NFL Announces It Will Forgo Its Tax Exempt Status

NFL Announces It Will Forgo Its Tax Exempt Status

7:53pm Apr 28, 2015

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A very improbable nonprofit - in fact, an extremely profitable one - has decided to relinquish its tax-exempt nonprofit status. It's the National Football League, whose 32 teams split $6 billion in revenue last year. Gregg Easterbrook, in his book, "The King Of Sports," devoted an entire chapter to the NFL's surprising tax status and joins us now.

Welcome to the program once again.

GREGG EASTERBROOK: Good to be here, Robert.

SIEGEL: And as I understand it, the teams in the NFL pay taxes. The head office that they jointly support does not. So what do you think will change if the NFL ceases to be a nonprofit?

EASTERBROOK: Well, first let's say we think the teams pay taxes. We don't know because with the exception of the Green Bay Packers, the NFL's 31 other teams receive public subsidies but don't disclose anything about their finances. So probably they pay corporate taxes, but who knows? And the tax exemption applied only to NFL Headquarters in New York City. It was preposterous that it was considered a charitable enterprise. Now that it will no longer be, they will also stop disclosing financial information.

SIEGEL: The difference about Green Bay is because it's owned by the people of Green Bay, it has a different obligation to report than the other teams do.

EASTERBROOK: It's the only publicly owned franchise in American professional sports. And it's not just people of Green Bay. Lots of Wisconsin citizens own symbolic shares. But because they're publicly owned, they have to disclose financial numbers.

SIEGEL: You wrote about this in your book. You wrote about it in your old ESPN column. There were complaints from Capitol Hill. But there are trade associations - the one for the utilities, I believe, enjoys the same nonprofit status. It represents profitable utilities, but the trade association is not-for-profit. Is that really unique to pro football, in that case?

EASTERBROOK: They were certainly not the only ones with a tax-exempt status under the piece of law that was being cited, but the NFL's tax exemption came from a period where there was very little money in professional sports, and it was thought that there would be hardly any money to tax anyway. The numbers have skyrocketed since, especially in the last 20 years. The NFL has become a money-printing machine. And yet, at its headquarters at least, it had a tax exemption.

SIEGEL: According to Sports Business Journal, the salaries of Commissioner Roger Goodell and other top executives of the NFL will no longer be a matter of public record if the NFL is no longer a nonprofit. Do you believe that to be true and is it important if it is?

EASTERBROOK: Oh, yeah. Roger Goodell has been paid $79 million in the last two years to pretend to be a person running a philanthropy that serves the public interest. Obviously, he's not. The only reason is that IRS regulations attached to nonprofit status require this. And he's not the only one in NFL Headquarters with a million dollars-plus salary, he's just the most prominent one. The reason the league is giving up its tax exemption is so that they can stop disclosing the amounts of money that Goodell and the other top officials in the league make.

SIEGEL: Are there any areas apart from disclosure of salaries of their top executives - any areas of the NFL's activities or any of its alleged defaults that would be changed because of this change in tax status?

EASTERBROOK: Not really. The Joint Committee on Taxation on Capitol Hill has projected that this will cause the NFL to pay an extra $10 million a year in taxes. As it should - everybody should pay their fair share. But it's not going to change the status of the league fundamentally as regards to money, for example, the roughly billion dollars a year in public subsidies that the NFL receives to build and operate its stadiums.

SIEGEL: Gregg Easterbrook, thanks for talking with us.

EASTERBROOK: Thank you, Robert.

SIEGEL: Gregg Easterbrook wrote the book "The King Of Sports." It's about football. And he spoke to us about today's news that the National Football League intends to relinquish its tax-exempt nonprofit status. Transcript provided by NPR, Copyright NPR.

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