The new tax code for 2018 resulted in some winners and some losers. Most notably for sports sales reps, the new laws eliminate the deduction for business entertainment expenses, including sporting events.
Before the tax bill took effect, companies could write off 50% of the expenses of a variety of entertainment options used for business, including client meals, club membership fees, tickets to charitable events, and sporting event tickets. That write-off has been eliminated, which will certainly dampen the spirits of those buyers who enjoyed a business development investment at essentially half-price.
For many of our biggest clients in sports, it has already affected the way they do business. Many have chosen to buy only half as many tickets as they did last year, and a few have chosen a different direction altogether. Under the tax reform act, companies are still allowed to deduct 50% of the cost of business meals, including entertaining clients at restaurants.
These new laws were enacted very quickly, and several questions still remain about the interpretation of them, including what constitutes “entertainment”, and even what constitutes a “meal”. For example, if a pair of businessmen have a hot dog and nachos at a basketball game, does that count as a meal?
While some companies are holding off buying until there’s clarification, others are continuing what they’ve done with caution. How should you respond to those who are “on the fence” about a ticket purchase decision in light of the uncertainty of the tax code?
Here are a few options to encourage your prospects (or current clients) to step forward confidently with you:
“It’s a shame that NO ONE will be able to do that any more, but let’s look at what IS, not what WAS. Your clients are still the most valuable assets you have, and relationships are still vital in making sure your clients STAY your clients. That hasn’t changed, and there’s nowhere else that those relationships can (will) grow as well as when you’re here with them at a game. It’s a great investment today, and will (continue to) pay off for companies like yours regardless of the write-off.”
“Yes, I suppose SOME companies will choose not to have seats; which puts you in a better competitive spot than they are! Imagine the clients that will appreciate the fact that YOU still HAVE the seats they love, and YOU’LL enjoy the benefit of that time together more exclusively than ever!”
“The tax write-off was great… but I’ll bet it wasn’t the reason you bought your seats in the first place. You invested in them because you wanted (an amazing incentive for your sales team/a unique entertainment option for your best clients/a way to say thank you to your best employees)… and that need hasn’t gone away. If they’ve been good for you in the past, they’ll still do the job for you going forward.”
Think about all the reasons your B-to-B clients and prospects can USE their seats, and re-emphasize the PAYOFF for their use vs. the loss of the write-off. Work with them to find the specific benefits of seat ownership that makes sense, irregardless of the tax benefits.
– Bill Guertin is CEO of Stadium Gorilla Sales Training, and Chief Learning Officer of Inspiration Sports Business Institute, creators of ISBI 360, a powerful new virtual training platform that is standardizing and automating the process of training, onboarding, and recruiting of sales and service executives in sports and entertainment.