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NFL relinquishes tax exempt status

On Behalf of | May 6, 2015 | Corporate Taxes |

If there is one thing that the National Football League does well, it creates interest. It has been nearly three months since a down has been played in an NFL game, yet headlines about over the league. Last week it was the annual NFL Draft; where fans from every franchise caught a glimpse of their team’s future. This week, it is the release of David Wells’ report regarding “inflate-gate,” which is the popular name given to the controversy over the accusations that the New England Patriots violated league rules regarding how their footballs were inflated during the AFC championship game.

But lost among the draft hoopla was news that the NFL decided to relinquish its tax exempt status. Since the league’s 32 franchises pay taxes on earnings from ticket sales, apparel sales and concessions, many casual fans did not notice that the league has held 501(c)(6) status since World War II.

Robert McNair, owner of the Houston Texas and chairman of the league’s finance committee explained that the league decided on the switch to eliminate the “distraction” that the status created. The distraction likely came from the annual tax return that the league would have to file, as well as the public disclosure of the league’s highest earning employees, including commissioner Roger Goodell. Much was made about his $44 million salary last year.

With Goodell set to make nearly $300 million over the life of his contract, the league likely did not want to deal with this type of additional news; especially in light of the botched disciplinary actions with Ray Rice, Adrian Peterson and Greg Hardy.


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