Q: I have heard that the NFL has non-profit tax status. If that is correct, how is that justified?
—Jim Dillon, Atlanta
A: The NFL was organized as a trade or industry association, so the league office is exempt under Section 501(c)(6) of the Internal Revenue Code. That section specifically mentions professional football leagues, along with "business leagues, chambers of commerce, real-estate boards and boards of trade."
Attorney Jeffrey Tenenbaum told ESPN.com in 2013 that the NFL is “an organization whose primary purpose is to further the industry or profession it represents.” The NFL, which brings in about $10 billion in revenue a year, receives funding from its 32 franchises to “cover its non-revenue overhead activities, such as office rent, league office salaries and game officiating,” a league spokesman said in the article.
The NFL also collects revenues and distributes them to all 32 teams, which are not tax exempt and pay taxes on things such as ticket and merchandise sales. NFL Ventures, a for-profit company, is the outlet for money “generated from sources like NFL Network, national sponsorship deals and merchandise,” the article stated. The teams own NFL Ventures, not the league office, and that money is taxed.
The NFL has been tax exempt since 1942. The NHL and the PGA Tour also are tax exempt, but Major League Baseball gave up the status in 2007 and the NBA is a for-profit organization.
Andy Johnston wrote this column. Do you have a question about the news? We’ll try to get the answer. Call 404-222-2002 or email q&a@ajc.com (include name, phone and city).
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