QOD — Should the NFL Lose Their Federal Tax Exemption?
Easy question — the NFL head office gets to operate as a non-profit (even though individual teams pay taxes), exempt from Federal taxes. There’s probably not a ton of money involved in eliminating this tax subsidy, but there is no reason my a sports league (even if it is the head office only) to no have to pay taxes. It isn’t as though the NFL needs any special incentives to operate or to make money. They squeeze enough of those out of the taxpayers of the cities they play in. And apparently, professional hockey and professional golf have the same deal. Seriously?
This week two Democratic senators have announced bills that would put this obvious farce to an end. In response to the outrage swirling over the NFL’s apparent tolerance of domestic abuse, New Jersey’s Cory Booker introduced legislation that would prohibit tax-free status for all major sports leagues. (The National Hockey League and PGA Tour are also nonprofits.) Washington state’s Maria Cantwell, meanwhile, is offering a bill targeted directly at the NFL’s tax-exempt status, prompted by its refusal to force the Washington, D.C., franchise to change its name from a racial slur against Native Americans.
Even if it’s taken a series of national scandals to give this idea a fresh push, it’s nice to see common sense gaining more steam. Previously, Republican Sen. Tom Coburn of Oklahoma (whose state lacks an NFL team) and the House Ways and Means Committee have proposed legislation that would strip sports leagues of their nonprofit status. But if senators representing Giants, Jets, and Seahawks fans suddenly feel comfortable getting behind this idea, that’s progress.
What do you think? Eliminate the tax exemption or no?
ps. The guys from South Park got in abit of epic trolling of the owner of the Redskins in their ad for the season premiere of South Park:
Tags: QOD
Tax exempt status for supposing non-profits that regulate multi-billion-dollar industries is a fascinating can of worms that goes way beyond professional sports.
For example, Highmark (the parent company of Highmark Delaware) is what a judge recently called a “supposed non-profit” that sits atop an empire of over thirty-five companies (most of whom are for-profit) and in 2012 made an “incidental” profit of $4.4 BILLION that was apparently tax exempt.
We live in a new world in which “non-profit” no longer means what is used to.
Of course they should. But not primarily over the issue of domestic abuse or the Redskins’ name. They should lose it b/c it was a rip-off from the beginning that has now grown to gargantuan size. Gregg Easterbrooke spelled it out in this must-read article from the Atlantic:
http://www.theatlantic.com/magazine/archive/2013/10/how-the-nfl-fleeces-taxpayers/309448/
Here’s how the NFL made its bones with Congress. From Easterbrooke’s article:
“This situation came into being in the 1960s, when Congress granted antitrust waivers to what were then the National Football League and the American Football League, allowing them to merge, conduct a common draft, and jointly auction television rights. The merger was good for the sport, stabilizing pro football while ensuring quality of competition. But Congress gave away the store to the NFL while getting almost nothing for the public in return.
The 1961 Sports Broadcasting Act was the first piece of gift-wrapped legislation, granting the leagues legal permission to conduct television-broadcast negotiations in a way that otherwise would have been price collusion. Then, in 1966, Congress enacted Public Law 89‑800, which broadened the limited antitrust exemptions of the 1961 law. Essentially, the 1966 statute said that if the two pro-football leagues of that era merged—they would complete such a merger four years later, forming the current NFL—the new entity could act as a monopoly regarding television rights. Apple or ExxonMobil can only dream of legal permission to function as a monopoly: the 1966 law was effectively a license for NFL owners to print money. Yet this sweetheart deal was offered to the NFL in exchange only for its promise not to schedule games on Friday nights or Saturdays in autumn, when many high schools and colleges play football.
Public Law 89-800 had no name—unlike, say, the catchy USA Patriot Act or the Patient Protection and Affordable Care Act. Congress presumably wanted the bill to be low-profile, given that its effect was to increase NFL owners’ wealth at the expense of average people.
While Public Law 89-800 was being negotiated with congressional leaders, NFL lobbyists tossed in the sort of obscure provision that is the essence of the lobbyist’s art. The phrase or professional football leagues was added to Section 501(c)6 of 26 U.S.C., the Internal Revenue Code. Previously, a sentence in Section 501(c)6 had granted not-for-profit status to “business leagues, chambers of commerce, real-estate boards, or boards of trade.” Since 1966, the code has read: “business leagues, chambers of commerce, real-estate boards, boards of trade, or PROFESSIONAL FOOTBALL LEAGUES.”
The insertion of professional football leagues into the definition of not-for-profit organizations was a transparent sellout of public interest. This decision has saved the NFL uncounted millions in tax obligations, which means that ordinary people must pay higher taxes, public spending must decline, or the national debt must increase to make up for the shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league and its all-important television contracts. Individual teams are for-profit and presumably pay income taxes—though because all except the Green Bay Packers are privately held and do not disclose their finances, it’s impossible to be sure.”
They never should have gotten tax=exempt status, they sure as bleep don’t need it now. Get rid of it.
The NFL’s tax information (Form 990) is publicly available. In 2012, the NFL made about $9 million in profit ($327 million in revenue vs. $318 million in costs).
So, the biggest fiscal problem facing the United States is not the NFL’s tax status.
It is not a huge problem but it should be an easy problem to solve. Professional sports are not nonprofit.
So, the biggest fiscal problem facing the United States is not the NFL’s tax status.
No, but it is a symptom of the United States’ fiscal problem — providing tax subsidies to corporations that just don’t need them.
The problem with taking away the NFL’s tax-exempt status is that it’s symbolic. It will make it look like something has been done to punish the NFL, when in fact it won’t punish it at all.
I think that $327 million is not the entire picture. Forbes reported last August that the NFL had revenues in 2013 of “somewhere just north of $9 billion.” (http://www.forbes.com/sites/monteburke/2013/08/17/how-the-national-football-league-can-reach-25-billion-in-annual-revenues/)
That’s the total made by all the teams combined. That’s separate from the league office. The league office is the only part of the NFL that’s tax-exempt.
@c “No, but it is a symptom of the United States’ fiscal problem — providing tax subsidies to corporations that just don’t need them.”
It’s a HUGE form of corruption that’s dragging our economy down. Rent seeking organizations lobby hard to be able to steal from average Americans.
China has direct corruption. Which is worse?
I think our form of corruption is actually worse. China seems to be able to build its new high speed rail lines, its new subway lines, its new bridges, its new tunnels, its new space program, its new supercomputers, its new electron microscopes, its new electric car factories,…
And we’re both falling deeper into debt and falling apart at the same time. Where is our infrastructure spending? Where is our investment in science and engineering and education? Aren’t we even trying to have a future?
The Republican plan for science and engineering: More H1 visas.
Yea… That will make us great! That’s how to build a great nation!
Not only should the NFL be taxed, the bonds floated to finance corporate named stadiums all over the country should be restructured and the League made to service that debt, not the local taxpayers.
The teams allegedly pay taxes. However, since only the Green Bay Packers is a publicly-owned corporation, there is no information as to how much the other teams pay. None. Betcha none of them have ever been audited by the Feds either. Despite histories of fraud by some league owners.
Plus, each team is presumably free to fleece the local tax authorities to its heart’s content.
The NCAA should also loose their tax exempt status.