down a little more than five percent over last year’s numbers. While there may be a number of reasons for this, including poor weather and competition with other forms of entertainment, is it possible that the new Tax Cuts and Jobs Act has something to do with it?
Deductions No Longer Allowed
Businesses are purchasing fewer tickets for sporting events. Why would that be the case?
While the new tax law doesn’t affect many standard business deductions, it does curb deductions for the following activities:
- Tickets for any purposes of entertainment, amusement, or recreation
- Suites, boxes, or other facilities used in connection with any of the above
- Membership dues for any club organized for business, pleasure, recreation, or other social purpose
Now that the IRS no longer allows businesses to deduct expenses for sporting events and golf tournaments, among other activities, many businesses are rethinking their client appreciation strategies. Some are giving up their corporate suites or season boxes – and even their customer golf outings – in favor of more elaborate and expensive dinners or promotional events that include advertising. Others are simply using the cash to provide better customer pricing on products and services.
Other business, though, are keeping their suites and season tickets, figuring that it’s just part of doing business with clients. Of course, the new tax law’s enormous cut in the effective corporate tax rate (from 35 to 21 percent) takes away most of the sting. Corporate suites at ball parks can cost over a hundred thousand dollars each year, but many businesses see value in paying for their clients’ pleasure, even at full price.
Will the Sting Trickle Down?
Certain business owners have noted that they are more willing to invest in sports entertainment if the team is good. On the flip side, many wonder: Why subject clients to a team that’s going to lose most of its games? One baseball executive said, off the record, that most Major League teams realize between 15 and 50 percent of their gate receipts from businesses. Teams in small market cities or ones that are perennial losers may be especially hard hit by the loss of corporate sales.
While the teams themselves certainly have a stake in revenue generated from corporations, so do others. The players, the people who work at the sports venue, the local restaurants and bars and other service providers who benefit from fans, the local tax revenue generated by sales – all of these could suffer from lower game attendance. Time will tell just how much of an effect these have at sports venues across the nation and the surrounding businesses and communities.
What Can My Business Deduct?
With changes made in the new tax law, you may be unsure about just what business expenses you can and cannot deduct. To maximize your deductions, try 1-800Accountant’s Tax Savings Calculator, which provides checklists of deductible expenses for many different industries.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.