NFL’s tax-exempt status could be providing tax breaks to teams, not just league

Timothy Lavin of Bloomberg View had an op-ed up last week on the NFL’s tax-exempt status, which I set aside before reading at first because while the league’s tax exemption is annoying, it doesn’t really amount to all that much of a tax subsidy. (Because individual teams, which are what actually earn the revenue, are still taxed.)

Except that Lavin has found some potential loopholes that the NFL may be exploiting to use that tax exemption as a more significant tax dodge:

  • “First, the league’s primary business these days is no longer football, it’s financing.” The NFL’s stadium loan fund — which is really more of a grant fund, since the teams get to pay it back with revenue they wouldn’t keep otherwise — appears to allow the league to borrow money on lower terms than it would otherwise, and pass the savings on to the teams that are building stadiums.
  • NFL teams pay more than $300 million a year total in dues to the league. If that money is then used to help teams pay for stadium costs, the team owners get to treat it as a business expense rather than a capital expenditure, which allows them to write it off much more quickly.

Lavin cautions that without looking at NFL teams’ books (ha ha ha ha!), we don’t know how much they’re actually saving by these methods, so it still may not be a huge deal. But this does potentially explain why the NFL is holding onto its 501(c)(6) status, which MLB voluntarily ditched in 2007.

Either way, the benefits for teams almost certainly pale in comparison to those from the IRS’s continuing acceptance of the tax-exempt bond dodge, which saves sports teams around $150 million a year, at the expense of the federal treasury. Maybe someday Congress will get around to doing something about all this, beyond staging the occasional hearing.

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