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Republican senator targets NFL’s non-profit status

Senate Republicans Speak To Press After Weekly Policy Meeting Getty Images

Plenty of NFL owners are Republicans.  And so they may be feeling more than a little betrayed by the fact that a Republican senator is openly complaining about the tax-exempt status of the league office.

Tom Coburn, who represents Oklahoma, included in his “Wastebook 2012″ reference to the NFL’s non-profit characterization as one of 100 examples in which the government is getting a raw deal.

The league’s tax-exempt status became a talking point during the 2011 lockout, with NFLPA Executive Director DeMaurice Smith repeatedly chiding the league regarding a label more commonly associated with charities.  The league’s position was, and is, that all money flows through the league office to the teams, and the teams pay the taxes.  That’s what NFL spokesman Greg Aiello told CNN.com in response to Coburn’s contentions.

Here’s the reality.  The NFL fits within the current legal definition of a non-profit business association.  If the IRS disagrees, then the issue should be litigated.  And if Congress thinks that the government is getting screwed by the definition of a non-profit business association, Congress should pass a new law.

The ultimate question is whether and to what extent the owners ultimately would pay more money if the league office wasn’t exempt from taxes.  Presumably, it would be more expensive for the league; otherwise, the league wouldn’t do it.  But without knowing the specific additional dollars and cents that Uncle Sam would realize by closing the eye of the needle through which the fat cats are fitting, it’s hard to gauge how big of a deal this could be for the league.

Either way, the Republicans who own NFL teams may want to remind guys like Senator Coburn that the first thing to go if the cost of doing business increases will be political contributions.

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34 Responses to “Republican senator targets NFL’s non-profit status”
  1. fwippel says: Oct 18, 2012 9:25 AM

    The NFL is a tax exempt organization?

    If I recall correctly, the league made $9 billion dollars last year, and the league office is tax exempt? I’m probably missing something, but this sounds like more of an issue for the league office than the owners. It’s not like the owner’s profits are tax exempt.

    Why does the league office qualify for this sweetheart deal? They ought to be paying the same tax rates that any other corporation pays.

  2. wetdentist says: Oct 18, 2012 9:26 AM

    if i’m not mistaken, Coburn is not running again so he is more at liberty to not care about campaign contributions. but really, the NFL as a non-profit (with Goodell standing to make $20 million a year soon) is like calling Bain Capital a small business

  3. joetoronto says: Oct 18, 2012 9:26 AM

    “Either way, the Republicans who own NFL teams may want to remind guys like Senator Coburn that the first thing to go if the cost of doing business increases will be political contributions.”

    And that’s the way the system works, it’s all about money and nothing else.

  4. chicagobtech says: Oct 18, 2012 9:31 AM

    The answer to your question, fwippel, is in Mike’s post:

    “The league’s position was, and is, that all money flows through the league office to the teams, and the teams pay the taxes.”

    The League takes in the money, holds onto enough to cover their expenses, then sends the rest to the 32 teams. The teams earn profit, which is what gets taxed. As the League earns no profit, and their business structure is set up that way, they are defined as a non-profit entity.

  5. marvsleezy says: Oct 18, 2012 9:32 AM

    They ought to be paying the same tax rates that any other corporation pays?

    Well actually you see, many large corporations like GE dont pay taxes either.

    Odd country we live in.

  6. vablockaderunner says: Oct 18, 2012 9:32 AM

    “Either way, the Republicans who own NFL teams may want to remind guys like Senator Coburn that the first thing to go if the cost of doing business increases will be political contributions.”

    If you know the first thing about Coburn, you know he doesn’t give a crap about losing political contributions like this.

    For starters, he’s not running for office ever again.

    Secondly, he’s never been a quid pro-quo kind of guy. He despises the kind of “crony capitalism” that’s going on here.

    He sees a government going bankrupt and he’s trying to stop it.

  7. east96st says: Oct 18, 2012 9:34 AM

    “…that the first thing to go if the cost of doing business increases will be political contributions.”

    Which is exactly why the country is in the shape it’s in. Tax code should be written STRICTLY on the basis of how it benefits the Nation and it’s citizens – ALL OF THEM. Not based on who lined who’s pocket.

  8. olcap says: Oct 18, 2012 9:35 AM

    Why is the NFL considered non-profit? This is absurdity and cause for investigation. More ripping off of the masses by the super rich!

  9. baldguy421 says: Oct 18, 2012 9:36 AM

    You are missing something fwippel. The league does not keep the money they earn, they distribute it to the teams and the teams pay the taxes, not the league directly. Otherwise the league AND the teams would pay the taxes.

