Under Review: The NFL’s Tax-Exempt Status

What’s the first thing that comes to mind when you think of a non-profit entity?  A church? A University?  Goodwill?  The American Red Cross?  How about the National Football League?

As odd as it may seem, the NFL, with revenues of approximately $9 Billion annually, is classified as a “non-profit” in the eyes of the Internal Revenue Service.  Specifically, as a 501(c)(6) non-profit organization which provides an exemption for “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”.

In addition to the NFL, the National Hockey League (NHL) and Professional Golfers Association (PGA) hold the same tax-exempt status.

Senator Tom Coburn (R-OK) is trying to put a stop to that.  Coburn, a well known fiscal conservative, estimates that revoking the NFL and NHL’s non-profit status’  would generate an additional $91 million in revenue each year for the United States Treasury.

Some have argued that the NFL’s non-profit status is not as financially advantageous as Senator Coburn makes it seem.  However, according to Mike Florio of profootballtalk.nbcsports.com, “the specific benefit to the NFL of tax-exempt status isn’t known, but the league already has decided that the reduced tax burden justifies the inability to shield from public view the salaries paid to key officials.  Commissioner Roger Goodell, for example, made nearly $30 million in the year covered by the most recent filing.  If the NFL didn’t possess tax-exempt status, no one other than the league’s owners and a handful of league-office employees would know how much Goodell makes.”

Regardless of what happens to each leagues 501(c)(6) status, the NFL, NHL, and PGA would still be able to operate their other charitable 501(c)(3) organizations similar to all other organizations.