The NFL's 990 federal tax form, filed to the IRS in 2012 and available for view at the nonprofit watchdog site GuideStar, shows that during the previous year the league office received $255.3 million in revenue (almost all of it via annual dues paid by the teams) while it spent a total of $332.9 million, including $2.3 million in grants given to community groups like United Way ($15,898) and March of Dimes ($10,000).
Using its tax-exempt revenues, the league office also paid $29.4 million in salary to NFL Commissioner Roger Goodell, for which he owed income taxes, and it paid $35.9 million to the New York City construction firm J.T. Magen & Company, which built out a new office space for the NFL bosses and their 1,546 employees after their previous lease expired and they opted to relocate to another part of Manhattan.
While the money to pay for those expenses was derived from tax-exempt revenues, the league does not claim an off-setting federal deduction — as do for-profit corporations — for any business expenses it incurs such as moving, remodeling, travel or rent, Spector said.
"Whatever benefit they're getting from the exemption, they're losing in not claiming a deduction," Spector said. "The system stays in balance."
But a tax attorney unaffiliated with the NFL, Washington, D.C.-based Jeffrey S. Tenenbaum, questions how the NFL league office meets the definition of a tax-exempt nonprofit when "the principal purpose of a 501 (c) 6 is promoting an entire industry or profession or sport."
In contrast, consider the U.S. Tennis Association, Tenenbaum suggested, calling that organization "the classic example of a 501(c) 6 entity because anyone can join as a member and they spend a lot of time and money promoting the sport, from little kids all the way on up." (Tenenbaum, a partner at the national Venable law firm and chair of the firm's nonprofit organizations practice, emphasized that he was not expressing his personal opinion on whether the NFL should or should not be tax-exempt.)
By comparison, the National Basketball Association has never had a tax exemption. Major League Baseball gave up the tax exemption for its league office in 2007. "There was no business or other benefit for us to have the exemption, so we made the decision to relinquish it," said MLB spokesman Matt Bourne.
The National Hockey League's main office, just like the NFL league office, does file a 990 form with the IRS as a 501 (c) 6.
That means the Senate bill drafted by Coburn (an Oklahoma medical doctor by profession) also would remove the NHL's tax-exempt status, if it were to pass. His bill has been referred to the Senate Finance Committee.
"Dr. Coburn's main concern isn't with the NFL but with politicians in Washington who are keeping tax rates for every American artificially high to pay for tax earmarks for sports leagues and other special interests," said John Hart, a spokesman for Coburn.
"In other words, tax earmarks are a tax increase for everyone who doesn't receive the benefit. In this case, every American pays a little more in taxes to provide an indirect subsidy to professional athletes and team owners. This exemption underscores the need for tax reform."