February 2, 2014

How the NFL is a Tax-Exempt Organization

With revenues more than $9 billion, the NFL is the most lucrative sports league on the planet.

February 2, 2014

Jennifer Dust

But that's not enough. NFL Commissioner Roger Goodell wants to triple the league's revenues by 2027 to a mere $25 billion. Oh, but there is even more! The NFL does not pay any Federal taxes on any of that revenue. Nothing. Nada.

As a nonprofit, the NFL earns more than the Y, the Red Cross, Goodwill, the Salvation Army or Catholic Charities. When the NFL merged with the old American Football League in 1966, it landed itself in the section 501(c)6 of the tax code, designated as an industry association. The designation actually covers "chambers of commerce, real estate boards, boards of trade, and professional football leagues."

Over the weekend, Rootstrikers blasted out an email urging people to sign a petition in support of Sen. Tom Coburn's (R-Okla.) PRO Sports Act, which would ban big sports leagues from receiving tax-exempt status. "You know the NFL as the National Football League," says the Rootstrikers email. "But the IRS knows them better as the Nonprofit Football League—that's because the NFL has not paid any taxes since 1966 and average Americans are left paying higher taxes to make up for that lost revenue. Senator [Tom] Coburn is trying to change that, and we support his endeavor." Coburn's bill would ban pro sports leagues with more than $10 million in revenue from receiving tax-exempt status.

Just to make it clear, teams that are members of the NFL do pay taxes. The leagues then supply the central NFL office with much of its revenue. And those dues that the teams pay, averaging to about $6 million per team, is considered donations to a nonprofit. Tax returns from 2011 show the NFL received $254 million in membership dues from teams. It paid nearly $108 million in salaries and gave just $2.3 million to charity. Charity is good! Around $2.1 million of the charitable donations went to expanding the Pro Football Hall of Fame in Canton, Ohio.

The NFL has defended its tax-exempt status, saying that the league offices are akin to chambers of commerce, dues come in and expenses go out. The pro football league has lobbied heavily to keep that nonprofit status. According to the Sunlight Foundation, the NFL's political action committee has handed out more than $1 million in campaign contributions since 2011, split evenly between the political parties.

So, as you sit around munching on Doritos and Budweiser during the Super Bowl, be proud your hard earned dollars you paid for that snazzy jersey is being put to good use. Not to mention your tax dollars being used to build those big fancy corporate named stadiums.

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