The National Football League is ending its tax exempt status, Bloomberg’s Richard Rubin reports. League Commissioner Roger Goodell told team owners and members of Congress about the change in a letter Tuesday.
Although the 32 individual NFL teams and owners are private companies that pay taxes, the league’s central office had been organized as a tax-exempt 501(c)(6) nonprofit — similar to business leagues, trade organizations and chambers of commerce. As Goodell noted, money generated from television deals, licensing agreements, sponsorships and ticket sales was already taxable through the 32 teams.
Lately, the NFL’s tax-exempt status has come under fire from politicians whenever scandal erupted off the field, including during controversies over the Washington Redskins’ name, head injuries and former Baltimore Raven Ray Rice’s domestic violence case. In September, Sen. Cory Booker, D-N.J., introduced legislation to strip the NFL’s nonprofit status and spent the tax money on domestic violence prevention programs.
Goodell called the tax-exempt status a “distraction.” “As you know, the effects of the tax-exempt status of the league office have been mischaracterized repeatedly in recent years,” Goodell wrote. Without its tax-exempt status as a political football, the league may be hoping to remove Congress’s lever of choice for interfering in the league’s business.
A Joint Committee on Taxation estimate has previously projected that removal of the NFL’s tax-exempt status may raise roughly $109 million over the next 10 years.
The last major United States sports league to end its nonprofit status was Major League Baseball, which switched in 2008. The National Hockey League, the Professional Golfers Association of American and the Association of Tennis Professionals Tour all maintain a tax-exempt status. The National Basketball Association has never been tax-exempt.
The change will not end controversy over the Redskins’ name, which typically comes under fire through trademark or communications laws rather than the tax code.
