Sports

A Republican Senator’s Lonely Mission to Make the NFL Pay Taxes


Coburn riding an escalator at the Capitol building

Photograph by Bill Clark/CQ Roll Call

Coburn riding an escalator at the Capitol building

Oklahoma Senator Tom Coburn introduced a bill yesterday that would strip the National Football League of its tax-exempt status. The PRO Sports Act proposed by the Republican lawmaker would prohibit professional sports organizations with annual revenue of more than $10 million from filing as nonprofit organizations. In addition to the NFL, the bill would also change the status of the National Hockey League, golf’s PGA Tour, and the ATP World Tour in tennis, among other professional sports groups.

Wondering how an organization charging $2,600 for Super Bowl tickets qualifies for tax exemptions in the first place? It’s a good question. The NFL qualifies as a 501(c)(6), a nonprofit category that includes chambers of commerce, trade groups, real estate boards, and a handful of other sports leagues. The National Basketball Association is a for-profit organization, and Major League Baseball gave up its exempt status in 2007.

When Congress granted an antitrust exemption in 1966 that allowed the NFL to merge with the AFL, lawmakers added “professional football leagues” to the statute to ensure the new league would qualify. So while the NFL’s 32 teams bring in a combined $9.5 billion in annual revenue, the league office calls itself a “trade association promoting interests of its 32 member clubs.” This is a bit like McDonald’s (MCD) calling itself a trade association promoting the interests of its 14,000 U.S. restaurants. The key difference is that the NFL distributes all its revenue back to the teams—after covering expenses such as rent, officiating crews, and Commissioner Roger Goodell’s $30 million salary.

“Tax earmarks are essentially tax increases for everyone who doesn’t receive the benefit,” Coburn said in his press release proposing to tax America’s most popular sport. “In this case, working Americans are paying artificially high rates in order to subsidize special breaks for sports leagues. This is hardly fair.” The NFL did not respond to requests for comment.

Coburn, whose home state is without an NFL team, tried to close the sports-league loophole earlier this year in an amendment to the Marketplace Fairness Act. The bill passed the Senate, but Coburn’s amendment never came up for a vote. Now he’s trying again with a standalone bill. A spokesman for the senator said Coburn has failed to find a co-sponsor despite “extensive outreach” to his colleagues.

It’s unclear how much the bill would add to the tax bill for the NFL and other leagues. MLB reported that its shift away from nonprofit status was tax-neutral. Last year, in his annual catalog of government pork, Coburn estimated that the change could “generate at least $91 million of federal revenue every year” from the NHL and NFL alone.

Boudway_190
Boudway is a reporter for Bloomberg Businessweek in New York.

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