What the? The NFL is a tax exempt charity?

Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you:

No adverts like this in the forums anymore.
Times and dates in your local timezone.
Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance.
Email notifications for threads you want to watch closely.
Being a part of the oldest wargaming community on the net.

If you are already a member then feel free to login now.

**Andrew1975**

Ok, this is just ridiculous.

http://sports.yahoo.com/blogs/nfl-shutdown-corner/congress-may-review-nfl-tax-exempt-status-004521453.html

Yes, it's all true. Technically, the NFL is a 501(c)(6) non-profit organization. That part of the Internal Revenue Code "provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual."

It's an interesting wrinkle, because while the NFL's member teams essentially act as a group of individual entities with an overarching partnership governed by the league, the league itself has not always argued so when it was against its benefit. In the Los Angeles Memorial Coliseum Commission vs. National Football League et al dispute argued in the Ninth Circuit Court of Appeals in 1983, the league argued that it was a single entity, thus exempting it from certain antitrust statutes. The Coliseum Commission (and the Raiders franchise on whose behalf the Commission was responding) said that the league was instead a group of legal entities that act independently. The Court agreed with the Commission and the Raiders, finding that Rozelle had acted in bad faith in Al Davis' attempted move out of Oakland.

I'm going to buy season tickets and write them off as a charitable donation!

**Alfndrate**

Andrew1975 wrote:
Ok, this is just ridiculous.

http://sports.yahoo.com/blogs/nfl-shutdown-corner/congress-may-review-nfl-tax-exempt-status-004521453.html

Yes, it's all true. Technically, the NFL is a 501(c)(6) non-profit organization. That part of the Internal Revenue Code "provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual."

It's an interesting wrinkle, because while the NFL's member teams essentially act as a group of individual entities with an overarching partnership governed by the league, the league itself has not always argued so when it was against its benefit. In the Los Angeles Memorial Coliseum Commission vs. National Football League et al dispute argued in the Ninth Circuit Court of Appeals in 1983, the league argued that it was a single entity, thus exempting it from certain antitrust statutes. The Coliseum Commission (and the Raiders franchise on whose behalf the Commission was responding) said that the league was instead a group of legal entities that act independently. The Court agreed with the Commission and the Raiders, finding that Rozelle had acted in bad faith in Al Davis' attempted move out of Oakland.

I'm going to buy season tickets and write them off as a charitable donation!

You'd be buying them for the Cleveland Browns right? It might as be a charitable donation to Jimmy Haslem's legal counsel

**Andrew1975**

True that. Ahh Cleveland can't wait to move back! Only a week to go.

**LordofHats**

That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

**Andrew1975**

LordofHats wrote:
That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

Well apparently they net zero at the end of the year by paying all the executives huge salaries, which they then get taxed on. Still doesn't seam right.

**LordofHats**

Andrew1975 wrote:
LordofHats wrote:
That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

Well apparently they net zero at the end of the year by paying all the executives huge salaries, which they then get taxed on. Still doesn't seam right.

So, I can get my business tax exempt status by keeping all the profit for myself?

Your right that doesn't seem right XD

**sebster**

LordofHats wrote:
That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

Because they don't make a profit. They can't make a profit.

Each of the teams that make up the NFL are all for-profit, tax paying organisations. And then they get together and appoint an overseeing body, the NFL, which is given just enough money by the various teams to cover its running costs.

It's like if a group of lawyers got together and organised a professional standards body, to oversee ethical standards, and hold seminars on new legal matters. The lawyers would pay membership fees and conference fees, which would be just enough to cover what it cost to run the board. And then some guy came out and said 'what the hell? all these lawyers are making loads of money but they're a not for profit organisation?!'... well no, each lawyer is paying taxes on his income, its just that he's also a member of a body that is a not for profit.

Does that help explain it?

**whembly**

sebster wrote:
LordofHats wrote:
That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

Because they don't make a profit. They can't make a profit.

Each of the teams that make up the NFL are all for-profit, tax paying organisations. And then they get together and appoint an overseeing body, the NFL, which is given just enough money by the various teams to cover its running costs.

It's like if a group of lawyers got together and organised a professional standards body, to oversee ethical standards, and hold seminars on new legal matters. The lawyers would pay membership fees and conference fees, which would be just enough to cover what it cost to run the board. And then some guy came out and said 'what the hell? all these lawyers are making loads of money but they're a not for profit organisation?!'... well no, each lawyer is paying taxes on his income, its just that he's also a member of a body that is a not for profit.

