NFL giving up tax exempt status

[irishline]

Expect prices for NFL related items to rise now. Taxes on businesses are not paid by the businesses. They are paid by the consumer, the employee, or shareholders.

They already paid taxes on that. In fact all 32 teams pay taxes on their revenue already. The only part that doesn't is the NFL office. This move costs the NFL headquarters about $10 million a year in tax savings nothing more...

"The tax exempt status for the most profitable sports league has generated a lot of controversy, but the move to cancel that is largely symbolic. While the league is tax-exempt, the $1 billion or so it makes a year is distributed to the 32 teams, all of which do pay taxes...

The league saved only about $10 million a year from the tax break, according to the Citizens for Tax Justice. That's a rounding error for an enterprise the size of the NFL."

http://money.cnn.com/2015/04/28/news/companies/nfl-tax-exempt-status/index.html

 

[RonSpringsdaman20]

Means Peterson is coming to Dallas

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[ConstantReboot]

So the NFL doesn't pay taxes until now and yet have been operating a billion dollar industry. Yet us normal people pay taxes each and every year. Something here doesn't make sense. America is really messed up.

 

[dallasdave]

The fact they were tax-exempt for this long is the biggest joke.

The biggest joke is Goodell whining how it's always been mis-characterized throughout the years...

A agree with you and Goodell is the biggest joke regardless.

 

[ConstantReboot]

I'll give an example that seems similar.

In Texas there is a franchise tax for money made by a corporation. If you pay out all of your profits as salary and dividends, then the Franchise Tax amount is zero.

Most of the revenue goes to the teams but some amount has to go to the NFL to pay Goodell's salary and that type of thing. I think only that pool of money that is used to Pay Goodell and the other NFL expenses was tax exempt. Even with tax, Goodell' salary is an expense that comes off the books before it gets taxed. He is paying tax on his salary personally.

I think it works similar to the franchise tax in the example. Only the amount remaining in the NFL's bank account at the end of the year will get taxed. They can structure it such that it will be a minimal amount.

If you have a small private corporation, you just need to make certain to pay out all of your profits before the end of the year. If you split all of the revenue up and pay it out to the owners in December then there is no franchise tax. If you pay them the same amount in January, then that amount is lower by the amount of the franchise tax. With a small private corporation, if you need money in the bank account in January, the owners can just loan back money to the company.

Yes most of the payments goes to the teams. But I doubt that what you mentioned is that simple. Each team pays a franchise fee to the NFL. That in itself can be worth billions. If thats not taxed and that in of itself should be taxable because thats incoming revenue.

I'm actually surprised that the NFL hasn't been taxed till now. Their a for profit corporation. Apple pays taxes. McDonald's pays taxes. Don't know why the NFL doesn't until now.

 

[Wheeltax]

I thought the ground felt a little chilly today.

 

[xwalker]

Yes most of the payments goes to the teams. But I doubt that what you mentioned is that simple. Each team pays a franchise fee to the NFL. That in itself can be worth billions. If thats not taxed and that in of itself should be taxable because thats incoming revenue.

I'm actually surprised that the NFL hasn't been taxed till now. Their a for profit corporation. Apple pays taxes. McDonald's pays taxes. Don't know why the NFL doesn't until now.

If we divide the NFL up into 2 sections, the teams and the part that is not the teams which I'll just refer to as the NFL Office.

Most of the money goes to the teams and then some amount goes to the NFL Office. The teams pay tax on their part. Consider what happens to the revenue that is kept by the NFL Office. Once they pay all expenses like Goodell's salary, advertising, rent, etc., what happens to the remaining money? It's only this remaining money that would be taxable. It does not get paid to non-team shareholders because it's not a public corporation. The remaining money either just floats around in a back account or it goes back to the teams. If the teams receive any other it they pay tax on it. The NFL Office really isn't a for-profit entity. The NFL in it's entirety including the teams does make a profit, but the NFL Office itself should be paying out the majority of it's revenue in expenses which include salary, rent, lawyers, advertising, etc.. Nobody is making a profit on any remaining amount unless it goes back to the teams at which point they pay tax on it.

They probably should be paying tax on any amount of profit they have at the end of the year, but that number can be very minimal with proper accounting practices. There is no point in the NFL Office bank account growing every year because the only point for NFL Office portion of the revenue is to pay expenses.

Profit = Revenue - Expenses

The NFL should be setup such that the NFL Office gets just enough to pay it's expenses every year and all other revenue should go to the teams. If the NFL Office gets more revenue than it's expenses, then the remaining profit will just sit in an account and not really be doing anything.

 

[Doomsday101]

If we divide the NFL up into 2 sections, the teams and the part that is not the teams which I'll just refer to as the NFL Office.

