Why the NFL Doesn't Have to Pay Taxes Like You

Credit: Allison Joyce / Getty Images

When you close your eyes and imagine what a non-profit organization looks like, the picture you see probably doesn't include a $10 billion fiscal year or a leader that took home $44 million for a single season. Yet the NFL continues to lean on its non-profit status, and, much like the Network of Victim Assistance, which aids those affected by domestic violence, it won't have to pay taxes when the government comes to collect this week.

Washington lawmakers want to change that in the worst way, not only because the optics are slanted so dramatically against the NFL, but also because the Joint Committee on Taxation estimates the league's exemption has cost taxpayers $109 million over the last decade.

"It's an issue of basic fairness," Rep. Jason Chaffetz (R-Utah) recently told Reuters, later adding that he just wants the NFL to "play under the same rules as everyone else."

The reason the NFL doesn't pay taxes is beyond outdated at this point. The league is a registered 501(c)(6), which "provides for exemption of business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues." The law was amended to include that last part of the language when the NFL and AFL merged in 1966 to allow all players to continue earning a pension.
 
NFL teams do pay taxes, but the league office is specifically exempt because it is technically an industry organization that oversees the league, hires referees, supports the owners, and does a lot of other boring, clerical activities. The billions of dollars that the league makes on TV deals and merchandise and the Super Bowl, though, are subject to tax.

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But it's not just football. The NHL, PGA, and LPGA are all tax-exempt, too, and until 2007, Major League Baseball avoided taxes before it ditched its non-profit status to keep its executive salaries private. NFL salaries — like the eye-popping aforementioned $44 million Roger Goodell made last year — are public information. And yes, the NFL commissioner was required to pay taxes on those wages.
 
In 2013, former Senator Tom Coburn, an Oklahoma Republican, introduced the PRO Sports Act to stop professional sports leagues with more than $10 million in annual revenues from filing as non-profits. Chaffetz, who is now the chairman of the House Oversight Committee, hopes to bring the bill back to life. Because something just doesn’t smell right when the NFL holds the same tax-exempt status as the Girls Scouts.