Saturday, April 27, 2013

Sports Cronyism: The NFL and Other Pro Leagues are Tax Exempt #WTF

Sports Cronyism: The NFL and Other Pro Leagues are Tax Exempt:
Yesterday, Senator Tom Coburn (R-OK) introduced legislation to
kill off a particularly ridiculous bit of corporate welfare that
allows professional sports leagues to dodge millions in taxes. The
National Football League, National Hockey League, Pro Golfers
Association, and the Ladies Professional Golf Association all claim
tax exemptions by operating as non-profits.
Since 1966, the tax code has allowed leagues to classify as
501(c)(6) charitable organizations—a classification used by trade
and industry organizations—under the assumption that the leagues
were promoting the general value of their sports. But Coburn’s
amendment asserts that the leagues … are businesses interested
solely in the promotion of their business; that is, the NFL isn’t
so much concerned about promoting the general sport of football as
it is concerned with promoting NFL football, because
it is the NFL brand and the NFL teams and logos and products that
make it a profitable business. The NFL, for instance, didn’t seem
interested in promoting the general spread of football when a
competitor league, the United States Football League, was formed in
In his 2012 “Wastebook,”
Coburn estimates that the NFL and NHL saved $91 million by avoiding
taxes on dues paid by teams to the leagues in 2010.

Nonprofit Quarterly
As a tax-exempt entity, [the NFL] doesn’t pay taxes on the
income that it earns. The NFL has managed to keep its income
earnings a little on a low side by paying its top executives
corporate-level salaries—eight NFL execs took home compensation of
$51.5 million in 2010. The teams get to write off their NFL
membership dues, roughly $6 million per team, for the privilege of
belonging to this unusual trade association, and that money is put
into a stadium fund that provides interest-free loans to teams so
long as they get taxpayer financing on stadium construction and
improvement costs.
Properly Reducing Overexemptions for Sports Act
(or Pro Sports
Act), would put an end to the shenanigans.
Earlier this week, Reason contributor S.M. Oliva called
for putting an end
to the NFL draft. Steve Chapman, on the other hand, sees the

of the NFL entirely.