NFL Nonprofit Flap: Outraged Petitioners Tackle Tax-Exempt Status Of The National Football League

on September 24 2013 1:19 PM

NFL The NFL logo and set are seen at New York's Radio City Music Hall before the start of the 2013 NFL Draft April 25, 2013.  Reuters/Shannon Stapleton

When it comes to paying taxes, critics say professional football has been getting a free pass.

More than 150,000 people have already signed a rapidly growing petition demanding that the U.S. Congress revoke the tax-exempt status of the National Football League. Calling the NFL the “most profitable sports league in the world” -- and pointing to top officers who are paid tens of millions of dollars a year -- the petition says the NFL “should not be able to hide under a nonprofit status in order to avoid paying federal taxes.”

The league, which represents the 32 teams that make up the National Football Conference and the American Football Conference, is classified as a trade association and currently enjoys 501(c)(6) status, a designation reserved for business leagues. While the individual league teams are for-profit ventures, the league itself pays no corporate taxes because it does not technically make a profit -- this despite reporting revenue of more than $255 million in 2011. (As a nonprofit, the NFL must direct this revenue back into its operating budget, but there is no stopping it from doing so by way of exorbitant executive salaries.)

Not everyone thinks this is a fair deal. Last week, Sen. Tom Coburn, R-Okla., introduced a bill that would deny tax-exempt status to sports leagues that make more than $10 million a year. The bill calls out league-wide operations such as the National Hockey League and the PGA Tour, which Coburn says are “unmistakably organized for profit and to promote their brands.”

The NFL petition was launched on Change.org by user Lynda Woolard of New Orleans, who identifies herself as a New Orleans Saints fan on her Twitter profile, and who tweets often about football:

 

 

 

In the petition, Woolard writes that it’s the football fans who are hurt most by the league’s preferential treatment:

“The NFL has methodically worked to shift all the power to their side, leaving players, employees and PARTICULARLY THE FANS little say in what goes on with the league. We deserve a say, but do not wish to boycott our teams! Therefore, we are calling on our elected representatives to revoke the tax-exempt status we bestowed upon the league half a century ago. Please sign this petition, and let Congress know that you want them to reconsider the NFL’s tax exempt status.”

The NFL’s tax-exempt status is not necessarily a sports-industry standard. Major League Baseball, for instance, gave up its nonprofit status in 2007, and the National Basketball Assocation has never enjoyed such status. It’s also worth mentioning that many professional football stadiums are partially funded with tax-payer money.

According to 2011 tax records, the highest-paid NFL officers include commissioner Roger Goodell ($29.4 million), general counsel Jeff Pash ($7.2 million) and VP of business ventures Eric Grubman ($3.8 million). As an industry, professional football generates more than $9.5 billion a year.

A spokesperson for the NFL did not immediately respond to a request for comment.

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