OT: NFL Voluntarily Drops Tax-Exempt Status
Probably overdue, but interesting nonetheless. Shouldn't impact much, as most taxable revenue runs through the member clubs. Mostly a PR move and leverage play against Congress re: concussion, domestic violence, etc.
http://www.bloomberg.com/politics/articles/2015-04-28/nfl-will-end-its-…
This has been my first post. Neat.
For the NFL, the costs of losing the tax break are minimal, an estimated $109 million over the next decade. There are benefits, too, including the end of federal disclosure requirements that put Goodell’s salary and some other league information in the public domain.
My perception of Roger Goodell might be off, but I tend to believe that the removal of certain disclosure requirements is worth every penny of about $11 million per year to him.
That's an incredible amount of money.
I'm sure you're right about the value of this move to Goodell; I'm not sure I'm convinced that the change in tax status will really cost the league office that much. Won't they restructure the income flows so that the money that flows back to the clubs never shows up as NFL income in the first place, now that it would be taxable? Or am I misunderstanding the structure here?
What most people don't realize, mostly because there's nothing sexy to report about it, is that the NFL (i.e., the league office) has various subsidiaries that handle much of its revenue-producing business. For example, NFL Properties handles its licensing/merchandising and (I think) sponsorship matters. I'm not well-versed in corporate taxation (yet!), but I would assume that, in this example, NFL Properties would bear most of the tax burden associated with those revenue streams, while the league office revenues are relatively minimal.
My guess is that they reorganized the structure to make the changes tax neutral or actually positive (pay less taxes) for the owners over the long term. With the NFL in tax exempt status, all the income (after expenses/etc) had to pass thru to the owners which makes it difficult for the owners to shelter/hide from the tax man. Depending on the new structure, they can get very creative and take advantage of the tax code to pay lower overall taxes.
Completely a PR move, that does't hurt the NFL's income. When in the last decade has the NFL ever done anything that reduces revenue or given up a profit source?
Yeah, but when there's a public outcry against the tax-exempt status, and the NFL says, "Ok, we'll drop it," the public doesn't then get to say "oh that's just a crass PR move."
This will totally make everyone forget how corrupt, condescending, and vainglorious the NFL is.
Kudos to you sir for using this excellent word! Upvote ya if I could.
they were a tax exempt organization for so long. Is it all the revenue or just certain parts of it?
Only the actual NFL revenue, not the individual teams, and most of what the NFL brings in is distributed back to the teams.
It only applied to the league office, not the franchises themselves.
I imagins that it will not end up costing the NFL anything close to that in additional taxes. Being that the league is essentially a special intterest group for team owners, I assume that should December 31 (or whenever their year end is) approaches, they can engage in some sort of tax planning to delay payments so that the league itself will usually show a loss, or negligible amounts of income.
I agree that the NFL had bad motives here (probably just balancing the PR value against the minor loss of revenue), but it is still a good thing that this is over. The fact that the NFL, at least the central part of it, was treated like a non-profit organization for years is absurd. This isn't much, but it is still a good thing.
Now if they just voluntarily dropped their "act dumb in public and hopefully nobody asks follow-up questions" act that would be great.
Great, now when does the NCAA and their $600 million endowment follow suit?
April 28th, 2015 at 11:08 PM ^
April 29th, 2015 at 11:08 AM ^
The "Forever Football" crap they publicized a couple years ago was seriously deplorable. The NFL was trying to do nothing but masquerade the bad news coming out regarding the risk and severity of head trauma. And the way they attempted to portray the league as a some profound, sentimental part of American culture just felt sickening.
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