Politics

February 2

Washington Notebook: Sen. King, colleague: Should NFL have tax advantage?

Two U.S. senators co-sponsor the PRO Sports Act, which would cut tax exemptions that sports leagues now enjoy.

WASHINGTON — More than 100 million people are expected to tune into Sunday night’s Super Bowl, the culminating annual event of a league that raked in more than $9 billion in 2012.

Roger Goodell
click image to enlarge

NFL Commissioner Roger Goodell – a part of the tax-exempt head office – earns an estimated $30 million a year. “Have you ever heard of a nonprofit where somebody is making $29 million a year?” Sen. Angus King, I-Maine, asks.

The Associated Press

With that kind of money flowing through the National Football League, two senators from Oklahoma and Maine urged their colleagues last week to ponder a simple question:

Should the NFL really be tax exempt?

“We have no excuse for reducing vital services to the needy or benefits like veterans’ pensions when special handouts like this one are still on the books,” Sen. Tom Coburn, R-Okla., and Sen. Angus King, I-Maine, wrote in a “dear colleague” letter to fellow senators last week.

The pair are seeking co-sponsors on a bill that would revoke the tax-exempt status of professional sports organizations such as the NFL, the National Hockey League and the Professional Golfers’ Association of America.

To be clear, the NFL is not really making $9 billion tax-free.

The vast majority of the cash that Americans shell out on game tickets, orange Peyton Manning jerseys or Patriots-logo valve stem caps for truck tires (only $13.95 per set) is taxable. Most of that money flows to the teams, which are for-profit franchises that pay local, state and federal taxes.

Only the NFL’s head office is tax-exempt under the 501 (c)(6) section of the tax code that also shelters the Chamber of Commerce and any other “trade associations” or “business leagues ... whose purpose is to promote the common business interest.”

Those trade associations are not allowed to make a profit, and the NFL’s tax attorney says that’s certainly true of the head office behind the world’s most financially successful sports league.

“All $9 billion – all of it – is subject to taxation every year,” Jeremy Spector, the NFL’s outside tax adviser, said in an interview. “To put it another way, the NFL’s tax exemption is not shielding any of those profits from taxation. The NFL is set up to have all of those revenues generated by the teams in the league, ... and because those teams are for-profit companies, all of that money is taxed.”

That said, the NFL’s tax-exempt head office isn’t exactly hurting for cash.

King and Coburn point out that NFL Commissioner Roger Goodell – a part of that tax-exempt head office – earns an estimated $30 million a year.

“Have you ever heard of a nonprofit where somebody is making $29 million a year?” King said in a joint appearance with Coburn on CNN’s “New Day” program.

And rather than marketing a business or all types of football, the pair contend, the NFL is marketing a specific brand.

“I love football. I love professional golf,” added Coburn, a spending-reform crusader who publishes an annual “Wastebook” that chronicles what he sees as government waste. “But I love a fair tax code and this is a quirk in the tax code.”

The Properly Reducing Over-exemptions for Sports Act (or PRO Sports Act) introduced by Coburn and now co-sponsored by King would apply to all professional sports leagues, not just the NFL. The Joint Committee on Taxation estimates that ending the exemptions would generate about $10 million in tax revenue annually.

But Spector said the Coburn bill is based on a “misperception and a flawed premise” that the NFL is somehow cheating the government out of tax dollars. Spector pointed out that the Internal Revenue Service audited the NFL several years ago for compliance as a nonprofit – including looking at the size of its compensation – and found no issues.

(Continued on page 2)

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors




Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)


Blogs

More PPH Blogs