Much Ado About Nothing: NFL to Abandon Nonprofit Status

business_ethics_highlights_2We use the National Football League’s name and initials in two senses. One refers collectively to the 32 for-profit member franchises of the NFL. The other refers more narrowly to the league office that governs relations among the 32 member franchises and provides them certain commercial services (e.g., negotiating the NFL’s television contracts). Politicians and media figures have sought to make hay over “the NFL” being a tax-exempt, not-for-profit organization by blurring the distinction between these two senses—implying, wrongly, that the 32 for-profit football clubs avoid taxation because their (trade association) league office does. The criticism makes about as much sense as claiming that because the American Petroleum Institute is a tax-exempt, not-for-profit trade association, its members like ExxonMobil pay no taxes. There is plenty for which to criticize the NFL legitimately without ignorantly (or maliciously) making up an abuse of the tax code (take, for example, its foot-dragging on acknowledging its until-recently-cavalier response to player head injuries, or its crony-capitalist pursuit of public subsidies for what are effectively private stadia). If the NFL’s abandonment of tax-exempt status for its league office is some kind of victory, it’s a victory for a public relations exercise feeding on public ignorance, rather than for ethical business practice. >>>

LINK: The NFL is dropping its tax-exempt status. Why that ends up helping them out. (by Drew Harwell and Will Hobson for Washington Post)

In a letter dated Tuesday to team owners and members of Congress, [NFL Commissioner Roger] Goodell called the decades-old tax-exempt status a “distraction” that has “been mischaracterized repeatedly,” and whose end “will make no material difference to our business.”

Since 1942, America’s biggest sports empire has qualified as a 501(c)(6) non-profit, the same designation given to business leagues, trade groups and organizations like the American Medical Association. Central bodies for hockey and golf, the National Hockey League (NHL) and The PGA Tour, also file as nonprofits, because the tax code says they work to promote their industries, not as for-profit enterprises.

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