In a largely symbolic move, the NFL is giving up its nearly 50-year-old tax-exempt status, league officials announced Tuesday. The move extends to the league itself, which had been listed as a nonprofit trade group under Section 501(c)(6) of the tax code since 1966, and not the 32 teams that make up pro football, which are already taxed.
The vast majority of the NFL’s $9.5 billion revenues go to those teams, as NFL Commissioner Roger Goodell noted in a letter to owners and members of Congress announcing the move that was reported by Bloomberg.
“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 wrote. “This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business.”
As several commentators have noted, though, the move means that Goodell will not have to report his salary—he made $44 million in 2012 and $35 million in 2013—which invariably gets brought up every time he screws something up, which is quite often.
Robert McNair, chairman of the league’s finance committee and owner of the Houston Texans, released a statement saying that the move was meant to clear up the fact that NFL franchises are actually being taxed as normal businesses.
“The owners have decided to eliminate the distraction associated with misunderstanding of the league office’s status,” his statement said.
In recent months the league has faced political pressure from Congress, with some members seeking to undo the tax breaks. As Slate’s Jordan Weissmann reported in September, there have been several attempts by members of the House and Senate to introduce legislation to change the NFL’s tax status. As Weissmann also noted, the financial impact on the league is unlikely to be much.
Chances are, yanking away the NFL’s tax exemption wouldn’t drastically change its finances … the league office often operates at a loss—in 2011 it finished more than $77 million in the red, while in 2012 it only had $9 million left at year’s end. Without profits, of course, there’s nothing for the government to tax.
Still, the move will end the farcical notion that the league is a trade group working for the public good rather than a giant cartel working for the profits of its existing owners.
Last month House Oversight Committee Chairman Jason Chaffetz began his own press for a change, telling Reuters the “National Football League should have to pay taxes like everybody else.”
Of the four major American sports leagues, the NHL is the only one remaining with tax-exempt status. As Reuters reported, the NBA never had tax exemption and Major League Baseball got rid of its status partially so that it wouldn’t have to reveal executive salaries.