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New Tax Law Could Affect Sports Teams’ Ticket Revenue

MWE Headshots Thumbnail LanceChristensen - New Tax Law Could Affect Sports Teams’ Ticket Revenue

Major League Baseball attendance has dropped over the past few seasons and experts blame the weather, noncompetitive teams, and the pace of the game. But MWE Partner Lance Christensen offers another theory to CBS Local: Starting next season, attendance might continue to drop if companies stop buying tickets to entertain clients now that the tickets are no longer deductible under the Tax Cuts and Jobs Act.



cbs loc - New Tax Law Could Affect Sports Teams’ Ticket Revenue

“Well, like any transaction that a business makes, it becomes a cost-benefit analysis,” said Christensen via phone interview. “Basically the company looks at it based on what how much the tickets cost against the benefits, i.e. the goodwill they’re generating with clients by taking them to games, and decides whether those tickets are still worth it. I explain to my clients now that the cost for these tickets just went up due to the elimination of the deduction. If you were sort of on the margins before about whether or not the tickets were worth it, you may see companies just say, ‘hey let’s not do this anymore.”

“I have not heard any of my clients say they’re not buying any tickets,” said Christensen. “A lot of the season-tickets for this year were purchased before the law came into effect on January 1, so it would be tough to tell how much, if at all, the law has impacted this year’s ticket sales.”

Read: New Tax Law Tough on Entertainment

Christensen did say, however, that he’s heard anecdotally that the new law is having an impact in how company’s look at the value of corporate tickets and a drop in sales could be an unintended effect of the legislation. As businesses and leagues continue to get used to the new law, it will be interesting to see what adjustments both sides make when it comes to corporate ticket sales. It could theoretically lead to a drop in sales or, leagues and teams could try to find a way make the tickets more enticing and therefore worth the cost despite the loss of deductibility.  Read more>>>

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