It’s no secret that the NFL makes money. Lots of money. It pays its executives lots of money — Commissioner Roger Goodell made nearly $30 million in the year covered by the league’s most recent tax filing.
A lesser-known fact is that the NFL, as an organization, is a 501(c)(6) tax-exempt organization. That means the league doesn’t have to pay federal income tax on its estimated $10 billion in revenue (that number is expected to grow to roughly $25 billion by 2018). If that seems a little ridiculous, that’s where Oklahoma Senator Tom Coburn comes in. According to The Newark Star-Ledger, Coburn has crafted an amendment that would strip the NFL, NHL and PGA of their tax-exempt status.
“Based on the publicly available information about the NFL and NHL alone, [revoking] non-profit status may generate at least $91 million of federal revenue every year,” Coburn said.
That’s a decent chunk of change for federal revenue.
The tax-exempt status of the NFL became a talking point during the 2011 lockout when NFLPA executive director DeMaurice Smith chided the league for using a label more commonly associated with charities. Technically the league does fall under the parameters to be a 501(c) organization, so it would take the government believing they are getting the short end of the stick with the definition of a non-profit business association for congress to pass a new law and change the situation.
Here is a tangible example from the Star-Ledger showing how the process works:
“The league collects $6 million in annual membership dues from each team, the teams write off those dues as ‘charitable donations,’ and the NFL in turn takes that $192 million and puts it into a stadium fund that gives owners interest-free loans as long as they secure public financing for their new or renovated stadiums.”
That means the taxpaying public loses out on federal tax revenue while also paying for stadiums that generate pure profit for no one else but team owners.