As we are all preparing to watch the Biggest sporting event in the USA, we need to remind ourselves that the NFL (National Football League) actually operates as a 501(c)6 non-profit association and has operated that way since the 1960s. Last year alone, the NFL made about $1 billions in profit.
The definition of a 501(c)6 as given by the IRS is as follows:
IRC 501(c)(6) provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues… which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.
The NFL pays its (best) players very very well. But given the types of risks they are taking, I wouldn't blame them for the compensation some of them are getting.
The NFL pays its executives even better, with Roger Goddell (the league commissioner and most powerful man) expected to make about $20millions by the end of his new contract with the NFL.
As one can imagine, the NFL has plenty of lobbyists in Washington, trying to keep the status quo.
On Capitol Hill, lawmakers have pointed to the NFL as a prime example of government waste. Tom Coburn (R-Oklahoma) released his ‘Wastebook 2012’ report in October, wherein calculations suggested that ending tax-exemption for professional sports organizations like the NFL and PGA would generate over $89.9 million in new tax revenue.
According to the Center for Responsive Politics, “the NFL spent $1.14 million on lobbying last year.” Political efforts have been mounted primarily from the NFL’s political action committee, Gridiron PAC, which was founded in 2008
But there is more to the NFL’s tax-exempt story beyond the IRS nodding at the League’s 501(c)(6) status. The for-profit teams get their own additional heavy subsidies in the form of taxpayer incentives for constructing or renovating stadiums. In Charlotte, N.C., for example, the Carolina Panthers are providing broad hints that if the city wants to keep the NFL franchise, it will have to ante up taxpayer money to upgrade the stadium. The Pittsburgh Steelers are trying to get taxpayer money to add 3,000 seats to Heinz Field. Goodell and Atlanta Mayor Kasim Reed joined Atlanta Falcons owner Arthur M. Blank in a pitch to Gov. Nathan Deal for a new stadium with a retractable dome to be partially paid for with taxpayer funds. Goodell described the plan as a public-private partnership but State Sen. Vincent Fort characterized it as “corporate welfare at its worst.”
Is the NFL’s tax-exempt status another example of corporate welfare? Will Congress finally look at it more closely, as it discusses waste? Or does the NFL—despite a limited membership of mostly billion dollar teams and billionaire owners like Paul Allen and Jerry Jones—deserve a 501(c)(6) tax-exempt status like any other association?
I consider my a football fan, as I do watch the game from time to time.
As America is discussing the fiscal cliff and all the issues with deficits. As America is trying to push for cuts to Low income Citizens, Veterans, the poor, elderly, disabled ... let's keep in mind that some of the most successful businesses in America do everything in their power to avoid taxes. These taxes will ultimately need to be paid by someone: Most likely YOU and ME.
+++updated: $1billion in profit.