Senator Coburn introduces legislation to remove tax exempt status for NFL, other sports leagues
Look out for flying pigs, a Republican just proposed a sane bill.
Oklahoma Sen. Tom Coburn (R) today introduced an amendment to the Marketplace Fairness Act that would end the practice of allowing professional sports leagues to qualify as tax-exempt organizations, a move that would hit leagues like the National Football League, the Professional Golfers Association (PGA) Tour, and the National Hockey League, among others.
Since 1966, the tax code has allowed leagues to classify as 501(c)(6) charitable organizations — a classification used by trade and industry organizations — under the assumption that the leagues were promoting the general value of their sports. But Coburn’s amendment asserts that the leagues are not non-profits engaged in the promotion of their sports but instead are businesses interested solely in the promotion of their business; that is, the NFL isn’t so much concerned about promoting the general sport of football as it is concerned with promoting NFL football, because it is the NFL brand and the NFL teams and logos and products that make it a profitable business. The NFL, for instance, didn’t seem interested in promoting the general spread of football when a competitor league, the United States Football League, was formed in 1983. Likewise, the PGA Tour, NHL, and other sports leagues serve to promote their brand of their sports, not the sport as a whole.
Further, the leagues hardly pay their executives as if they are non-profits. The NFL paid $51.5 million to just eight executives in 2010, according to Coburn, and other leagues are similar — PGA commissioner Tim Finchem made $5.2 million that year, while NHL commissioner Gary Bettman took home $4.3 million.
In his 2012 Waste Book that chronicled government waste, Coburn said that taxpayers were losing as much as $91 million a year subsidizing professional sports leagues because of their non-profit status:
The National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers’ Association (PGA) classify themselves as non-profit organizations to exempt themselves from federal income taxes on earnings. Smaller sports leagues, such as the National Lacrosse League, are also using the tax status. Taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits. Taxpayers should not be asked to subsidize sports organizations already benefiting widely from willing fans and turning a profit, while claiming to be non-profit organizations.