NFL giving up tax exempt status

[Doomsay]

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

bean head, more likely.

 

[Rogah]

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

I am not indicating support or opposition to the NFL's recent announcement. I honestly don't give a crap. I am just trying to help others understand why the NFL qualifies as a "non-profit" and also make sure it is clear that when people say "the NFL is a non-profit entity" that that only refers to the league office itself, not the individual franchises.

 

[xwalker]

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.

The NFL Office is not intended to make a profit. It just exists to enable the 32 teams to function as a league. When the teams make money, it goes to the owners who can spend the money. If the NFL Office makes money, it just accumulates in a bank account and there is nobody to spend it. If any money in that account ever made it's way back to the owners, it would have been taxed at that point.

 

[xwalker]

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.

Yes, the average running profit is basically zero, but some years they have more revenue than expenses exactly on December 31st which makes it technically a profit year; however, if they are 10M short the following year then the average is zero in the long term.

 

[Tabascocat]

See my post #6.......

All this is for is to hide the allocated money. Goodell took a beating this year and his salary is public. Now, when he gets another raise, we will have no idea how much. This is to take some heat off of him IMO.

Nothing will change from this move, it just goes from public to private in financial terms.

Xwalker has explained it nicely..................