At first glance lots of things appear to be clear cut. The correct conclusion a no brainer. Forrest Gump could figure this one out. The National Football League pays no income tax. Under the tax code they are considered a 501 (c) 6 organization. Those organizations are business leagues that promote a common business interest but do not engage in a regular business of a kind ordinarily carried on for profit. The activities of the organizations should be directed to the improvement of business conditions one or more lines of business rather than the performance of particular services for individual persons. The normal participants are groups like the local chamber of commerce. The NFL on its tax forms calls itself: "trade association promoting interests of its 32 member clubs." It should be kept in mind that the NFL is not the only professional sport in this catagory. They are joined by the Professional Golf Assoication and the National Hockey League. Major League Baseball gave up its tax exempt status about five years ago and the National Basketball Association has never been a not-for-profit. The Congress Joint Committee on Taxation estimates taking the exempt status from the NFL would provide an additional $109,000,000 in tax revenue over the next 10 years. Now let's muddy up the waters just a bit.
The NFL notes that while the league office is tax exempt the 32 franchises are not. The NFL's most recent tax form indicates $4,300,000,000 was distributed to the 32 clubs where that money is subject to tax. That is revenue from television rights, postseason revenue and shared ticket revenue from visiting teams. Every dollar of revenue according to an NFL spokesman is subject to income tax since it is distributed to the member clubs. The NFLdoes list $621,000,000 in receivable loans part of the lending program to teams for new stadiums. Those loans are made at below market rates helping the teams build better revenue producing stadiums. Those loans could be considered private benefits for NFL insiders and those kind of benefits are not normally allowed for tax exempt not for profits. The NFL central offices which is the tax exempt business collected $255,000,000 from team membership dues. Since they are a not for profit the dues are a tax deductible donation. If the NFL becomes a for profit business the dues become a business expense so there is no additional tax revenue generated by that change.
Want to stir the pot a bit more? A recent study calculated that 70% ofthe capital costs of an NFL stadium has been provided by taxpayers and not NFL owners. Cities, counties and states pay the stadiums ongoing costs by providing power, sewer and other infrastructure as well as stadium improvements. So working taxpayers are subsidizing the NFL with those expenditures. Is it that simple? Probably not. How much money do ticket sales, hotel stays, bars, eating establishments and other entertainment venues bring in due to attendance at the games. Very few folks drive to the stadium, attend the game and go home without spending any other money in the state, county or city hosting the game.
Once again when you look at all sides of the issue it isn't so simple. It seems to boil down to this. When everyone else is being called on to make some sacrifices to address our budget problems maybe even a revenue neutral move by the NFL would show some good faith and enhance the image of the league.
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