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This fight is for everything.

The next time the wall street journal editorial board speaks the truth will be the first.

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Celebrate the fucking wins.

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You are here: Home / Economics / C.R.E.A.M. / Open Sports Thread: The NFL’s Tax Status

Open Sports Thread: The NFL’s Tax Status

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David Roth, SB Nation, “Meet the woman who wants to make the NFL pay its taxes“:

It happens every year, briefly and usually around Super Bowl time. That’s when the matter of the NFL’s tax-exempt status percolates to the surface, generally as a result of all the outrageous things that the NFL demands from whatever city is lucky enough to host the Super Bowl that year, and which kind of idly enrage those so-inclined. Most states exempt 501(c)6 non-profit organizations — trade groups, ordinarily, like the Chamber of Commerce or National Beef Council — from state income and sales tax, and the NFL is classified as such. The NFL also pays no federal corporate taxes.

This tends to offend, especially given the NFL’s notable dedication to profit and power above just about everything else; it also violates the spirit of the law, as Slate‘s Jordan Weissmann points out, because the NFL is more like a closed cartel than an industry organization. And offend it does, generally for that one week in January. And then things roll on for another 50 or so weeks, more or less as it has since Congress first granted the NFL 501(c)6 status back in 1966…

But a New Orleans-based activist Lynda Woolard hit upon an idea that might force a little bit of accountability upon an organization that’s otherwise proven itself resistant to it. Several years ago, she started a Change.org petition aimed at revoking the NFL’s tax-exempt status. Since then, first slowly and then all at once, the movement has picked up momentum — the campaign now has the endorsement of a wide array of prominent national political figures, and the petition has more than 363,000 signatures. In the last week, two Senators — Maria Cantwell of Washington and Cory Booker of New Jersey — have introduced bills aimed at ending the NFL’s nonprofit status. The unlikely coalition supporting this cause includes an independent Senator from Maine, an arch-conservative Senator from Oklahoma, and a libertarian-leaning congressman from Utah.

Woolard, an artist and a Crescent City resident for over twenty years — and a die-hard Saints fan — was politically galvanized after Hurricane Katrina, and has dedicated herself to organizing in the years since. It’s not her only job, but it’s one she’s embraced with rare passion…

What was your inspiration for starting this petition — that is, what was the moment when you decided that the NFL’s tax-exemption was unjust enough that you wanted to organize and try to do something about it?

The Super Bowl riders were something I learned about after I started the petition… and I have learned much more about the intricacies of the NFL’s finances in the course of talking to like-minded sports writers and sports fans over the last few of years. Besides the fact that this multi-billion dollar industry being governed by a non-profit seems, on the face of it, unfair to everyone else who works hard and pays taxes, I really started the petition as a tool to gain some financial leverage over the NFL, and as a mechanism to call in the only body who seemed to have any authority over them: Congress.

I felt like every season started with some issue that fans felt uncomfortable with, but that we had no power to do anything about, whether it be the player lockout, the replacement refs, the growing body of evidence that the NFL hid reports linking concussions to later life disabilities, and so on. We just see that list of concerns getting longer today…

Reader Interactions

42Comments

  3. 3.

    OzarkHillbilly

    I sat and listened to a CN Senator talk about how the NFL promotes role models for American youth on NPR the other day, and that if they had the proper role models in their ranks they should be able to keep their tax exempt status (he actually used the threat of removing it if they did not shape up to his standards…. same diff). I am fairly certain he was a Dem and I can only say that I have not heard such a load of horse sh!t since the last time I accidentally hit Rush Redundant Bough on the radio. Cut the crap, treat them like any other business… make them jump thru a dozen different loopholes for their tax exempt status.

    Accountants are people too.

  4. 4.

    Helen

    Valerie Plame Wilson? Wow – there’s someone we haven’t heard from in a while. What is her dog in this fight?

  6. 6.

    Sterling

    The teams pay taxes. The NFL organization doesn’t. The expected tax revenue from switching to for-profit status is not as big as you think it would be, because they are not not pulling giant profits out of that entity.

  8. 8.

    Thoughtful David

    @raven:
    It’s not the money, it’s the principle of the thing. There is no way the NFL should be considered a not-for-profit organization. I don’t care how much or little tax revenue it raises.

  10. 10.

    Jim, Foolish Literalist

    Rachel Maddow replaying that should-be surreal moment when Alaska Tea Baggers hate Eric Holder because he’s anti-gun, but they can’t name one “anti-gun” thing he’s done. “I don’t have all the facts, but I know he’s anti-gun”. And the classic where the guy says “just look at his voting record”. “He’s actually never been a legislator” “Well… just google Eric Holder and the second amendment”

  12. 12.

    OzarkHillbilly

    @Sterling: So? The NFL got the tax break because….. Why? The likeliest explanation I’ve heard is that it was because back in the 60s they were a fledgling organization and needed the help. They are now a billion $ corporate entity. They rake it in by the fistfuls. They don’t need any help.

    Meanwhile, I’m a fledgling Monarch butterfly and polar bear nursemaid trying to help these poor innocent creatures transition to the new warmer world…. Where’s my tax break?

