National Football League says it will give up its tax-exempt status

Tue Apr 28, 2015 4:12pm EDT
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By Steve Ginsburg

WASHINGTON (Reuters) - The NFL's front office will voluntarily give up its decades-old tax-exempt status, eliminating a "distraction" for the league that for years has been "mischaracterized," Commissioner Roger Goodell said on Tuesday.

National Football League teams pay taxes on their profits, but the league's central office has gotten a pass since it is listed as a non-profit trade or industry association, a designation that has been criticized by some members of Congress.

Goodell, in a memo announcing the change to the league's 32 teams, said the "fact is that the business of the NFL has never been tax exempt."

"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."

He said that will still occur when the league office and Management Council file returns as taxable entities, and that the change "will make no material difference to our business."

The NFL is the world's most profitable sports league and has nearly $10 billion in annual revenues. While the central office is tax exempt, most of the profits are given to the teams, which do pay taxes.

Goodell said the league's tax status has been "a distraction" and has been "mischaracterized repeatedly in recent years."

Section 501(c)(6) of the Internal Revenue Code lists "professional football leagues" as deserving of tax-exempt status, a vestige of legislative wrangling that helped the NFL and its upstart rival, the American Football League, merge in 1966.   Continued...

NFL Commissioner Roger Goodell speaks to the media before Super Bowl XLIX in Phoenix, Arizona January 30, 2015. REUTERS/Lucy Nicholson