The University of Tennessee athletics department forks over $4.4 million a year in taxes on ticket sales because of a unique amusement tax that specifically targets UT sporting events, something officials there are hoping to change in the future.
Each ticket sold to football and men’s and women’s basketball games is taxed at 14.25 percent — that’s 5 percent above the regular state sales tax, said Athletic Director Mike Hamilton.
“That’s a $1.5 million swing for us, and the city is not in a position to repeal that right now, but it’s a pretty unfair tax on UT athletics and it’s time to start letting people know that,” Hamilton told the athletics board at its spring meeting Saturday morning in the Brenda Lawson Center.
The extra amusement tax, which is narrowly defined to target UT sporting events, makes UT the most taxed athletic department in the country, Hamilton said.
In the SEC, five schools including Kentucky and Florida, pay no taxes on the sale of tickets and the other schools pay only state sales tax, which is less than 7 percent there.
Though the tax has been in place for decades and local governments are in desperate need of the revenue, Hamilton and Chancellor Jimmy Cheek said they plan to begin the conversation of trying to repeal the tax before it impacts the athletic department long term.
If the city, which receives 4.5 percent of the tax, and the county, which gets 0.5 percent, decline to offer relief, they would have to go to the state to repeal the law, Cheek said.
Despite the money it pays back in taxes, the athletic department is expected to again close the year $1 million in the black and ticket sales are strong. Among all basketball teams in the SEC, UT men finished second in attendance for the year and the UT women in third. Men’s basketball is slated to finished in the top five in the country and football was sixth this year, despite a national trend of declining ticket sales in all sports, said spokesman Jimmy Stanton.
Despite the positive budget outlook this year, UT hopes that repealing the tax will protect the department and its programs in the future, including the $7 million it gives back to the university in various capacities.
Since the SEC signed a television agreement with ESPN, UT uses a portion of its revenues of the contract to give $800,000 a year to graduate fellowships and another $200,000 to other academic causes. It’s a gesture, faculty said, that is welcomed and appreciated.
“It creates such good will that I’d hate to see it disappear,” said biology professor and board member John Koontz.
In particular, the graduate fellowships are appreciated by faculty, said UT President Joe DiPietro.
“As a former faculty, you feel it personally because you’re able to support a graduate student who you wouldn’t be able to otherwise and you realize where the money comes from because you’re trying to keep the program alive,” DiPietro said.
Cheek emphasized that the money given back to the university is not currently in jeopardy.
Megan Boehnke can be reached at 865-342-6432.