  14. 14.

    scav

    It is rather funny to watch them all get into such a flap about a tax status they insist isn’t such a financial benefit really and is apparently such a long-term bubbling source of distrust and low-grade ill-will. Especially as they’re otherwise so PR oriented. Either they’re lying or it really is just all about the being in bossy total control for them. Rather like the stance over the Redskins name, actually.

  15. 15.

    OzarkHillbilly

    @raven: Still waiting for a reason why they should have tax exempt status, preferably one that will stand up in the light of day.

  18. 18.

    Helen

    @Thoughtful David: I cannot tell you how much I do not care about sportsball (h/t Wonkette) but I think we need to be clear about what “not for profit” means. “Not for profit” does not mean there is no money left over after expenses; the very definition of no profits. It means “when there is money left over after expenses, no one profits.” Meaning there are no share holders who get a portion of the money left over after expenses. That money either is moved over into the next fiscal year or returned to the donor.

    Memorial Sloan Kettering Cancer Center has more money after expenses than God (but less than Oprah, (h/t Rosanne) but no one profits from that.

  22. 22.

    Steeplejack

    The Bloomberg article linked to above is pretty informative:

    The teams benefit from the league’s tax-exempt status because (a) a large part of the league’s financial activities involves very generous loans to the teams for stadium construction and improvements and (b) dues paid to the league (about $10.2 million per team per year) are tax-deductible.

    To the extent the NFL doesn’t spend [the dues] immediately to benefit its members, teams are able to deduct business expenses sooner than they otherwise could. And if the league office used the money from dues for capital improvements—say, for facilities upgrades—a team could then convert what might have been its own capital expenditure (which can’t be deducted immediately) into a business expense (which can be). If the league lost its exemption, both those benefits would evaporate.

    In other words, it looks like the primary beneficiaries of the NFL’s tax exemption are, in fact, the teams—those wildly profitable private enterprises that the NFL insists pay their fair share to the tax man. So when the league’s lawyers say things like, “None of the NFL’s profits escape tax by virtue of the league office’s tax exemption,” this is true insofar as you share their definition of words like “none,” “profits,” “escape,” “tax” and “virtue.”

    Exactly how much those tax advantages are worth to teams is impossible to determine without seeing their books. But it’s fair to say they’re worth all the aggravation, misunderstandings and calamitous publicity the exemption episodically causes. Otherwise the league would drop it. That’s one kind of cost-benefit analysis the NFL is actually pretty good at.

  24. 24.

    JustRuss

    I don’t see why any trade org should get tax exempt status. The National Beef Council exists to help it’s members sell beef. Why are taxpayers subsidizing that?

  27. 27.

    Helen

    @raven: Do we care? Not me. Used to be a big Mets fan. Long story – I am old(they won in the 80’s!) but not as old as you!

    The only thing I care about re: sportsball is that : I AM NOT NOT NOT paying for your stadium. If you overpay your talent, do not come to me to pay for your venue.

  28. 28.

    Culture of Truth

    I have to admit this part of the Internet bugs me. People who have no real clue about tax law or non-profits suddenly learn the NFL is non-profit and link to some site explaining why it is or is not, but clearly clearly he/she can’t vouch for its accuracy. So what’s the point, and why do you care — because of Ray Rice, or tax law in general? If the former, that’s a little silly and if the latter, why didn’t you care before?

  29. 29.

    Cacti

    Roger Goodell is the country’s highest paid nonprofit employee with an annual salary of about $44 million.

  30. 30.

    Chet

    Non-NFL-related, and I know we’re all sick of hearing about the guy, but… Derek Jeter. Holy fucking shit.

  35. 35.

    Steeplejack

    @Corner Stone:

    Thanks. Mine have loosened up a little and gotten even more comfortable—broken in very quickly. I find myself reaching for them all the time now for short jaunts and errands. Haven’t actually tried them for “serious” walking yet.

  37. 37.

    Steeplejack

    With RGIII out and a host of other injuries, how were the Redskins six-point favorites going into this game? Are the Giants supposed to be that bad? Because they are tromping on Washington.

  38. 38.

    Wally Ballou

    That Jeter play is a great story, and should bring some much-needed attention to what has been a criminally under-reported career finale. :-|

    Listening to the Giants game, and I just heard Jon Miller say that the Pirates beat the Braves 10-1 and have won 16 of their last 20 games. Where’s the Bucco talk, Cole?

  39. 39.

    Gian

    @Helen:

    as I understand it, the NFL owner lust for new stadiums with personal seat licenses and super pricey luxury boxes has a great deal to do with NFL revenue sharing.

    the pampered owners get to keep the gate, not the TV rights, so they want to do anything to increase the gate and the concessions. As far as I can tell the NFL games fucking suck to go to if you’re not a drunk assed 20 something male rooting for the home team. (or a young female who enjoys being yelled at to expose herself)

    Part of me was hoping that Adrian Peterson would get to play and the home team’s sound guy would play Pat Benatar “hell is for children” over and over and over.

    But to the point, when MGM, Disney and Marvel are non profit the NFL should be as well.
    it’s entertainment, just like the hunger games.

  40. 40.

    Mnemosyne

    @Gian:

    But to the point, when MGM, Disney and Marvel are non profit the NFL should be as well.
    it’s entertainment, just like the hunger games.

    I must be missing your point, because those are for-profit companies (and, technically, the Disney Borg has absorbed Marvel, so you really only listed two companies. Resistance is futile.)

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