The National Football League is disavowing its tax-exempt status, which could help shield the sport from Congressional inquiries and financial disclosure requirements.
Commissioner Roger Goodell announced the decision Tuesday in a letter to team owners and members of Congress, calling the league’s tax-exemption a “distraction,” Bloomberg reports.
The move involves minimal sacrifice on the part of the NFL, because the tax break is worth only about $10 million per year — a small fraction of the league’s roughly $10 billion in annual revenue.
“Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there,” Goodell explained, so “the change in filing status will make no material difference to our business.”
In fact, the benefits of abandoning the tax exemption could be far more valuable to the NFL than the taxes it will now have to pay, according to SB Nation.
For one thing, it could dampen public criticism related to the compensation of NFL executives. As a nonprofit, the league previously had to report executive pay to the IRS in a public filing, which notably led to the revelation that Goodell earned a $44 million salary in 2013.
The move could also blunt criticism from Congress, where an effort to revoke the NFL’s tax exemption has been gaining steam in recent years. With the league unlikely to evoke sympathy on the matter, the NFL would have had little to gain from defending the bill in a public forum.
Indeed, HuffPost reports that Republican Rep. Jason Chaffetz sent Goodell a letter last month informing him that the committee would soon begin reviewing the tax-exempt status of the NFL and several other sports leagues. Chaffetz, who chairs the House Committee on Oversight and Government Reform, also mooted the possibility that Goodell would be called before an Oversight panel.
“It seems like Congress has been making a big deal out of it,” former Green Bay Packers vice president Andrew Brandt told Bloomberg. “Without this status there’s no requirement to disclose, which helps in the PR battle,” Brandt explained.
Major League Baseball disavowed its own tax-exempt status in 2007, Bloomberg says, and now that the NFL is following suit, the National Hockey League will be the only major sports league in North America to retain its tax exemptions.
This report, by Peter Fricke, was cross-posted by arrangement with the Daily Caller News Foundation.
