NFL giving up tax exempt status

[mahoneybill]

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

Goodell = politician so none of this surprises me....

 

[dallasdave]

Goodell = politician so none of this surprises me....

Well said, stay thirsty my friend.

 

[BigDFan5]

This basically means nothing, I saw an article where the NFL usually has about 10 million in "profit" each year which means about a 3.5 million dollar tax bill

 

[Nightman]

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

and are the only pro franchise that has to open it's books every year. it is getting harder and harder for even GB to remain non-profit as the revenues just keep rising. I imagine any 'profits' go the team's charitable foundation.

 

[Nightman]

This basically means nothing, I saw an article where the NFL usually has about 10 million in "profit" each year which means about a 3.5 million dollar tax bill

I think people were put off by Goodell's pay package of 44m and they needed to do some PR maneuvering after the year he had.

 

[Doomsay]

It's all about avoiding disclosure, principally Goodell's salary. Hard to ask the public to finance stadiums in cash strapped cities when the fat man is pulling down $50 million.

 

[yimyammer]

How in the world did they ever qualify for tax exempt status?!?!? Its a business, not a non-profit, confused...

 

[Nightman]

It's all about avoiding disclosure, principally Goodell's salary. Hard to ask the public to finance stadiums in cash strapped cities when the fat man is pulling down $50 million.

It is funny that 300m in revenue for the League office is seen as minimal. Enough to pay the salaries of those that run the League. A lot of corporations would love to "only" have 300m in revenues.

 

[ConstantReboot]

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.

I know what you mean. I just don't get it that they can tag themselves as a not for profit entity and write themselves a paycheck. Note that Goddell doesn't make McDonald wages. He makes in the vicinity of over 35 million. So yes they should not have non-profit status from the beginning. Same with some of the mega-churches. They make way too much money to have a not for profit status attached to their name.

 

[xwalker]

I know what you mean. I just don't get it that they can tag themselves as a not for profit entity and write themselves a paycheck. Note that Goddell doesn't make McDonald wages. He makes in the vicinity of over 35 million. So yes they should not have non-profit status from the beginning. Same with some of the mega-churches. They make way too much money to have a not for profit status attached to their name.

I don't think you understand.

Goodell pays tax on his salary.

Tax is always paid on salary regardless of whether it came from a non-profit or for-profit entity.

Salary is always shown as an expense. Tax is only paid on Profit. (Profit = Revenue - Expense)

The NFL is setup for the teams to make money. Teams have always paid tax.

The NFL Office only needs to break even. It has no need to make money. They do show some profit because it's difficult to operate if you match Revenue to Expenses exactly at the end of the year, because then the bank account is zero until the next payment comes. They could do it, such that they have a big network payment on Jan 1st, but it would be really inconvenient to have zero in the bank for a day or two.

The total revenue for the NFL was 6 Billion dollars. They paid tax on all of that except 10 million.
6, 000, 000, 000 Taxed
1, 000, 000 Not Taxed

If they had given Goodell a 10 million bonus in December, then they would have paid tax on 100% of the the money because the NFL Office would have broke even.


If you make 60 thousand dollars and get the same deal, then the equivalent is:
60 thousand taxed
60 dollars not taxed

 

[xwalker]

How in the world did they ever qualify for tax exempt status?!?!? Its a business, not a non-profit, confused...

I've tried to explain it in this thread.

If you make 60 thousand per year and got the same deal, then the equivalent would be:
taxed 60 thousand
not taxed 60 dollars

 

[yimyammer]

I've tried to explain it in this thread.

If you make 60 thousand per year and got the same deal, then the equivalent would be:
taxed 60 thousand
not taxed 60 dollars

I'm embarrassed to say I still don't get it. I understand that when one is exempt from taxes they don't pay taxes but what I don't get is how the NFL managed to qualify as a tax exempt entity and I don't understand how your recent reply addresses my confusion. No knock on you, I'm assuming my brain isn't working as well as I'd like, perhaps you can elaborate what your point is in the above reply?

 

[xwalker]

I'm embarrassed to say I still don't get it. I understand that when one is exempt from taxes they don't pay taxes but what I don't get is how the NFL managed to qualify as a tax exempt entity and I don't understand how your recent reply addresses my confusion. No knock on you, I'm assuming my brain isn't working as well as I'd like, perhaps you can elaborate what your point is in the above reply?

Try this. If you were a pro player and you had a manager that handled all of your business for a 1% fee and the NFL sent all your pay to the manager and he then kept 1% and sent 99% to you. In this scenario you pay tax on your 99% but the manager does not pay tax on his 1% if he has non profit status.

The NFL Office is like the manager for all teams. Their percent is far lower than the 1% in the example.

