Friday, January 31, 2014

The NFL is tax exempt?!

This weekend the Denver Broncos and Seattle Seahawks will be contesting the Super Bowl. The game itself usually nets a profit of over $200 million ($245 million two years ago). Annually, the NFL huddles up an annual profit of $9 billion. Considering how much of a money machine the NFL is, it would surprise many to find out the the NFL is actually classified as a tax exempt organization by the IRS... I know I was!

And it has actually been this way since the 1966. The NFL league office is classified as not-for-profit under section 503(c)(6) which lists these as applicable for tax-free status:
business leagues, chambers of commerce, real estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit …
 The inclusion of 'professional football leagues' is pretty odd to me. Interestingly enough, 503(c)(6) organizations are generally considered "organizations whose primary purpose is to further the industry or profession it represents." The NFL argues that they in fact operate is the same way that a chamber of commerce, or plumbers association (also exempt under the same section).

The problem is that they actually don't operate like a professional organization as they claim. A plumber can join a plumbers group by showing they are a plumber and paying their dues. But one can't simply show that they have a football team, pay a fee and be an NFL franchise. The NFL personally seeks and distributes franchises as it wishes.

A college or arena football team can't just join the NFL, like an electrician can join an electricians organization. Also, the NFL does not benefit football in general like a welding guild benefits that profession in general. Tell me how the NFL benefits the Arena Football League or college football? If anything, leagues like arena football suffer because of the NFL.

Also consider that with the NFL making a $9 billion profit, they only donated $2.3 million to charity (NFL Charities is a separate organization), but paid NFL Commissioner, Roger Goodell almost $30 million a year. The NFL isn't just non-profit, instead they make a profit bloated enough to make a
gorged tick blush.

So it's no surprise that senators Angus King (I) and Tom Coburn (R) have proposed a bill to revoke the special treatment that NFL has been enjoying. If passed, it is estimated to mean $91+ million of tax revenue for the government every year. That would mean that the NFL would be paying their fair share, and you and I could pay a bit less in taxes. Sounds good to me! Now only if we could get GE to pay taxes as well...

Sign the petition here if you'd like to speak out against the NFL's free ride.

-Brain Hulk

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