The NFL May Not be Tax Exempt for Much Longer
It may be the biggest non-profit in the country and its big event comes to New Jersey next February. We’re not talking about UNICEF, The World Food Program, or even the American Cancer Society, we’re talking about the National Football League!!!!
The NFL is a non-profit organization. That means it conducts itself as an enterprise which promotes a “common business interest and not to engage in a regular business of a kind ordinarily carried on for profit,” the Internal Revenue Code tells us.
Maybe that’s why they need volunteers to work the Super Bowl.
Seriously, while individual teams operate as for-profits, the league itself does not, and therefore enjoys federal tax-exempt status on its earnings. Sometimes, it even avoids taxes at the state and local level. For example, NFL employees aren’t charged tax when they stay at a hotel during the Super Bowl. That will come into play next February when they come here to play.
We don’t really know how much tax responsibility the league dodges because they do not disclose financial reports, but we do know that this particular non-profit paid its top eight executives roughly $53.8 million in 2012, including $11.6 million for its current commissioner (Roger Goodell) and $8.5 million for its former commissioner (Paul Tagliabue).
Here’s an example of what this tax exempt organization is able to do…
The league collects $6 million in annual membership dues from each team, the teams write off those dues as "charitable donations," and the NFL in turn takes that $192 million and puts it into a stadium fund that gives owners interest-free loans as long as they secure public financing for their new or renovated stadiums. That means we’re left with two bills: Not only do taxpayers lose out on federal tax revenue, we pay for new stadiums that generate profits which enrich only the owners.
Oklahoma Senator Tom Coburn, is trying to put an end to this. He has crafted an amendment that he has attached to the Marketplace Fairness Act this past Thursday.
This is not a new quibble for Coburn – he’s also going after the PGA and NHL -- but now he's given it a name: It's called the Property Reducing Over-exceptions for Sports Act (PRO Sports Act). And when it comes up for a vote, we could see the end of the NFL’s tax exempt status forever.
Coburn, who never has much of an agenda other than cutting waste wherever he detects it, thinks that “based on the publicly available information about the NFL and NHL alone, (revoking) non-profit status may generate at least $91 million of federal revenue every year.”
This should lead to some first class lobbying. Maybe the NFL could cajole the politicians with those unsold fifty yard line tickets that the fans cannot afford because we’re too busy paying taxes! Should the NFL be tax exempt? Discuss in the comment section below.