NFL gives up non-profit status, saves taxpayers approximately $0

I’ve been fielding lots of questions from youse guys the last few days about the NFL’s announcement that it will give up its non-profit status, which isn’t technically a stadium question, but does touch on a lot of subsidy issues (and was the subject of a major Change.org petition campaign). My short answer has been that it’s not that big a deal: It’s just the league office that was not-for-profit, and the vast majority of revenue goes to the teams, not the league, so meh.

The long answer has been tackled by lots and lots of other people, starting with Travis Waldron of ThinkProgress:

Relinquishing the tax exemption will almost certainly have little, if any, cost for the league or benefit to taxpayers, since the NFL operates as a pass-through entity. …

Citizens for Tax Justice has estimated that the exemption saves the league just $10 million annually, roughly the same calculation the Joint Committee on Taxation made when it estimated that revoking the exemption would increase federal revenues by $109 million over a decade.

But those benefits may not exist at all. Major League Baseball gave up its tax exemption in 2007 and has maintained that doing so had no effect on its finances. The NFL, according to some experts, may have to pay a small amount of taxes based on some revenue it takes in and the structure of a stadium loan program it used to run. But even accounting for that, other experts have in the past guessed that the league might be able to find more than enough write-offs in the tax code to offset what it could have to pay.

And then there’s this, from the Washington Post:

If the NFL had filed taxes as a for-profit company last year, according to spokesman Brian McCarthy, it wouldn’t have made a difference on its tax bill. In 2014, McCarthy wrote, the league would have owed the IRS a grand total of $0.

Meanwhile, ditching its 501(c)(6) tax exemption means that the NFL no longer has to reveal any internal financial info about its league office, like commissioner Roger Goodell’s crazy salary. All of which is why other sports leagues have given up their non-profit status already, and why this isn’t much of a big deal for the NFL.

But wait: Doesn’t the NFL get big tax breaks on things like hotel rooms at Super Bowl time thanks to its 501(c)(6) status? Not really — those tax breaks are mostly negotiated with local cities as a condition of granting the Super Bowl anyway, so they’re not going away anytime soon. Timothy Lavin of Bloomberg View did suggest last year that NFL teams could be using the league’s tax exemption as a way of getting cheaper stadium financing costs and expensing league dues more rapidly, but neither of those is making anybody a whole lot richer than they already are.

So, for the NFL, getting rid of their non-profit status mostly means not having to answer any more questions about their non-profit status, so you can see why they’re doing it. One hopes that the discussion (and Change.org petitions) will now move on to some of the seriously lucrative tax breaks that sports leagues haul in, like the use of tax-exempt bonds for stadiums that is costing taxpayers between $50 million and $150 million a year. That one the NFL probably isn’t going to give up voluntarily.


3 comments on “NFL gives up non-profit status, saves taxpayers approximately $0

  1. Goodell’s definitely making more than $50 mil a year now… Maybe $52 mil a year, so he can say he makes a million a week like Leo in The Wolf of Wall Street.

    Roger Goodell drawing comparisons to Jordan Belfort, what a great guy. O_O

  2. Even if the loss of this status had produced some tangible tax benefit for the state in which the corporation is resident, I don’t think anyone believed that the NFL couldn’t adjust it’s own revenue distribution model until their tax bill was either $0 or a refundable credit was owing.

    They literally have no shame where money is concerned.

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