Goodell’s Big Bonus Adds Scrutiny to the NFL’s Nonprofit Status
The NFL released its 2013 tax filing on February 13, revealing a gigantic sum awarded to Roger Goodell for his work as the league’s commissioner: a whopping $35 million.
Goodell’s net earnings consisted of his annual $3.5 million salary, along with an additional $31.1 million bonus decided upon by a small coterie of NFL team owners.
The announcement comes at a sensitive time for the NFL. Amidst high-profile domestic abuse cases and the ongoing debate concerning players’ long-term health issues, the tremendous size of Goodell’s paycheck throws yet another controversial element of the league’s operations into sharp relief: the NFL’s status as a 501(c)6 tax-exempt nonprofit.
Technically a “trade organization” under its unique nonprofit status, the NFL does not pay any corporate taxes, even though its annual revenue hovers around $9.5 billion. Other sports enterprises share this unique designation, including the National Hockey League, the Professional Golfers Association Tour, and the Professional Rodeo Cowboys Association.
The NFL’s special treatment dates to 1966, when the National Football League merged with the American Football League. Congress passed Public Law 89-800, an arcane provision which essentially expanded antitrust exemptions to include professional football, allowing the newly established league to act as a monopoly in setting highly lucrative television fees.
The same year, NFL lobbyists successfully procured an addendum to Section 501(c)6 of 26 U.S.C. of the Internal Revenue Code that broadened the criteria for what sorts of organizations qualify for tax-exemption to specifically include professional football leagues.
The NFL’s privileged role vis-a-vis the average tax payer is further underscored by the generous amount of public funding the league’s highly profitable teams receive. According to urban planning specialist and Harvard faculty member Judith Grant Long, a number of teams – 12 in all – have turned profits on public subsidies alone, not including any of the immense profits garnered by the teams through ticket sales, concessions, or broadcasting rights.
A bipartisan group of lawmakers, however, are challenging the league’s tax-exempt status. Rep. Jason Chaffetz, representative of Utah’s 3rd district, is championing such a bill. ”To say establishments like the NFL are not for profit organizations is laughable. They are a for-profit and should be taxed as such,” the lawmaker told Buzzfeed.
Local politicians are putting the pressure on as well, as a group of legislators in New York City are pushing bills that would revoke the NFL’s nonprofit status within the state. This measure wouldn’t hold up against federal tax law, but is designed to pressure national legislators to take action.
Currently, public opinion concerning the league’s tax exemption is tepid. Indeed, only 13 percent of survey respondents could accurately identify the league as a nonprofit. But debate over the issue is growing. A petition on change.org titled “Revoke the Tax-Exempt Status of the National Football League” currently has nearly 429,000 supporters.
In the long-run, a number of factors will likely influence what ultimately happens to the league’s tax exemption status. The NFL’s extraordinary profits alone make it easy to question its nonprofit categorization, but the added scrutiny brought about by its bungled response to recent domestic violence controversies as well as the longterm medical issues suffered by retired players will likely elevate the discussion further.