One popular misconception holds that the NFL operates tax-free, paying nothing on its billions of revenue. This is simply not true.
For years, the NFL headquarters operated under a tax-exempt status enjoyed by several other professional sports leagues as well as all trade associations, which, in effect, the league office itself is. However, it’s important to note several facts:
• This status only applied to the league office itself, not the individual teams.
• The NFL gave up this tax-exempt status for the office in 2015.
• The league office itself generated “only” $9 million in tax-exempt revenue in 2014, hardly a huge tax shelter for a $10 billion league.
• The individual team owners pay federal tax on all team revenue, from ticket sales to merchandise to sponsorship to broadcast revenue.
• Teams do enjoy significant tax breaks from states and municipalities for, say, stadium construction and operations, but those are largely local issues, not federal ones, and thus outside the president’s direct oversight. (It’s worth noting that the interest paid on municipal bonds issued for stadium construction is free from federal taxes, but simply ending the tax-exempt status on those bonds would, again, have a significant ripple effect on state and local governments and private businesses.)
The NFL opted to change its league office’s status in 2015 in the wake of scandals such as the Ray Rice domestic violence debacle. “The effects of the tax-exempt status of the league office have been mischaracterized repeatedly in recent years,” NFL Commissioner Roger Goodell said in a letter to owners in 2015 announcing the change in status. “The fact is that the business of the NFL has never been tax-exempt.”
None of this is meant as a defense of the NFL’s prior tax-exempt status. Why and whether the NFL even deserved that status in the first place is a valid question, but the fact remains: it’s classified across the board as a fully tax-paying entity now. NFL teams’ ability to secure tax breaks for billion-dollar stadium construction is another issue worth scrutiny, but again, that’s a complex, state-to-state issue and one the president can’t affect via federal legislative decree.
The NFL does continue to enjoy an anti-trust exemption, as do baseball, basketball, and hockey. This permits the league to act as a monopoly and speak on behalf of all 32 teams when negotiating, say, leaguewide media deals. It’s a luxury that saves leagues tens of millions of dollars in negotiations, among other benefits, and it’s also been the target of congressional oversight on occasion, but that doesn’t appear to be Trump’s focus. Yet.