  10. boothlustig says: Oct 18, 2012 9:37 AM

    NFLPA Executive Director DeMaurice Smith has attacked the NFL over its non-profit status? Let’s see, if the NFL owners have to pay more taxes and profits are not as high, what does that do to the pocketbooks of NFLPA members? Mr. Trebek, I’ll take ‘Stupid’ for $2000, please.

  11. peavey2 says: Oct 18, 2012 9:37 AM

    It really doesn’t matter as long as the tax gets paid at some point. In an S Corporation, the corporation doesn’t pay any taxes directly, but rather the income that the corporation shows is prorated among the share holders via K-1′s, and the individual shareholders pay tax on their share when filing personal tax returns. In a lot of ways this is more fair; each shareholder pays the tax rate on their share of the earnings at their individual tax rate, rather than a flat rate imposed at the corporate level.

    Now, if there are things that are deductible for an organization classified as a charity that are not deductible for a regular business, that’s another matter. Churches don’t pay property taxes, for example. Stuff like that better not be available for the “non-profit” NFL.

  12. santolonius says: Oct 18, 2012 9:53 AM

    actually the very last thing to go will be political contributions. if you don’t believe me ask anyone who works closely with a member of congress. deep pockets absolutely never stop greasing the wheels.

  13. csilojohnson says: Oct 18, 2012 9:54 AM

    NFL non profit… Just like the catholic church……

  14. kingmj4891 says: Oct 18, 2012 10:03 AM

    fwippel says:
    Oct 18, 2012 9:25 AM
    The NFL is a tax exempt organization?

    If I recall correctly, the league made $9 billion dollars last year, and the league office is tax exempt? I’m probably missing something, but this sounds like more of an issue for the league office than the owners. It’s not like the owner’s profits are tax exempt.

    Why does the league office qualify for this sweetheart deal? They ought to be paying the same tax rates that any other corporation pays.

    Can you read? The article clearly states that the NFL does in fact pay taxes on its profits but that it is split up between the 32 owners.

  15. zaggs says: Oct 18, 2012 10:07 AM

    Just one thing to clarify (though I know why it wasn’t brought up). Its not just the NFL. its the NFL, NHL and PGA (I’m guessing MLB and NBA pay taxes).
    Though assuming all of its accurate, some of the items in the Wastebook are….interesting. Like how it costs 2.4 cents to make very penny and 11 cents to make a nickel. Or half a million for a prom week simulator.

  16. lafayettesaint says: Oct 18, 2012 10:09 AM

    If I’m not mistaken, the AARP, another multibillion corporation is defined as “non profit”. They sell more stuff than Wal Mart.

  17. pj1983a says: Oct 18, 2012 10:15 AM

    Eliminating the NFL’s tax exempt status would hurt 22 states that depend on that revenue. As it stands right now, money flows through the league office and is taxed at the state and federal level at each of the 32 teams, spreading the league’s tax revenue over 23 different states. By taxing the money at the league office, however, New York alone would stand to gain that revenue, with the federal government gaining no additional benefit. It’s a stupid, stupid idea.

  18. SparkyGump says: Oct 18, 2012 10:20 AM

    It’s all a game to the billionaire boys club that the NFL owners belong to that seeks to never pay a dime in taxes. If you pay taxes, you’re looked upon as a sucker who doesn’t have the right accountant. Our whole government is in the pocket of the rich and their corporations but once in a while, even a republican calls out the hypocracy and inequality of the system. What gets my goat is we have people who live in near poverty and need the government more than they realize but continue to vote for those who would lower their taxes by cutting the benefits of those who vote for them. Talking about cutting off your nose to spite your face.

    Now can we please keep politics off this site? If I want to rant about politics, I’ll go to the Huffington Post. Now where’s our mandatory Tebow thread?

  19. clssylssy says: Oct 18, 2012 10:22 AM

    Under the current guidelines for “tax exempt” status an organization must use it’s earnings to support it’s operations and activities which the NFL does. It also is involved in numerous charities. The tax code needs to be rewrittien and “tax exempt status” repealed for the majority of so-called “tax exempt” organizations if we are to go down this road. Churches are probably the most wealthy “tax exempt” organizations, owning property, and land, even businesses, tax free, while average Joe is getting his house forclosed upon! Who is to say whether a person worships on Sunday in a traditional manner, or has a spiritual experience at a football stadium? This is indeed a slippery slope. Our economy would probably be a whole lot healthier if the tax code was re-examined and some bold changes made.

  20. bigd9484 says: Oct 18, 2012 10:39 AM

    “Either way, the Republicans who own NFL teams may want to remind guys like Senator Coburn that the first thing to go if the cost of doing business increases will be political contributions.”

    What’s sad is that in Washington that means more than trying to reduce the national debt by increasing taxes on companies that increase their revenue and profit margins like clockwork and are worth (soon to be) north of $10 billion dollars.

