The National Football League is voluntarily becoming a taxable entity, following several years of scrutiny and legislative attempts to revoke that status. Commissioner Roger Goodell informed team owners and members of Congress of the decision this week, saying he was eliminating a “distraction.”
“Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business.”
There is some disagreement on what losing the exemption will cost the NFL. As the Wall Street Journal points out, in 2013, a report by Sen. Tom Coburn (R., Okla.) calling for the NFL and National Hockey League to give up their tax-exempt status estimated that such a move would generate $91 million annually for the federal government. But Congress’s Joint Committee on Taxation pegged the amount at $109 million over the next 10 years.
And the NFL does gain something in this exchange, as it no longer has to make its executive compensation public. As a tax-exempt entity, its 990 annual information returns are public record, but as a taxable entity that will no longer be the case.
At any rate, legislators are pleased with the decision. Rep. Jason Chaffetz (R., Utah) and Rep. Elihan Cummings (D., Md.) said in a joint statement: “It is rewarding to see such an important and positive step toward restoring basic fairness. We hope other professional sports organizations in similar situations will follow the positive example set by the NFL, and we look forward to rightfully returning millions of dollars to the federal treasury as a result.”