The 501 S(c)ene

The latest view on not-for-profit accounting issues

Touchdown or Fumble? NFL Gives Up Tax Exempt Status

In March, the ownership of the National Football League (NFL) voted to give up their tax exempt status and become a taxable entity. The majority of the income generated by the league is from television rights fees, licensing agreements, sponsorships, and tickets sales, which are generated by the 32 individual teams and already taxed. The move will cost the NFL an estimated $109 million over the next ten years. Keeping the tax exempt status to save $109 million was viewed as a “distraction” by league commissioner Roger Goodell after the league generated $10 billion in revenues in 2013 alone.

Many Congressmen have been pushing recently to remove the tax exempt status of all pro sports leagues. In recent dealing with the NFL, Congress has used the tax exempt status as leverage against the NFL with issues regarding domestic violence and concussion protocol. Many view the move by the league as an effort to separate the NFL from the dealings of Congress and to take away the small amount of ammunition that Congress held. In the past, the NFL would have been required to file a public return that discloses the salary and benefit information for Roger Goodell as well as other officers, key employees, and highly compensated employees. Going forward, this information will not be made public. It should be noted that the NFL is not the first sports organization to give up their tax exempt status. Major League Baseball gave up their tax exempt status in 2007 while the National Basketball League has never held the non-profit distinction. The PGA and LPGA still hold their tax-exempt status.

By David Woods