Does that help explain it?

It does for me... thanks!

**sebster**

Andrew1975 wrote:
Well apparently they net zero at the end of the year by paying all the executives huge salaries, which they then get taxed on. Still doesn't seam right.

No, they net zero because they exist only on the contributions made by the NFL franchises, and they exist only to serve the needs of those franchises. There is simply no profit making function in play in the commission.

**Andrew1975**

sebster wrote:
Andrew1975 wrote:
Well apparently they net zero at the end of the year by paying all the executives huge salaries, which they then get taxed on. Still doesn't seam right.

No, they net zero because they exist only on the contributions made by the NFL franchises, and they exist only to serve the needs of those franchises. There is simply no profit making function in play in the commission.

Are you sure about that? I kind of find it hard to believe that the NFL is essentially worthless.

**Mannahnin**

All the teams make tons of money. The structure of the officiating body means it is not making the money.

The tricky bit is how they coordinate like one business in some ways, which makes kind of a paradoxical situation in terms of competition vs cooperation.

**Andrew1975**

Mannahnin wrote:
All the teams make tons of money. The structure of the officiating body means it is not making the money.

Right, and I guess money generated directly by the NFL is divided by the teams also, so I can see it. The high salaries of the employees also are taxed on an individual basis. I guess the question is why do they need a tax exempt status for then? Any company can claim zero profits by giving all profits to employees, however they may still have to pay various other taxes. Lets say the NFL is selling tickets, since they are tax exempt do they not have to pay sales tax? I don't know, just throwing that out there.

When the NFL sells its TV rights do they pay sales tax on that? Or do the teams pay the tax based on the income they each receive, even though they are not the ones selling the rights? The NFL does generate money directly, so it just seams to me it should be taxed directly.

**sebster**

Andrew1975 wrote:
Are you sure about that? I kind of find it hard to believe that the NFL is essentially worthless.

Read my earlier answer. The franchises make a lot of profit, and they pay taxes on those. It's just the officiating body that doesn't make profits, as it is just set up to receive just enough money to adminster the sport.

**Mannahnin**

The NFL doesn't sell tickets, AFAIK. The teams do. The TV rights split the money between the teams. Profit sharing between the teams is one of the ways they coordinate their (legally separate) businesses.

**SlaveToDorkness**

All income is disseminated to the individual teams or spent to better the League in general.

Non profit does not equal "worthless".

**dogma**

Andrew1975 wrote:

When the NFL sells its TV rights do they pay sales tax on that? Or do the teams pay the tax based on the income they each receive, even though they are not the ones selling the rights? The NFL does generate money directly, so it just seams to me it should be taxed directly.

Simply because the NFL develops income independently does not make it a for-profit organization. If it did, then any charity which sold candy bars would also be a for-profit organization.

But if you want something to be angry about: the 501(c)(6) section of the tax code explicitly includes "professional football leagues" as tax exempt organizations.

**Andrew1975**

dogma wrote:
Andrew1975 wrote:

When the NFL sells its TV rights do they pay sales tax on that? Or do the teams pay the tax based on the income they each receive, even though they are not the ones selling the rights? The NFL does generate money directly, so it just seams to me it should be taxed directly.

Simply because the NFL develops income independently does not make it a for-profit organization. If it did, then any charity which sold candy bars would also be a for-profit organization.

But if you want something to be angry about: the 501(c)(6) section of the tax code explicitly includes "professional football leagues" as tax exempt organizations.

Not really angry, just trying to figure it out. I know about the tax exemption and I'm trying to figure out why it is necessary. Seams like it doesn't even need to be there as they don't make a profit to tax anyway.....so what is the point. That is why I was wondering if there was some tax they were getting by on, such as sales tax, payroll tax or whatever. I'm not really intimate with how the NFL generates funds and disperses them. It just all seams a little fishy. I see too many large corporations finding loopholes and getting away with it.

**sebster**

Andrew1975 wrote:
Not really angry, just trying to figure it out. I know about the tax exemption and I'm trying to figure out why it is necessary. Seams like it doesn't even need to be there as they don't make a profit to tax anyway.....so what is the point.

