NFL voluntarily gives up tax-exempt status: What's the difference?
The National Football League announced Tuesday that it will voluntarily give up its nonprofit status, removing its eligibility for tax exemptions.
While its nonprofit status was confusing to most Americans, as it's a multibillion dollar commercial enterprise, the change will actually bring about multiple benefits to the league.
Commissioner Roger Goodell said the NFL has held tax-exempt status since 1942. He called the status a 鈥渄istraction,鈥� saying it misled the public to believe the league does not pay taxes. All 32 teams already pay taxes on their income, so the change will not alter the operation or function of the NFL.
鈥淎s you know, the effects of the tax-exempt status of the league office have been mischaracterized repeatedly in recent years,鈥� Goodell said, 鈥淭he fact is that the business of the NFL has never been tax exempt.鈥�
So if the league was already paying taxes, what changes?
One of the requirements of the league鈥檚 previous status as a , which lists the compensation for the organization鈥檚 highest paid employees. By giving up this status, the league will no longer be required to make employee compensation public.
Since the teams themselves were not tax exempt, the taxes that will come from the organization are smaller than the billions brought in by the entire NFL. , the NFL executive offices will now need to pay taxes. In 2013, their income totaled $327 million. over the next decade. Not bad for an industry that makes .
On the other hand, the public will no longer know the details of executive salaries, such as whether or not Mr. Goodell鈥檚 salary caps at the or will continue to climb. At least six other executives have salaries in the seven-figure range, and about 300 others make six figures.
鈥淭he NFL just probably realized it didn鈥檛 have much to give up and they鈥檙e gaining the ability to not reveal salary information,鈥� Michael McCann, .
Recently, the NFL has faced public relation problems such as domestic violence charges, ex-players convicted of murder, and other allegations. Congress has also pushed for change and reform in the industry. released a joint statement following the NFL鈥檚 announcement:
It is rewarding to see such an important and positive step toward restoring basic fairness 鈥� We hope other professional sports organizations in similar situations will follow the positive example set by the NFL, and we look forward to rightfully returning millions of dollars to the federal treasury as a result.
