The Pro Sports Tax Scam

The NFL doesn't pay any taxes, due to the unusual tax exemption awarded it by the Federal Government, something which Senator Tom Coburn (R-OK) would put an end to.  He is sponsoring an amendment to the Marketplace Fairness Act, the Properly Reducing Overexemptions for Sports Act (or “PRO Sports Act”), that would end the corporate welfare loophole gained by the NFL and other Professional Sports Associations.

The uniqueness of the NFL’s 501(c)(6) status is that it got its tax exemption in 1966 legislation that established “professional football leagues” as a category of the (c)(6) business or trade association, otherwise defined by the IRS as ”business leagues, chambers of commerce, real estate boards, [and] boards of trade.” You can thank former commissioner Pete Rozelle for that nifty provision, included in legislation that also exempted the NFL from anti-trust provisions.

If the NFL were simply a business or trade association, it would be a 501(c)(6) because its “purpose is to promote the common business interest and not to engage in a regular business of a kind ordinarily carried on for profit.” However, Coburn’s amendment suggests that the NFL isn’t simply promoting the common business interests and value of the sport of football, but specifically acting like a business itself in increasing its profitability and the specific profitability of its members.

Not only are the 7-figure paychecks of the commissioners and top executives paid with tax-exempt dollars, the NFL teams also write-off the dues they pay to the NFL.  The NFL has a very lucrative logo licensing business (caps, jerseys, T-shirts, etc.) that is also tax exempt.  Similar arrangements exist with the PGA and the NHL.  Time for these tax leeches start paying their way.