Wait, The NFL Is A Tax-Exempt Organization?
Ira Boudway writes at Bloomberg:
Oklahoma Senator Tom Coburn introduced a bill yesterday that would strip the National Football League of its tax-exempt status. The PRO Sports Act proposed by the Republican lawmaker would prohibit professional sports organizations with annual revenue of more than $10 million from filing as nonprofit organizations. In addition to the NFL, the bill would also change the status of the National Hockey League, golf's PGA Tour, and the ATP World Tour in tennis, among other professional sports groups.Wondering how an organization charging $2,600 for Super Bowl tickets qualifies for tax exemptions in the first place? It's a good question. The NFL qualifies as a 501(c)(6), a nonprofit category that includes chambers of commerce, trade groups, real estate boards, and a handful of other sports leagues. The National Basketball Association is a for-profit organization, and Major League Baseball gave up its exempt status in 2007.
When Congress granted an antitrust exemption in 1966 that allowed the NFL to merge with the AFL, lawmakers added "professional football leagues" to the statute to ensure the new league would qualify. So while the NFL's 32 teams bring in a combined $9.5 billion in annual revenue, the league office calls itself a "trade association promoting interests of its 32 member clubs." This is a bit like McDonald's (MCD) calling itself a trade association promoting the interests of its 14,000 U.S. restaurants. The key difference is that the NFL distributes all its revenue back to the teams--after covering expenses such as rent, officiating crews, and Commissioner Roger Goodell's $30 million salary.
"Tax earmarks are essentially tax increases for everyone who doesn't receive the benefit," Coburn said in his press release proposing to tax America's most popular sport.
via @Old Whig
"Wait, The NFL Is A Tax-Exempt Organization?"
Holy crap, Amy, you took those words right out of my mouth!
Why, on earth, are they tax-exempt? Why was the IRS going after Tea-partiers and not these folks raking in the millions? (oh wait, I need to re-read that - raking in the Billions)
I fear, the world is more fucked-up than I imagine.
Charles at September 20, 2013 6:46 AM
The one thing I wonder about, as far as the other side of the story, is: does the NFL actually retain any of the revenue it collects, or does it distribute it all to the member franchises (who, of course, pay taxes)? Does the NFL itself actually have investors, or is it just a negotiating entity for the franchises? There might be less here than meets the eye.
Cousin Dave at September 20, 2013 6:52 AM
Actually Cousin Dave, sadely there's a lot more that's horrific about the NFL's relationship to taxes:
http://www.theatlantic.com/magazine/archive/2013/10/how-the-nfl-fleeces-taxpayers/309448/
I love Football and watching football, but the public money & taxes aspect is seriously messed up. We don't need to subsidize the ridiculously wealthy and extremely profitable NFL.
Andrew at September 20, 2013 8:06 AM
Even more egregious is the fact that universities, which often have huge endowments and own enormous amounts of valuable property are also tax exempt.
DrMaturin at September 20, 2013 8:37 AM
The entire non-profit tax free system needs to get re worked. Some were put in place when tax or no tax wasn't a big deal, but with taxes so high, it is a major advantage. The one that I'm often arguing with a coworker is credit unions (non-profit, tax free) vs banks (for profit taxed, well sort of).
The supposed main difference is the profit. If a bank makes money, the owner / stock holders make money. If a union does, it gets distributed to the members (through better rates and no fees). Both can have high salaried executives. so members vs stock holders a rather fuzzy distinction at times.
Joe j at September 20, 2013 9:24 AM
Tax exempt? Tax exempt? What public service does the NFL provide? That's akin to the strip club downtown claiming tax exempt status because they promote the interest of their 1099'd strippers. SERIOUSLY!!!! Corporate greed is out of control and the burden to individual taxpayers is a direct result. Any organization that can afford to pay it's CEO $30m should automatically lose it's tax exempt status as clearly, they are making a profit. And do the remaining proceeds turned back to the teams count as team revenue??? I bet not.
Lee Ladisky at September 20, 2013 9:54 AM
How in the hell are they nonprofit?? They make MASSIVE profits!
momof4 at September 20, 2013 10:44 AM
"Corporate greed" Technically they aren't a corporation, they are legally more a union.
PS I'd be all in favor of getting rid of tax exemption and other perks of all unions.
" They make MASSIVE profits!" Technically they don't, the money goes back to the members (teams) where it might be taxed, but possibly at a different rate. So the league doesn't make profit, the members do.
Taxes are weird. for example one of the main capitol gains arguments is it is taxed multiple times.
Company makes a profit, and pays tax on said profit, then the money is paid out as dividends to the stockholders who have to pay capitol gains tax on it. Double taxed?
Joe J at September 20, 2013 11:44 AM
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