Most of the money goes to the teams and then some amount goes to the NFL Office. The teams pay tax on their part. Consider what happens to the revenue that is kept by the NFL Office. Once they pay all expenses like Goodell's salary, advertising, rent, etc., what happens to the remaining money? It's only this remaining money that would be taxable. It does not get paid to non-team shareholders because it's not a public corporation. The remaining money either just floats around in a back account or it goes back to the teams. If the teams receive any other it they pay tax on it. The NFL Office really isn't a for-profit entity. The NFL in it's entirety including the teams does make a profit, but the NFL Office itself should be paying out the majority of it's revenue in expenses which include salary, rent, lawyers, advertising, etc.. Nobody is making a profit on any remaining amount unless it goes back to the teams at which point they pay tax on it.

They probably should be paying tax on any amount of profit they have at the end of the year, but that number can be very minimal with proper accounting practices. There is no point in the NFL Office bank account growing every year because the only point for NFL Office portion of the revenue is to pay expenses.

Profit = Revenue - Expenses

The NFL should be setup such that the NFL Office gets just enough to pay it's expenses every year and all other revenue should go to the teams. If the NFL Office gets more revenue than it's expenses, then the remaining profit will just sit in an account and not really be doing anything.

so does that money now get taxed twice? What the NFL office brings in before it goes to team and then taxed once again when each team gets their share?

 

[CanadianCowboysFan]

Salary cap will drop to compensate for loss of revenue. Wouldn't surprise me...

only after we sign someone big

 

[ThreeandOut]

It's a PR move just like the Hardy 10 game suspension.

 

[perrykemp]

Only the 'NFL" entity that is the league office is tax exempt. Each individual team still pays taxes.

Technically I think the Packers are also except due to the fact that they are a non-profit organization.

 

[BoysfanfromCanada]

They'll have the best accountants which will take advantage of every tax loophole, and eventually the NFL will get money refunded back. Didn't GE have a gross of $14B a couple years back but somehow get a $500Mish refund? Dirty dirty tactics, but if the government allows these tax breaks, which company wouldn't take advantage

 

[xwalker]

so does that money now get taxed twice? What the NFL office brings in before it goes to team and then taxed once again when each team gets their share?

The money paid to teams is just an expense on the NFL ledger (Profit = Revenue - Expenses) so it does not show up as a profit to the NFL Office.

Now that they are not tax exempt, I'm fairly certain that it is just the portion that the NFL Office keeps minus their expenses that would get taxed. There is really no reason that I can think of for the NFL Office to have excess revenue over their expenses.

Even with the tax exemption, if any of that exempt money make it back to the NFL teams, it would have to be taxed at that point.

An accountant could explain it better, but some of them like to throw out a bunch of nomenclature that confuses the issue.

I've co-owned a small corporation for about 20 years so that's where I get my perspective on the accounting issues. It's the part of business that I most detest.

 

[Rogah]

It is really not a big deal. People think "non profit organization" means a charity and they would criticize the NFL for being a non-profit. However, "non-profit" does not equal "charity". The NFL is indeed a non-profit entity because no one owns it, no one draws equity from it, there are no dividends, etc. Now don't get me wrong; the individual teams in the league do those things. I am just saying the league office itself doesn't.

I think they decided the very small amount of savings the league office gains from being a non-profit simply was no longer worth the hassle.

 

[LatinMind]

Does anybody even care? Not being taxes exempt going to allow defenses to hit without being penalized? If not idc

 

[AmericasTeam81]

Public perception (ignorance) can be a *****.

 

[Floatyworm]

It means the NFL did not used to have to pay taxes. After pressure that they should due to their massive revenues, they're giving up their tax exempt status and will now pay taxes.

You mean......they will now bring in some Wall street crooks to cook the books......

The rich will get richer....and the small market teams will get nothing.

And the NFL will no longer have to show where their money goes.

Mark this day in history......What was a blip on the screen 3 days before the draft when everyone is caught up in the hoopla......The elitiests smoothly swoop in and begin to exert control.

The NFL will never be the same since no one will know who is making what....no transparency.

In history...this could be the day that was the beginning of the down fall of the league.

Any agency that isn't accountable..... eventually runs into trouble. Too big to fail? Not a chance

In a few years......I just don't want to hear....how the league is in trouble because how it mismanaged it's money and now needs a tax payer bail out

 

[waving monkey]

This is only right thing to do

 

[Rogah]

Mark this day in history......What was a blip on the screen 3 days before the draft when everyone is caught up in the hoopla......The elitiests smoothly swoop in and begin to exert control.

The NFL will never be the same since no one will know who is making what....no transparency.

In history...this could be the day that was the beginning of the down fall of the league.

Can't say I share your apocalyptic take on the matter. What this means is they no longer have to disclose some of the inner workings of the league office, but they still have to actually obey the laws of the land.

 

[xwalker]

Public perception (ignorance) can be a *****.

Yes, this thread shows that most people just look at the headlines not the details.

People really believe that the Billions of dollars that NFL teams make were not being taxed. There's a sucker born every minute.