Per-Seat Contributions in Athletics: Exchange or Not?

Per-seat contributions, which allow donors to purchase tickets for a specific seat at a collegiate athletics event, pose an interesting accounting question: How should they be categorized (and consequently, recognized) in an athletic department’s financial statements? It’s a question that blurs the line between exchange and non-exchange transactions—presenting a compelling quandary.

Exchange vs. Non-Exchange Transactions

The basic tenets of exchange and non-exchange transactions are defined by the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB). It’s important to understand these differences when deciding how to recognize per-seat contributions.

While the GASB and FASB are separate accounting standard setters, the general concepts of exchange versus non-exchange transactions are fairly consistent between them.

  • Exchange transactions are characterized by a mutual exchange of goods, services or assets of approximately equal value. Both parties involved agree upon the value of the exchanged items, and the transaction is not a gift. Any deviation from these criteria means the transaction is not an exchange.
  • Non-exchange transactions see one party receiving value without giving something equivalent in return. These transactions are typically seen as gifting; they don’t involve a mutual exchange or an agreed-upon transaction value.

A key accounting difference between exchange and non-exchange transactions lies in the timing of revenue recognition. Revenue is recognized in exchange transactions when goods or services have been delivered or when property ownership has been transferred. In contrast, for non-exchange transactions, revenue is recognized when the recipient meets all eligibility requirements and the resources become available.

The Word on Per-Seat Contributions

So where do per-seat contributions fall within these definitions? From what we’ve seen, athletic departments and booster clubs—often the entities handling these contributions through separate nonprofit clubs or foundations—are split in their treatment of these transactions. Some recognize them as non-exchange transactions with immediate recognition to revenue. Other organizations treat them as exchange transactions and defer the recognition into revenue until the corresponding athletic season occurs.

When we turn our attention to skyboxes and suites, there is much more consistency in reporting. These transactions are usually considered exchange transactions. All associated amounts are deferred and not recognized into revenue until the corresponding athletic season occurs.

You should also consider the tax law changes enacted in 2017’s Tax Cuts and Jobs Act (TCJA) when it comes to per-seat contributions. The TCJA rendered these contributions non-deductible for donors, prompting frequent discussions about the impact on the accounting for these transactions.

However, while tax law and accounting standards are often related, they’re distinct from each other. Changes in tax law don’t necessarily translate into new accounting procedures under generally accepted accounting principles (GAAP). So despite the alterations to the tax law, the accounting for per-seat contributions under GAAP remains unaffected.

The classification and treatment of per-seat contributions is a complex issue straddling the border between exchange and non-exchange transactions. Correct categorization is crucial for ensuring accurate accounting and financial reporting. The very existence of such grey areas highlights the diverse and intricate nature of transactions in the world of collegiate athletics, inviting further scrutiny and discussion.

Do you have concerns about your financial reporting for per-seat contributions? It’s important to remember that you don’t need to navigate these complex issues alone. Your collegiate athletics CPAs can provide guidance, helping to ensure you have accurate financial reporting for your athletic department.


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