Why doesn't the NFL pay taxes?

The IRS sees it as a nonprofit, but Sen. Tom Coburn's new bill aims to sack that tax-exempt status. Good luck, senator.

By Jonathan Berr Sep 19, 2013 12:58PM
New England Patriots quarterback Tom Brady during the AFC divisional playoff in Foxborough, Mass. on Jan. 13, 2013 (© Elise Amendola/AP Photo)Believe it or not, the National Football League, whose teams generate some $9.5 billion in annual revenue, is considered by the IRS to be a nonprofit organization. That's due to an odd quirk in the tax code that Sen. Tom Coburn, R-Okla., aims to fix.

The conservative Republican yesterday introduced The Pro Sports Act, a bill that would prohibit sports organizations with annual revenue of more than $10 million from enjoying the same tax-exempt status that trade associations and public interest groups enjoy. 

If passed, his bill would affect a variety of sports groups such as golf's PGA Tour, the National Hockey League and tennis' ATP World Tour, according to Bloomberg Businessweek. Interestingly, it wouldn't apply to Major League Baseball, which gave up its tax-exempt status in 2007, or to the National Basketball Association, which is a for-profit business, the publication says.
 
In a press release announcing his quixotic effort, Coburn noted that "working Americans are paying artificially high rates in order to subsidize special breaks for sports leagues. This is hardly fair."

Coburn is right, of course, but his bill has as much chance of prevailing in Congress as the hapless Jacksonville Jaguars have of winning the Super Bowl. Professional football is by far the country's most popular sport, and it has plenty of fans in the U.S. Congress. One reason Coburn can launch his quest to right this fiscal wrong is that his state doesn't have a pro team.

Technically, the NFL is a trade association that promotes the interest of its 32 clubs, a notion that strikes Businessweek as ridiculous. "This is a bit like McDonald’s (MCD) calling itself a trade association promoting the interests of its 14,000 U.S. restaurants," it says.

The NFL has it good for many other reasons. Congress granted it an antitrust exemption in 1966 so the American Football League could merge with the NFL. And many of the league's stadiums are funded with the help of taxpayers. For instance, the Atlanta Falcons' planned $1 billion new stadium is set to get about $200 million in public funding.

It has been said before, but it's worth saying again: The U.S. tax code is overly complex and patently unfair. The tax-exempt status of the NFL is a case in point.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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306Comments
Sep 19, 2013 1:22PM
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Hell!  I'm going to set myself up as a trade organization.  I am just a middle man as I transfer funds from my debtors to my creditors.  I am definitely non-profit.
Sep 19, 2013 2:27PM
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Why wouldn't this pass in Congress?  If them being sports fans makes them incapable of doing the right thing then I suggest they all resign and let us replace them with people who will.  I'll gladly do the job myself and I won't let my personal hobbies cloud the decisions I make that are supposed to be best for the people.

 

The fact is that the NFL is not a nonprofit, it generates absurd amounts of revenue and is big business.  The fact that so many major sports (golf, tennis and hockey) are all tax-exempt is criminal.  We are sitting here while people get furloughed and lose their jobs due to budget issues and we have industries who generate billions in revenue who don't pay taxes. 

 

I know there is more to it than this, but we need some serious work done in this country:

 

1) tax codes need to be fixed and fair

2) political parties need to quit bickering and work for the people

3) entitlement programs need a desperate overhaul

 

I could go on, but if we don't start addressing these things soon we are going to continue to decline as a nation.  We are no longer one of the happiest nations, our education levels have been declining, our jobs are becoming lower paying/skill and the economy is in bad shape with wages stagnating and the cost of living increasing.  Meanwhile, the federal bank refuses to quit printing money because god forbid the stock market and the ultra wealthy take a hit.  Why can the rest of us suffer?  The economy isn't measured by the stock market, people aren't spending because we can't even resolve basic issues in this country right now.

 

Politicians and Wall Street need a serious wake up call.

Sep 19, 2013 2:08PM
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This is corruption, plain and simple.
Sep 19, 2013 2:44PM
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To add insult to injury many cities tax their citizens to generate funds to build stadiums for NFL teams:  Free to the tax exempt teams.   The poorest of citizens - most of which will never step foot inside these stadiums - pay taxes to generate wealth for super-sonic rich players, coaches, and owners.
Sep 19, 2013 2:27PM
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Disgusting.  Billionaires taking from the public trough like it was their piggy bank.  NFL makes [lenty of money, treat them lie every other business!  Remove these tax breaks.  And while you are at it remove the breaks for all those huge companies who not only pay no taxes and still get tax refunds.  Insane.  And end tax breaks for big oil too!

Damn bastards stealing everything that is not welded down!
Sep 19, 2013 2:07PM
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This is like learning that Congress outlawed insider trading for itself just recently,  Unbelievable.
Sep 19, 2013 2:52PM
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Wait, why wouldn't this pass in Congress because they are sports fans?  I'm a huge sports fan and love the NFL, but there's no reason for it to be tax-exempt.  The NFL is worth billions; paying taxes isn't going to threaten it's existence.
Sep 19, 2013 1:48PM
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If I run a fantasy league, can I get the same deal?
Sep 19, 2013 3:10PM
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non profit I know we americans treat football like religion but this is so disgusting - These guys pay themselves millions and yet they are not for profit - wake up america we the tax payer are the biggest idiots on the planet time for a tax revolution its been awhile
Sep 19, 2013 3:58PM
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Since you pay to attend a non for profit event (i.e. an NFL game), is the contribution then tax deductible like other charity or not for profit events (fund raising dinner, etc.)?
Sep 19, 2013 3:46PM
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How is the NFL considered non profit?
This is just another way that I see my paycheck dwindle to half before I even get to cash it, while the fatcats and welfare trash continue to spend my tax dollars!

Sep 19, 2013 2:28PM
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Gee, why am I not surprised about this...............  
Sep 19, 2013 1:43PM
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There are many non profits that make lots of money. Of course the Executives great money.
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Hell we probably have to pay unemployment to the multi-million dollar players in the off season.  TAX EXEMPT MY A$$.
Sep 19, 2013 2:01PM
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He's right that the NFL should be paying taxes. Problem is football is expensive enough for the fans already. Get ready for $300 seats.
Sep 19, 2013 2:56PM
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I know he wants them to pay their fair share, but they are a monopoly and will just raise the prices for everything.  They are the NFL and they know they can just rape the fan base as long as fans keep coming back for more.
Sep 19, 2013 2:38PM
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stick it to 'em Coburn.  NFL sux.  haven't watched a single minute of it since they let Vick The Dog Killer play again.  and I never will again.
Sep 19, 2013 2:20PM
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I always knew there was a reason I do not watch NFL games.
Sep 19, 2013 3:12PM
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What crap and the politicians are in the pockets of sports team owners.  Them and churches don't deserve exemptions.  Pay taxes like we do.  What a bunch of bull nfl a non profit organization, then why do all the owners seem to get richer with few exceptions.  irs needs to bring things into reality not fantasy land. 
Sep 19, 2013 3:21PM
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Who do you suppose these organizations donated to ; republican or democrat ?
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