Super Bowl Sunday Beats Tax Day

There are probably not very many issues on which Oklahoma Senator Tom Coburn and I see eye-to-eye. If you look at his website, he definitely lies to the right of this author. However, when I came upon this article in Bloomberg, I thought, “Tom Coburn is right!”

The article describes Coburn’s mission to make the NFL pay taxes. If you are flabbergasted that the NFL does not pay taxes, so was I. The NFL’s tax status is a triumph of lobbying, which sports teams do incredibly well at all levels of government.

According to the article, the NFL currently holds 501c(6) tax status, the same status given to chambers of commerce and other trade groups. The NFL presents itself as a “trade association promoting interests of its 32 member clubs.” NFL commissioner Roger Goodell makes $30 million a year.

What’s more, when the AFL and the NFL merged in 1966 and received a congressional antitrust exemption, Congress rewrote section 501(c)6 in order to ensure the new NFL would qualify.

Local teams, though, do pay taxes, at least in theory. They often try to receive incentives to minimize those taxes. While football’s national organization ensures its tax-free nonprofit status at the federal level, some of the individual teams do damage to local economies. Nearly every stadium project by the NFL’s 32 clubs involves public money. Even in recession-ravaged cities like Buffalo, NY, public funding pours into the local NFL franchise, the Bills. Many teams refer to their public funding as an “economic development package,” citing the number of jobs NFL teams provide, as well as other boosts to the local economy such as the number of hotel rooms filled. However, these economic benefits would arguably exist if the team was in place before the stadium renovation.

According to The Charlotte Observer, “Of the 20 stadiums built or renovated since 1997, a year after Bank of America Stadium opened, all but one have used public money.” This is timely because in Charlotte, the Carolina Panthers requested public money for Bank of America stadium. Last year, the team asked for $144 million to stay in Charlotte, while Los Angeles’ former Mayor Antonio Villaraigosa has offered incentives to move to LA.

The people of Miami recently learned how sports stadiums make for bad economic bets. The Miami Herald noted that the bonds put out to convince the Marlins to move to Miami (baseball, not football, I know) will cost the city $1.2 billion to pay back.

The NFL makes quite a lot of money, around $9.5 billion a year. And that does not include the additional money that teams make from concession sales, advertising in stadiums, and ticket sales. With all that money, teams should not bankrupt the municipalities they represent. Tom Coburn is right: the NFL should pay their taxes like everyone else. Don’t worry, folks, the NHL and the PGA tour do not pay taxes, either.

Also, if you want to see how much money each NFL team makes, Forbes does a ranking here.  They break down each NFL team’s revenue stream dividing merchandise sales, TV revenue, ticket sales, and the like.