NFL Punts Its Nonprofit Status
Over the past year, Key Elements Group has provided ongoing coverage of the controversies facing one of the most profitable nonprofits in the United States – the National Football League. In the wake of domestic violence scandals and soaring profits and salaries for its executive staff, the NFL began attracting more and more public and media scrutiny, particularly over its tax-exemption status.
Evidently, this attention had some effect.
The NFL announced Tuesday, April 29 that it was relinquishing its tax-exemption status. As a nonprofit, team owners pay into the league in a form of dues, which go toward administering the league and paying out the gargantuan (untaxed) paychecks of its chief executives. Roger Goodell – the league’s commissioner – made a staggering $35 million in 2013. A lot of the NFL’s earnings are distributed back to teams, however, which as taxable entities consequently pay up. This doesn’t stop some team owners, however, from bullying cities for preferential treatment and kickbacks.
Goodell announced to the press that the “league office and its management council will file returns as taxable entities for 2015 fiscal year,” referring to its nonprofit status as a “distraction.”
Commentators point out that a primary catalyst behind the move is a desire for less transparency. By law, nonprofits must reveal how much money top-level employees make. Under the new tax categorization, the NFL will not have to reveal just how well-compensated executives like Roger Goodell truly are.
The moral of this story? Bad media attention can force hands.
With executive missteps over the year’s spate of domestic violence cases, looming lawsuits over the longterm health issues faced by former players, and the extraordinary compensation enjoyed by NFL elite, the tax-free treatment that league cadres enjoyed was a bit too much for the nation to bear.