NFL, other pro sports leagues are technically nonprofits

When you think back over that $4 million, 30-second halftime spot you chuckled at during Sunday’s Super Bowl or sit down this weekend to see which golfer takes home $1.15 million for winning the AT&T Pebble Beach National Pro-Am, ponder this:

The National Football League, just like the PGA Tour, National Hockey League and others, is a tax-exempt organization.

This may have cost taxpayers $91 million in 2010 for the NFL and NHL alone, according to an analysis last year by the office of U.S. Sen. Tom Coburn, R-Okla. His estimate doesn’t include other groups, such as the PGA Tour, which generated more than $900 million in revenue that year, mostly through television rights, tournament earnings and sponsorships, and royalties.

The 2010 IRS filing, the most recent available, lists the NFL’s purpose as a “trade association promoting interests of its 32 member clubs.” Those clubs have a total value estimated at more than $35 billion.

“Hardworking taxpayers should not be forced to provide funding to offset tax giveaways to lucrative major professional sports teams and leagues,” the report concluded.

Plus, NFL employees – including Commissioner Roger Goodell, who earned $11.5 million in 2010, according to IRS filings – used their tax-exempt status in 2010 to avoid paying local taxes at hotels, restaurants and elsewhere in Indianapolis during the 2012 Super Bowl, according to the Indianapolis Business Journal.

It’s unclear if they did the same this year in New Orleans and, if so, how much money it cost that still-beleaguered city.

Professional leagues carved out a loophole for themselves in the same section of the tax code that allows for non-profit chambers of commerce and real estate boards. The premise is that they are organized for the benefit of their membership, not themselves.

A snarky 2010 legal essay by Vermont Law Student Andrew Delaney lays out the way the NFL’s tax exemption is structured and how it’s part of a larger scheme to pressure teams and local governments to use public funds to build new stadiums for the for-profit teams.

Delaney’s conclusion: “The NFL should stop blowing smoke up a certain orifice of the American taxpayer and start paying its taxes.”

Brian Frederick, executive director of Sports Fan Coalition, argued in a piece last year that the exemption was created using the Democratic process, and can be ended by it.

“We can revoke that exemption if the league blacks out its fans, forces fans to pay for personal seat licenses, extorts public money from municipalities by threatening to move teams, etc.,” he wrote on “The NFL may technically be a ‘nonprofit,’ but it sure as hell isn’t acting in the public interest.”

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