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‘Nonprofit’ makes millions

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What are you doing this weekend?

Like me, you may be hunkered down, papers piled high and calculator in hand, ready to tackle your income taxes.

If so, do not — I repeat, do not — read this column until after you are done and the sticker shock of just how much you pay to the federal government has settled in once again. Failure to comply may result in an abnormal spike in blood pressure.

You see, while many of us are calculating the damage done by a 25 percent income tax bracket and an overall tax structure that amounts to half our income going to multiple levies, the most successful and powerful sports organization in the world won’t pay a cent on its income.

The NFL, the sports juggernaut that makes more than $255 million in revenue each year, won’t pay a penny in taxes. It long ago was granted nonprofit status by Congress.

The rich get richer could be the new NFL slogan.

How it got that way is a story of power brokering sure to make even the most staunch defender of our current tax structure mute.

An arcane tax code change eased the 1966 merger of the NFL with the old American Football League and landed the new combined entity in section 501(c)6 of the tax code, designated as an industry association, Forbes reports.

The political trade that got the league that golden status was a handshake agreement not to play games on Friday or Saturday in competition with high school and college teams.

It has endured to this day, but a U.S. senator is questioning whether the NFL deserves the same nonprofit status bestowed on charities like the Salvation Army and Red Cross.

“If you are in a state that has a pro football league or runs a pro golf tournament, the career politicians are afraid to touch it,” Oklahoma Sen. Tom Coburn told USA Today last fall.

The PGA, NHL and several other sports have found a tax haven in this provision, as well. Major League Baseball and the National Basketball Association do not claim tax-exempt status.

Why should the NFL, a $9 billion industry, get a business tax break different from the local dry cleaners or movie theater?

No one can seriously contend that the NFL is a penny-pinching charity.

Consider this from the most recent tax reports, as compiled by Moneywatch:

Revenue for the league, not counting what the teams made, was $255.3 million.

The top eight league officials made a total of $50.1 million in 2011 from the NFL or related organizations, with commissioner Roger Goodell seeing about $29.5 million in his paycheck.

The league received another $10.4 million (including nearly $7.6 million to former commissioner Paul Tagliabue).

In 2011, the NFL paid $35.9 million for office construction, $13.5 million in office rent, $6.7 in IT consulting, and $6.7 million in travel expenses.

Total travel expenses topped $11 million.

It had notes and loans owed to it of nearly $620.8 million.

For all the income, expenses were even higher at almost $333 million.

The organization spent more than $1.5 million on lobbying.

Sen. Coburn, a Republican who publishes an annual “Wastebook,” detailing wrong-headed government policies, has been crusading against the tax breaks for years.

“This is a directed tax cut that (went) to the league office, which means every other American pays a little bit more every year because we give the NFL league office a tax break and call them a nonprofit,” Coburn said on CNN. “In fact, they’re not.”

The tax status does not apply to individual NFL franchises, such as the Colts; but critics point out that those teams get their own forms of public assistance through sweetheart stadium deals.

For its part, the NFL says Coburn has it all wrong, pointing out that the league simply recycles TV revenues and merchandise profits to its team, which in turn pay taxes. Besides, they say, the NFL actually loses money if you look at its books, making the payment of taxes simply hypothetical, at best.

If correct, one wonders why the league is fighting to retain the exemption, spending more than a million annually in lobbying expenses.

All this is fodder for frustration. And that frustration will not change anytime soon.

Coburn has announced his retirement from the Senate. Until someone else picks up the cause, his idea of requiring pro sports organizations to pay the same taxes as any other business will retire as well.

With that said, it is time for me to get back to paying my own taxes.

Rick Morwick is sports editor for the Daily Journal

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