By Rick Cohen
Nonprofitquarterly
Now that Peyton Manning is leaving the Indianapolis Colts, and now that former New Orleans Saints defensive coach Gregg Williams has been exposed for offering his players bounties for having opposing players carried off the field, we can return to the real business of professional football and join Business Insider to ask, “Why Does the National Football League Deserve Tax-Exempt Status?”
NPQ raised this question in 2008. Back then, the NFL tried to get the American Society of Association Executives (ASAE) to get a bill passed that would give a special meaning to the NFL’s tax-exempt status—making them exempt from having to reveal the names of NFL staff members earning six-figure salaries, not to mention the seven-figure and, in the case of commissioner Roger Goodell and NFL Network president Steve Bornstein, the eight-figure compensation packages. According to the NFL, complying with the requirement of disclosing high-salaried employees—like every other nonprofit has to do—would violate the employees’ privacy.
Like this Business Insider piece, we questioned the nonprofit provenance of the NFL, suggesting that there was much to make the IRS reconsider the NFL’s status. We contrasted Roger Goodell’s NFL with Bud Selig’s Major League Baseball which is incorporated as a for-profit. Business Insider examined the definition of a 501(c)(6) and concluded, “It seems inconceivable that the NFL is not ‘engag[ing] in a regular business of a kind ordinarily carried on for profit.’”
The Insider’s blogger cites a paper by University of Vermont law student Andrew Delaney, who concluded that the NFL was functionally a “glorified tax shelter.” Delaney concluded, “If the NFL isn’t violating the letter of nonprofit status, it’s certainly violating the spirit.”
Our analysis noted that the NFL “has the unusual distinction of not only being a tax-exempt multi-billion dollar corporation…[but] a tax exempt monopoly.” It is a 501(c)(6) monopoly that earned a scant $9 billion in revenue last season. Maybe as the IRS begins to find its oats in questioning the tax-exempt credentials of 501(c)(4) organizations that seem to do a lot of politicking and not a lot of social welfare, it might also take time to look at the 501(c)(6) NFL, which seems to pull in lots of earned revenue with little hint that it deserves to be a nonprofit.—Rick Cohen