WASHINGTON xx (Reuters) - Congressman Jason Chaffetz insists his bid to overturn the NFL’s decades-old tax-exempt status has nothing to do with political posturing or electioneering.
And the Utah Republican says his campaign to get rid of the tax break is not motivated by the recent travails of NFL Commissioner Roger Goodell, who has been excoriated for turning a blind eye to domestic abuse by some of his players.
“It’s an issue of basic fairness,” Chaffetz, his palms turned upward, said in an interview. “The National Football League should have to pay taxes like everybody else.”
The teams that comprise the NFL, boasting some $10 billion in annual revenues, pay taxes on their profits, as well as on merchandise and player salaries. But because it’s listed a non-profit trade or industry association, the league’s head office gets a free pass.
Chaffetz, a 47-year-old firebrand who became chairman of the powerful House Oversight Committee in January, wants that to change.
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.
The result is the NFL’s status is comparable to that of the Chamber of Commerce when it comes to taxation.
“It doesn’t pass the laugh test of being something that’s a not-for-profit trade association,” said Ryan Alexander, president of Taxpayers for Common Sense, a federal budget watchdog organization. “There’s no evidence the NFL would collapse without this exemption.”
The Joint Committee on Taxation estimates the 10-year cost to the taxpayer of the NFL exemption is about $109 million.
Not surprisingly, the League sees it differently.
“The league office funded by the teams is a not-for-profit entity like a trade association,” said NFL spokesman Greg Aiello. “All revenue goes to the teams and is taxed there.”
Among the entities joining the NFL as “tax-exempt organizations” are the National Hockey League, the Professional Golfers Association and the U.S. Tennis Association.
The National Basketball Association never sought tax-exempt status, while Major League Baseball in 2008 opted to do away with its exception because, in part, it would have had to reveal the salaries of its top executives.
That requirement is how the public knows that NFL Commissioner Roger Goodell made $35 million in 2013, down from the $44.2 million he pocketed in 2012.
Andrew Delaney, a sports law expert with Martin & Associates, said if it became a for-profit entity, the NFL would likely find enough write-offs to offset the savings it would lose along with its tax-exempt status.
“When MLB made the switch from a non-profit, they reported that there was no real change in their tax liability,” he said. “If I were running the NFL show, I’d say, ‘This isn’t worth it.’ It’s not worth the PR hit it takes.”
Chaffetz concedes if the non-profit status is removed, the NFL has “some very tax savvy people that will figure this all out for them.” He added, however, that he just wants the NFL “to play under the same rules as everyone else.”
Delaney said similar legislation has “been tried before, and hasn’t made it. But you never know.”
Chaffetz is taking the baton from former Republican Oklahoma Senator Tom Coburn, who retired in January. In 2013 Coburn introduced the PRO Sports Act, which would prohibit professional sports organizations with annual revenue of more than $10 million from filing as non-profits.
Chaffetz, a former placekicker for Brigham Young University, wants to hold hearings on the issue and have Goodell testify. He hopes to push the PRO Sports Act to the floor of the House “sooner rather than later.”
When asked of his chances of overturning a policy that’s been in place longer than just about every member of Congress, Chaffetz was confident - and ready to use his seniority to push the issue. “I’m a chairman now,” he said.
During the NFL’s domestic abuse saga, several members of Congress hinted that the league’s coveted antitrust exemption could be rescinded if it did not revise its personal conduct policy, which it did.
The threat of removing MLB’s antitrust exemption was a catalyst for the sport strengthening its stance against performance-enhancing drugs.
There have been none of those threats over the NFL’s tax-exempt status, probably because the antitrust exemption allows the league to negotiate the billion-dollar television contracts for all teams, and taking that away would seriously harm the NFL.
“I want to give Roger Goodell a fair shot to explain the tax-exemption,” Chaffetz said. “The NFL by all accounts is the nation’s most profitable sports league.
Reporting by Steve Ginsburg; Editing by Christian Plumb