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Sunday, January 26, 2014 12:20 PM

Were You Aware the NFL is Treated as Non-Profit and thus Exempt From Taxes? Should it Be?

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With the Super Bowl a week away, here's a question on my mind: Were you aware the NFL is treated as a non-profit organization and thus exempt from taxes?

If you weren't, you are with the majority. Only 13% of people polled got the question correct. Curiously, it's only football that's exempt from taxes, not baseball or other sports.

Please consider a Fairleigh Dickinson University report Your Tax Dollars into NFL Owners' Pockets?

Americans may love football, but few support the use of public funds and tax breaks for the National Football League and a vast majority were unaware the NFL is a not-for-profit entity, according to a recent national survey from Fairleigh Dickinson University’s PublicMind.

More than half of respondents (56%) identify themselves as fans of the NFL, but when it comes to tax dollars being used to help the NFL, an overwhelming majority of Americans say it should be ‘under further review.’ Seven-in-ten (69%) oppose the use of public funds to build and support stadiums for NFL teams, and virtually the same number (71%) say no to tax breaks to attract or keep a team in town.

“The public’s love for the game clearly doesn’t trump their fiscal restraint when it comes to big time sporting events,” said Krista Jenkins, director of PublicMind and professor of political science at Fairleigh Dickinson University. “Even teams who don’t make it to the Super Bowl generate millions from licensing and ticket sales. The public says taxpayers shouldn’t be hit up for support when there’s enough in the NFL coffers to pay their own way.”

Digging deeper, there’s little evidence to suggest that some are more persuaded by NFL appeals for public funding than others. Across gender, race, and age, opinion remains consistent -- a resounding “no” to tax breaks and public funds. Even self-described football fans are largely opposed to corporate welfare for the NFL, although it’s notable that fans are twice as likely as non-fans to favor tax breaks for NFL teams (27 versus 14 percent, respectively).

The same survey also finds that most are unaware that the NFL is a not-for-profit organization. As a recent report in The Atlantic outlined, the NFL and its teams are the recipients of a good many direct and indirect subsidies. However, more than two-thirds (69%) say the NFL is NOT a nonprofit, with only 13 percent correctly identifying it as not-for-profit.

“Since the NFL is generally associated with wealthy owners and players, not to mention the tremendous revenue that each team generates year-round, the public would not be expected to know the League is a non-profit organization,” said Jenkins. “With billions likely to flow from the Super Bowl, it would seem a contradiction that the organization behind it all would be technically a not-for-profit, but that is indeed true about the NFL.”
Fairleigh Dickinson University Survey Question

How Did the NFL Get Tax-Exempt Status?

Bloomberg explains in Americans Think NFL Should Pay Taxes
The NFL enjoys vast support among the American public despite recent controversies, but when it comes to taxes, the league is best served by keeping fans in the dark.

A survey conducted last month by Fairleigh Dickinson University found that people overwhelmingly oppose tax breaks enjoyed by the league, while the majority had no idea the National Football League has nonprofit status. The poll, which questioned more than 1,000 people, found that 56 percent identified themselves as football fans, 69 percent don't think public money should be used to build stadiums, and 71 percent oppose tax breaks to keep an NFL team in town.

Most interesting, however, is how effective the NFL's public-relations machine has been at keeping its nonprofit status out of the public eye. Only 13 percent of those polled correctly identified the NFL as a nonprofit. It seems most people have a hard time reconciling tax breaks for a league flush with cash at a time when government budget cuts are threatening classrooms and even the IRS itself.

To clarify, the NFL is not categorized as a charity under the tax code; rather, it falls under Section 501(c)(6), which exempts trade or industry associations from taxation. In 1966, the tax code was amended to include professional football to facilitate the merger of the NFL and the American Football League, by granting the sport antitrust and tax exemptions. The IRS specifically mentions the sport in its statute:

IRC 501(c)(6) provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues (whether or not administering a pension fund for football players), 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.

With $9.5 billion in revenue, the NFL doesn't seem to fit this definition. The next-richest professional sports league, Major League Baseball, does not enjoy the same break.

There's a bipartisan campaign to amend the tax code, which is right in the wheelhouse of liberal activists calling for increased taxes on millionaires and conservative critics of government waste. Senator Tom Coburn, Republican of Oklahoma, recently announced he would retire from Congress, but not before introducing a bill that would strip the NFL of its nonprofit status. The PRO Sports Act proposes taxing any professional sports league that brings in at least $10 million. In such a politically polarized climate, it seems football might be our great uniter after all.
Mike "Mish" Shedlock

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