October 6, 2014
By Brad Hoylman
New York, NY – These days, one would be hard-pressed to find an organization mired in deeper controversy than the National Football League.
The rap sheet keeps growing. Jonathan Dwyer of the Arizona Cardinals was just charged with assault for allegedly breaking his wife’s nose with a head-butt. That’s on top of domestic violence incidents involving Ray Rice and Greg Hardy, child abuse charges leveled at Adrian Peterson — while Aaron Hernandez’s double-murder trial continues.
And last month the league was forced to acknowledge in federal court documents that it expects nearly a third of its retired players to develop serious health problems from concussions suffered on the field.
None of the bad press seems to have impacted the NFL’s bottom line, however. With annual revenues approaching $10 billion, it’s the world’s richest sports league.
Even its losing teams turn handsome profits. The Buffalo Bills, which haven’t had a winning season in nearly a decade, made an estimated $30 million last year, even before the team got its share of league profits.
You’d probably never guess, then, that the league — headquartered in my district — pays no federal corporate income taxes.
It’s time to throw a challenge flag.
In 1966, a loophole was created in the federal tax code classifying “professional football leagues” as tax-exempt 501(c)(6) organizations, a designation otherwise reserved for trade organizations like chambers of commerce.
Following the feds, New York State, too, exempts the NFL from corporate franchise taxes, which means the state misses out potentially on hundreds of thousands of dollars.
The result is that the NFL executives’ salaries are underwritten by taxpayers, including Commissioner Roger Goodell’s exorbitant $44-million paycheck last year, which was funded by tax deductible “members’ dues” paid by the league’s teams.
Goodell’s so-called nonprofit salary is about four times that of the next best paid nonprofit chief executive and more than twice that of the average for-profit CEO on Standard & Poor’s 500 stock index. This includes chief executives at major New York firms like Time Warner, Alcoa and Goldman Sachs.
Individual teams like the Jets, Giants and Bills are considered for-profit entities and pay taxes. Still, they benefit from various tax write-offs that the league’s not-for-profit status affords them, such as tax deductions the teams receive on the millions of dollars they pay the league every year in “member dues.”
This is to say nothing of the cash payments, tax abatements, infrastructure improvements and operating costs teams receive from cities and states to subsidize stadiums.
The recent negative press has rightfully refocused attention by federal lawmakers on the NFL’s tax-exempt status.
Closing the NFL tax loophole at the federal level has met strong resistance in Congress. That may have something to do with the cash showered on Capitol Hill by the league — which spent more than $3 million on campaign contributions and lobbying during the 2012 and 2014 election cycles alone.
Polls show more than 70% of taxpayers oppose public support for NFL stadiums. And an online petition calling for the NFL’s tax-exempt status to be rescinded has generated over 400,000 signatures over the past year.
Other sports leagues have seen the light. The National Basketball Association has always operated as a for-profit entity. Major League Baseball gave up its nonprofit status in 2007 and started paying federal and state corporate income taxes.
If the NFL doesn’t start paying corporate income taxes voluntarily, rather than waiting for Washington, Albany should strip the league of its nonprofit status. Nobody should be forced to support the NFL’s costly and bad behavior, least of all New York taxpayers.
Brad Hoylman is a New York State Senator representing midtown Manhattan.