 

[Galian Beast]

This is like announcing a restructure as if it were a pay cut...

It isn't....

It would be news if the NFL announced that they weren't going to have publicly subsidized stadiums anymore, and that they weren't going to pass the cost of their massive television contracts onto the consumers, especially consumers who don't watch football.

 

[yimyammer]

Try this. If you were a pro player and you had a manager that handled all of your business for a 1% fee and the NFL sent all your pay to the manager and he then kept 1% and sent 99% to you. In this scenario you pay tax on your 99% but the manager does not pay tax on his 1% if he has non profit status.

The NFL Office is like the manager for all teams. Their percent is far lower than the 1% in the example.

You're describing the effect of the NFL having tax-exempt status, thats simple math I understand.

Thats not what I'm trying to understand or what I am asking about.

I want to know what circumstances allowed the NFL to qualify as a tax-exempt entity for tax purposes, which I am currently understanding that they are (perhaps that's not the case?). IRS exemption requirements under 501 (3) (c) for example require the organization to be a charity and not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings can inure to the benefit of any private shareholder or individual, so the NFL doesn't qualify under 501(c)(3).

Since they don't qualify under 501(c)(3), under what circumstances are they qualified to call themselves a tax-exempt organization because there is nothing about what they do that could be could be construed as a charity or other organization (church, political organization, private foundation, chamber of commerce, etc) that might qualify since they are clearly a profit driven enterprise.

Never mind, I looked it up and the NFL qualifies as tax exempt under Section 501(c)(6) of the Internal Revenue Code which apparently allowed them to be tax exempt but not without scrutiny or people questioning the validity of that status.

 

[Nightman]

I'm embarrassed to say I still don't get it. I understand that when one is exempt from taxes they don't pay taxes but what I don't get is how the NFL managed to qualify as a tax exempt entity and I don't understand how your recent reply addresses my confusion. No knock on you, I'm assuming my brain isn't working as well as I'd like, perhaps you can elaborate what your point is in the above reply?

The NFL Office is like the Chamber of Commerce. They represent the interests of the 31 for profit franchises(GB is non-profit)that make up the NFL, but they are not in the business of making money themselves. All the money from ventures like the NFL Network that make money are under a different company that shares all the revenues with the 32 teams and is ultimately taxed.

The revenue they take in through dues and others minor sources was around 300m in 2013. After expenses for salaries, rent for the NY offices and costs associated with running the league offices, they were left with a small surplus or debt. Some years they are 70m short, some years they are 10m ahead. Not a lot for a League with close to 10b in total revenues.

The NFL has taking a PR hit because they have to show their books as a non-profit and everyone saw that Goodell made over 44m in compensation last year. By dropping the non-profit label they can close the books and keep their secrets. Whatever they don't give back to the teams will be taxed. But that could be as little as 10m a year.

 

[Rogah]

I'm embarrassed to say I still don't get it. I understand that when one is exempt from taxes they don't pay taxes but what I don't get is how the NFL managed to qualify as a tax exempt entity and I don't understand how your recent reply addresses my confusion. No knock on you, I'm assuming my brain isn't working as well as I'd like, perhaps you can elaborate what your point is in the above reply?

Remember this: "Non-profit" does not necessarily mean a charity, like so many people think. Nobody owns the league office. No one takes dividends. There is no owner, no shareholders.

Whenever anyone says that NFL is a $10 billion a year enterprise that doesn't pay taxes on their profits, that is a misleading statement because all the teams are paying taxes on profits.

 

[65fastback2plus2]

it was setup as a non-profit because it is a non-profit. It disburses all income that it receives returning a profit of $0. The nfl teams that receive the disbursements pay the taxes. People think the NFL is the "company" but it really isnt...its just the union of the individual teams.

they're still going to disburse all the income they take in and will still pay $0 in taxes just the same.

 

[65fastback2plus2]

Remember this: "Non-profit" does not necessarily mean a charity, like so many people think. Nobody owns the league office. No one takes dividends. There is no owner, no shareholders.

Whenever anyone says that NFL is a $10 billion a year enterprise that doesn't pay taxes on their profits, that is a misleading statement because all the teams are paying taxes on profits.

I'm impressed! From the deflategate stuff, I figured you were a bone head

 

[Doomsay]

Remember this: "Non-profit" does not necessarily mean a charity, like so many people think. Nobody owns the league office. No one takes dividends. There is no owner, no shareholders.

Whenever anyone says that NFL is a $10 billion a year enterprise that doesn't pay taxes on their profits, that is a misleading statement because all the teams are paying taxes on profits.

Confused. Are you supporting the favorable tax structure the monopoly enjoys? Are you a Kraft nephew?