By TARIQ KENDALL
Staff Writer
This year’s Super Bowl is projected to make the NFL nearly half a billion dollars. With this massive windfall, looming questions have been raised about the NFL’s tax-exempt status. Should an entity that pulls in $9.5 billion this past season really be excluded from paying taxes?
The NFL’s tax exemption dates back to the NFL-AFL merger. Leading up to the merger NFL commissioner Pete Rozelle spent time lobbying Congress.
For reasons unknown, Rozelle wanted this new NFL to be exempt from taxes, and on November 8th, 1966, exactly five months after the announcement of the merger a bill was passed that quietly exempt “football leagues” from taxes. Keep in mind this bill was intended to “suspend the investment credit and the allowance of accelerated depreciation in the case of certain real property” so it’s a little strange that toward the end of the bill they mention football.
Congress justifies this exemption by classifying the NFL under section 501 (c)(6) of the tax code as a non-profit ‘Trade Association’
A ‘Trade Association’ is defined by wisegeek.com “organizations that create a means for businesses involved in a given industry to interact to the mutual benefit of all concerned.”
In the case of the NFL, this means the league office in New York. So under the tax code the NFL League office is the only thing exempt from taxes. What does this have to do with the nine billion dollars? The nine billion doesn’t go to the league office, it goes to the teams so that money is subject to tax. End of story, right? WRONG.
A Trade Association is technically a non-profit. So when teams have to pay ‘dues’ to the NFL that money isn’t taxed. So yes, the IRS is getting some of the money the NFL generates, but they aren’t getting as much as they could.
The problem isn’t with the league office, it’s with the teams. The league office acts as a tax shelter. The teams dump some of their profits into the office and in turn less of their money is taxed. When you take into account the fact that league ‘dues’ have only gone up since the merger, and you start to see the con the NFL is running.
As profits increase, ‘dues’ increase allowing teams to get around the brunt of the taxes they’re supposed to be paying. All this is happening while teams like the Vikings are bartering to get a new stadium built with your tax dollars.
The insanity doesn’t stop here. Section 501(c)(6) creates a tax exemption for businesses whose “activities are directed to the improvement of business conditions of one or more lines of business, rather than the performance of particular services for individual persons.”
The NFL doesn’t do that. It operates for the benefit of itself and itself only. Think about the previous football leagues that tried to coexist with the NFL, (WFL,USFL, and the AFL) none of them exist now. The NFL improves football, as it improves there business, they care nothing for other leagues. When it comes to actual player safety the NFL only takes action when it improves their business. Concussions have always been bad but when does the NFL start acting on it, when it starts to turn people away from the sport. It’s one thing for the NFL to be given this exemption and to abuse it, but the bigger problem might be whether the NFL actually deserves this privilege in the first place.
This tax exemption has been shady from the start, it was slid into a bill without the public knowing about it, and has done nothing but create an avenue for the NFL to not pay their fair share.
In a country that preaches the values of hard work, and spits in the face of those who do it, this tax exemption just piles it on. There’s no question that the NFL should be stripped of its tax exempt status.