Thing is, the money allocated by the teams to the commission is based on what their estimated spend will be that year. So they might hand over $10 million for a special junior development project, but then that project might get delayed a year and so the money isn't spent in this tax year. Leading to the league posting a large surplus for the year. Were it a tax paying body, it'd pay tax on that. Then the next year, when it spent that money it'd record a loss for the year, and get a tax deduction it could claim againt profits in future years... if such an event happens again.

Stuff like that means it is just fairer and simpler to let organisations that simply spend member's funds on activities to benefit the members as not-for-profit.

I see too many large corporations finding loopholes and getting away with it.

No argument there.

**dogma**

Andrew1975 wrote:

Not really angry, just trying to figure it out.

I didn't mean to imply that you were. I was saying that an explicit exemption for "professional football leagues" (read: the NFL) is something that really shouldn't be a component of the tax code.

**Andrew1975**

dogma wrote:
Andrew1975 wrote:

Not really angry, just trying to figure it out.

I didn't mean to imply that you were. I was saying that an explicit exemption for "professional football leagues" (read: the NFL) is something that really shouldn't be a component of the tax code.

Oh, I agree, and the article did touch on that bit of weirdness.

**SoloFalcon1138**

Can I now write off my Redskins memorabilia purchases because they are NFL branded?

**Andrew1975**

SoloFalcon1138 wrote:
Can I now write off my Redskins memorabilia purchases because they are NFL branded?

Nope, and your team is racist

**SoloFalcon1138**

At least it doesn't share the name that my 4 year old uses for.poop...

**sebster**

dogma wrote:
I didn't mean to imply that you were. I was saying that an explicit exemption for "professional football leagues" (read: the NFL) is something that really shouldn't be a component of the tax code.

I agree, but there is a pretty long and strange history of congress jumping in to study the NFL when there's, you know, an actual country to run.

I remember when you had the wars in Iraq and Afghanistan, and congress was worrying about... was it steroids? It was fething stupid, whatever it was.

**Andrew1975**

SoloFalcon1138 wrote:
At least it doesn't share the name that my 4 year old uses for.poop...

Hey the browns have to make it to a bowl somehow!

And he's 4, so i get why he would find poop jokes funny!

**Scipio Africanus**

Andrew1975 wrote:
SoloFalcon1138 wrote:
At least it doesn't share the name that my 4 year old uses for.poop...

Hey the browns have to make it to a bowl somehow!

And he's 4, so i get why he would find poop jokes funny!

Actually, a lot of Greek comedy is basically fart jokes and big penises.

I'm not American, so I'm unaware who Cleveland brown is.

He's from family guy, right?

**dogma**

sebster wrote:

I remember when you had the wars in Iraq and Afghanistan, and congress was worrying about... was it steroids? It was fething stupid, whatever it was.

That was Major League Baseball.

The exemption for "professional football leagues" dates back to the 60's, and its grounded in statute.

Edit: Messed up the link.

**Hlaine Larkin mk2**

Scipio Africanus wrote:
Andrew1975 wrote:
SoloFalcon1138 wrote:
At least it doesn't share the name that my 4 year old uses for.poop...

Hey the browns have to make it to a bowl somehow!

And he's 4, so i get why he would find poop jokes funny!

Actually, a lot of Greek comedy is basically fart jokes and big penises.

I'm not American, so I'm unaware who Cleveland brown is.

He's from family guy, right?

Cleveland is named after the Browns

The browns are one of the oldest franchises but since the merger they've not won a SB and I don't think they've even been to one
The closest they've been I can think of was the AFC Championship in 86 when Jon Elway's "Drive" won it for Denver (Sorry Alf

)

They also chased out Paul Brown their founder who set up the Cincinnati Bengals who are now doing better and are division rivals

**Alfndrate**

Hahaha, It's okay, I wasn't even alive when Elway did that

And Cleveland loves it's 1 word descriptors for horrible things to happen to Cleveland sports teams, we have the Drive, the Fumble, the Shot, the Catch, the Decision... it's terrible really, we can almost make a list of the 10 worst sports moments in Cleveland history and not make it more than 10 words.

As to the issue at hand, I certainly do love that the NFL is non-profit, and Goodell makes more than 10 million dollars

.

**azazel the cat**

LordofHats wrote:That is stupid. The NFL is worth billions and I don't see them giving any of it away. How are they not for profit?

The NFL doesn't make money. But the invididual team organizations do, and I'm quite certain that they all pay taxes.

It's like the local Merchant's Association, which also probably does not make any money, even though all of the individual businesses that comprise its membership do (and pay taxes).