NFL: Money laundering, anyone?
If you were looking down on the field at the Mercedes-Benz Superdome during the recent Superbowl from your $1000 per rump seats, I am sure the first thing that would come to your mind is nonprofit. No?

See, that is the odd thing. The NFL - a $10 billion per year sports entertainment organization - is a nonprofit, as are many other companies that I arguably should not be.

Yes, the same organization that raked in (hundreds of?) millions of dollars around the Superbowl alone, the same organization that has a placed a salary cap (the amount teams can spend on player salaries) at $120.6 million per team - an amount that has increased by 350% from 1994 ($34.608 million) and 160% from only a decade ago ($75.007 million) - is somehow a nonprofit organization.

Last November NPR did a piece on the many nonprofits that look suspiciously like for-profit businesses, and though the NFL is not alone it certainly stands out given the amount of money involved. 

The rationale for allowing the NFL to remain a nonprofit is that the money they generate is through "dues and assessments" to continue their professional organization, dues paid for by each of the 32 NFL teams belong that belong to the organization. The money generated by the individuals teams is taxed, though due to the piles of cash they give to the NFL in these "dues and assessments" their overall tax rate is greatly reduced. 

Seems a bit fishy.  

Surely there are limitations to the amount of tax-exempt money that can flow through professional organizations before someone finally raises a red flag, no? Apparently, there is not.

This issue is discussed in much greater detail in Andrew B. Delaney's "Taking a Sack: The NFL and its Undeserved Tax-Exempt Status" that was published in the Vermont Law Review. 



10/27/2013 4:49pm

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