Every so often, in a bid to sound threatening, a member of the US Congress has vowed to revoke the NFL’s tax-exempt status. Now NFL commissioner Roger Goodell says the professional league is to give it up voluntarily to “eliminate this distraction.”
One result is that Goodell’s compensation — about US$35 million in 2013 and approximately US$44 million in 2012 — would no longer need to be made public.
In a memo on Tuesday to all 32 teams, he wrote that “a change in the tax status will not alter the function or operation of the league office or management council in any way.”
A business of about US$10 billion in annual revenue, the NFL has held tax-exempt status since the 1940s, and so was required to file a publicly available US Internal Revenue Service form listing compensation for the highest-paid employees. Individual NFL teams do not have tax-exempt status.
The league’s switch from tax-exempt to taxable does not affect its antitrust exemption, created in the 1961 Sports Broadcasting Act. That allows clubs to negotiate radio and TV broadcast rights together.
US Senator Richard Blumenthal, a Democrat, said the NFL’s move “seems more like a PR stunt than a real gain. The tax-exempt status produces a pittance compared to its congressionally granted antitrust exemption — enabling billions in broadcast revenue.”
Blumenthal said he would reintroduce legislation calling for a review of antitrust exemptions for the NFL, MLB, NBA and NHL.
NFL owners gave the league’s finance committee and management council the authority to change the tax status at league meetings last month, Goodell said.
The NBA does not have tax-exempt status, and MLB gave its up in 2007. The NHL is still tax-exempt.
“The effects of the tax-exempt status of the league office have been mischaracterized repeatedly in recent years,” Goodell wrote to club owners. “The fact is that the business of the NFL has never been tax exempt. Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales and other means is earned by the 32 clubs and is taxable there. This will remain the case.”
Goodell forwarded his memo to US representatives Paul Ryan and Sander Levin. Ryan, a Republican, chairs the tax-writing House Ways and Means Committee; Levin, is that panel’s top Democrat.
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