Battle over NFL's Tax-Exempt Status Focuses Attention on Sports Crony Capitalism

Breitbart Sports ^ | 12/9/2013 | MICHAEL PATRICK LEAHY

[markomalley]

The National Football League, which Forbes Magazine recently called "the most lucrative sports league in the world" has enjoyed federal tax-exempt status since 1966. In September, Senator Tom Coburn (R-OK) introduced the PRO Sports Act (S. 1524), which is designed to end the tax-exempt status of the NFL, along with several other sports leagues and organizations, including the NHL, the PGA, and the LPGA.

Despite a petition to Congress signed by over 300,000 fans requesting an end to the NFL's tax-exempt status and a recent pair of dueling op-eds between Senator Coburn and Jeremy Spector, an attorney with Covington and Burling and outside tax counsel to the NFL, that publicly debated the merits of the NFL's tax-exempt status, Coburn's legislation is going nowhere.

In a Senate filled with colleagues who eagerly rush to co-sponsor popular bills, Coburn has failed to find a single co-sponsor. On September 18, when Coburn introduced the bill in the Senate, it was read twice on the floor, as is the custom, and was sent to the Senate Finance Committee on the same day. Nothing has been heard of it since.

The reasons why the bill is going nowhere sheds light on the intricate connection between the major players in the sports world and our national problem of special-interest crony capitalism.

Though the 32 teams that comprise the NFL and several valuable league subsidiaries, such as NFL Ventures LLC, are for-profit tax paying organizations, the NFL League office itself is a not-for-profit organization. It is not an IRS Code Section 501 (c) (3) charitable non-profit, like the American Red Cross, but is instead an IRS Code Section 501 (c) (6) non-profit, which independent tax attorney Jeffrey Tenenbaum points out is "an organization whose primary purpose is to further the industry or profession it represents."

[Yorlik803]

a lot of us pay for the stadiums while the NFL makes boat loads of cash. I will never go to a Steeler game for two reasons: One, I cant afford a ticket and two, the Rooneys are Obama buttboys.
I also resent paying millionaire football players. Most of whom should be in jail.

[Almondjoy]

Don’t confuse people with facts.. it just muddles the fact that people want to say that nobody in the NFL pays taxes.

[Alberta's Child]

If they have $10 million in income and pay the guy $10 million in salary, then they pay no income taxes at all.

Whatever "revenue" they have is only to pay their expenses, including the cost of office space, salaries for their staff (not just the commissioner but his administrative staff), etc. That's how a non-profit organization works.

The NFL doesn't get any revenue from its football operations. My guess is that all of their income is from fees that are paid by each franchise.

[mrsmith]

"It’s always the common folk that pay the taxes, always. It has to be this way since almost all the money is held by the middle class. The great bulk of all taxes are paid by the middle class as increased prices of goods and services passed on to them to make up for the taxes levied on the wealthy and corporations...."

Can't be said too often.
The poor pay even more in taxes than the middle class- but they pay in lost opportunities, not in money.

[Bobalu]

Yes, you make a very good point.

[Tea Party Terrorist]

The NFL blackmails cities into subsidizing stadiums for their billionaire owners.

They also insist on not paying any hotel taxes in the cities that host the Super Bowl.

If they don’t make a profit and don’t have any revenue over expenses, then they should not have to worry about being tax-exempt.

[Alberta's Child]

If they’re a non-profit I believe they can retain “earnings” for the next tax year without paying income taxes.

[Alberta's Child]

I agree with the other points, though.

I'm no fan of the NFL. It's just kind of ridiculous to suggest that nobody gets any tax revenue from professional football teams.

[Tea Party Terrorist]

I certainly see their point, but that doesn’t change the fact that the NFL is an organization that exists to bleed Taxpayers dry for the benefit of billionaires.

[Alberta's Child]

IF taxpayers have a problem with that, they should take it up with their elected officials. The problem is that most taxpayers are perfectly content to let this happen. The NFL bleeds billions of dollars from taxpayers because taxpayers put a higher priority on their NFL football than they do on a lot of other things.

[Tea Party Terrorist]

I’m not so sure that’s the truth, but I disagree with your logic.

If 50%+1 of voters thinks it’s OK to take your cash from your wallet does that make it OK?

One of the general principles that should rule Gov’t is no subsidies for private business.

[Alberta's Child]

None of that is OK. Your problem isn't with the NFL; it's with your elected officials and therefore with your fellow citizens.

I agree 100% that government shouldn't be subsidizing private business. But if you were to rank every company in the U.S. that receives a government subsidy the NFL probably doesn't rank among the top one thousand of them.

[Alberta's Child]

P.S. One of the ways governments get a lot of local support for financing these sports venues is the way they set it up so as to minimize the expenditures for local taxpayers. Most of these stadium financing deals involve the use of hotel and rental car tax revenues to support long-term bonds. What this means is that taxpayers from somewhere else are the ones who ultimately pay the cost of the stadium.

[Nik Naym]

Exactly. My taxes built their stadiums and they get tax exempt status on top of that. I say let them build their own stadiums and give no subsidies and no tax breaks. Let it survive or die like any other business. Football is just another entertainment business. It should be treated as such.

[Tea Party Terrorist]

So, crony capitalism is “OK” if “someone else” is having to foot the bill? Gotcha.

[Alberta's Child]

It doesn't make it OK. It makes it politically feasible.

One legitimate rationale for hotel and rental car taxes is that it helps raise tax revenue from people who use public infrastructure and resources but usually don't pay other taxes in that jurisdiction (income taxes, for example).