A tax provision that allows Michigan football and hockey fans to deduct up to 80 percent of the donation required to buy season tickets has recently come under fire.

Former University President James Duderstadt, a member of the 19-member Secretary of Education's Commission on the Future of Higher Education, said he is worried not only about the reliance of the University on tax-deductible donations, but also about a profit-seeking attitude in college athletics that he said seems to be driving many large institutions - including the University.

The debate surfaced in December 2006 when the Senate Finance Committee discussed tax breaks for colleges and universities. Part of Duderstadt's testimony at the hearing on the subject focused on tax deductions that help subsidize the cost of season tickets for collegiate athletics.

When fans purchase tickets to athletic events, they also pay for the right to buy that ticket. This "right to purchase tickets," also called a required seat donation, is automatically included in the cost of season tickets.

Although the two separate fees aren't always obvious, the separation of the right to purchase tickets and the cost of the ticket becomes important when paying taxes. A 1988 law considers the purchase of the right to buy tickets to collegiate athletic events to be a charitable donation. As a result, 80 percent of that fee is tax-exempt.

This exemption is important at institutions with big-time sports teams like the University. It can make the difference for sports fans between buying season tickets for a college team and a professional team.

Jason Winters, the Athletic Department's chief financial officer, said the required seat donations are key to maintaining a 25-sport athletic program. He said money earned from major sports like football and hockey help fund sports that don't make any money, like golf and field hockey.

"The seat donation was created about three years ago when the Athletic Department was in a financial crisis," said University CFO Timothy Slottow. Instead of cutting sports or increasing stadium advertising, the University Board of Regents decided to require a seat donation from people purchasing the stadium's best seats.

Duderstadt said the flaw with the tax-deductible donations is that they are not actually charitable contributions, but quid-pro-quo agreements.

Fans make the required seat donation, and then they are able to purchase tickets. Because they receive something in return for their donation, Duderstadt and other critics believe that the tax law is flawed.

Supporters of the tax breaks argue that the required seat donation does not actually give ticketholders anything - only the right to get something - and therefore should count as a tax-deductible, charitable donation.

Much of the revenue that will be used to pay for the proposed construction of luxury boxes in Michigan Stadium is slated to come from required seat donations.

Over 40 percent of the Athletic Department's revenue currently comes from ticket sales. The Athletic Department expects that almost 12 percent of its revenue for the 2007 fiscal year will come from required seat donations.

Congress will likely continue investigating tax breaks for higher education as it opens a new session.

"Congress needs to look at the generous tax breaks we give colleges and universities and see what the public gets in return," said Sen. Charles Grassley (R-Iowa), the ranking member on the Finance Committee, in a written statement. "These tax breaks are supposed to benefit the public. I'd like to have the universities explain how tax deductions for stadium sky boxes help families pay for college."

Duderstadt was even more vigorous in his estimation of public sentiment toward universities.

"We simply have to restore a sense of public trust and confidence in higher education, and unfortunately that is being seriously undercut by intercollegiate athletics," he said.

He said that as the cost of higher education continues to rise, huge projects like the Big House renovation seem wasteful.

"The high visibility of the tax treatment of college sports will create negative public opinion that will influence political decisions that could affect tax law toward higher education," Duderstadt said.

University officials said they don't know what effect any changes to the tax law would have on the athletic program.

"It wouldn't necessarily change our decision to do stadium renovations if the tax law were to change," Slottow said. "We're not doing the stadium renovations to exploit the tax law."

But Slottow said he wasn't entirely confident about selling tickets without the exemption.

"I wouldn't want to be the one to test whether or not people are buying tickets because of the tax deductions," he said. "But I don't think that they are."