  21. nyjalleffingday says: Oct 18, 2012 10:40 AM

    Imagine the money the country could make if we taxed religion and pro sports alone? Why such massive money makers get off is beyond me.

  22. TheRichMeister says: Oct 18, 2012 10:41 AM

    The “spirit” of an idea never lasts long when the dollar is in play.

  23. dryzzt23 says: Oct 18, 2012 10:42 AM

    Coburn needs to go after research colleges and universities next, most, if not all of them are listed as “non-profit” organizations.
    The university that I work for pocketed a cool $800 million as pure profit for a drug that it had helped to develop. New buildings are going up all the time on campus, and faculty are going to conferences all over the country, and the university continues to cry poverty.
    My school currently has over 15 drugs in development right now and they could profit around 15 billion yet the media will tell you that the pharmaceutical companies are “evil profit mongers” while the university does not seek profit but instead is doing a service to the community.

  24. 7swag7 says: Oct 18, 2012 10:50 AM

    “baldguy421 says:
    Oct 18, 2012 9:36 AM
    You are missing something fwippel. The league does not keep the money they earn, they distribute it to the teams and the teams pay the taxes, not the league directly. Otherwise the league AND the teams would pay the taxes”

    In theory, this is a correct explanation. But do we know that the league distributes 100% of it’s income to the teams? If the league (which is of course owned by the 32 team owners) holds onto some of the income and it is not taxed, but then “loans” the money to the owners, they have effectively passed along income the is not taxed at the league level or the team level.

  25. rjg427 says: Oct 18, 2012 12:32 PM

    Hes just pissed cuz Oklahoma doesnt have an nfl team

  26. KIR says: Oct 18, 2012 12:51 PM

    @chicagobtech says: Oct 18, 2012 9:31 AM

    The answer to your question, fwippel, is in Mike’s post:

    “The league’s position was, and is, that all money flows through the league office to the teams, and the teams pay the taxes.”

    The League takes in the money, holds onto enough to cover their expenses, then sends the rest to the 32 teams. The teams earn profit, which is what gets taxed. As the League earns no profit, and their business structure is set up that way, they are defined as a non-profit entity.
    ______________________

    Non for profits shouldn’t be able to pay their director 20 MILLION a year!

  27. motremmar says: Oct 18, 2012 1:04 PM

    Last time I checked Oklahoma doesn’t have an NFL Franchise. Perhaps the good senator is not getting any campaign contributions from the NFL and this is his way of gettting them to send a few $$$’s his way.

  28. Legion Of Boom says: Oct 18, 2012 1:14 PM

    Curious, so what happens when the League “fines” a player or coach 10′s of thousands of dollars?
    Where does the money go?
    Is it taxed?
    Or is the player the only one taxed for income earned?

  29. peavey2 says: Oct 18, 2012 1:27 PM

    There again, don’t worry about the director making $20 million a year. He doesn’t get it tax free; he has to pay taxes on it on his personal tax return when the gets a w-2 for it. It’s not a tax dodge.

  30. bluestree says: Oct 18, 2012 1:43 PM

    “We’ll give everyone a bucket worth up to, we’ll just say $25k. Then say if you’re in sport, you can fill your bucket with up to $25k in deductions from sport.”

  31. zn0rseman says: Oct 18, 2012 2:15 PM

    We all pay far too much in taxes as it is, and most of thst money is wasted on entitlements and government waste.

    That said, the non-profit status is being abused around the country… but fixing it means new laws, and new laws means new loopholes, and new loopholes means more laws. All of which is paid for in spades with the working man’s money.

  32. KIR says: Oct 18, 2012 3:27 PM

    The difference is the Non for profit paying taxes on their profit and then the director paying taxes on his income. The country couldn’t exist (ie roads, bridges, hospitals, schools, military, fire, police, utilities ect..) if all corporations were able to claim NFP status.

  33. contrasuxbalz says: Oct 18, 2012 8:39 PM

    Hang on you mean a bunch of wealthy white guys don’t pay taxes on this money until it ends up in someones paycheck and then technically that person pays the taxes. Hmmmm….you can bet if it were me or the guys I work with the government would be getting theirs.

  34. jimmylions says: Oct 18, 2012 10:25 PM

    “Either way, the Republicans who own NFL teams may want to remind guys like Senator Coburn that the first thing to go if the cost of doing business increases will be political contributions.”

    Translation: team owners need to tell the Republican politicians that they own that the perks and cash bribes will stop coming in if this situation isn’t fixed quickly.

    And if you think an envelope doesn’t end up in someone’s pocket when he visits an owner’s luxury box, then you are naive.

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