Lucrative NFL’s tax-exempt status, demand for state and local money rankles lawmakers

December 9, 2013 in News by The Manimal

Source: Fox News

FILE: Dec. 3, 2013: A Minnesota Vikings fan with the team mascot during the groundbreaking ceremony for the new Vikings stadium, in Minneapolis, Minn.AP PHOTO/THE STAR TRIBUNE, GLEN STUBBE

The NFL’s tax-exempt status is, as the refs might say, “under further review.”

Despite having grown over the decades into an estimated $9 billion-a-year operation, the NFL retains a non-profit status, just like trade associations and chambers of commerce.

The status, dating back to the 1960s, was granted to help the once-fledgling operation get started and applies only to the league’s so-called “front office” — which is run like a non-profit in that it collects dues from its 32 teams to pay for such operational costs as referees’ salaries, the college draft and executive paychecks.

But critics argue that hugely profitable sports enterprises — including those that frequently strong-arm taxpayers into financing their multi-million dollar stadiums — should get no such benefit.

The lone Capitol Hill lawmaker pushing for the change is Oklahoma Republican Sen. Tom Coburn, a fiscal hawk whose annual “waste-book” draws attention to the NFL exemption and millions of dollars in other potential government waste.

Coburn has proposed legislation again this year to try to repeal nonprofit status for big-money sports leagues – most notably, the NFL — but has struggled to get cosponsors, who fear backlash from big business donors and voters back home.

Major League Baseball dropped its tax-exempt status in 2008.  However, the National Hockey League and the Professional Golfers Association are among the major sports operation that still take one.

Coburn argues American could be losing at least $91 million by subsidizing the tax loopholes.

“Grass is always greener when a sports league can score with loopholes to avoid paying taxes,” Coburn writes in his 2012 Waste Book.

City and state officials have long argued a major sport franchise is an economic boon, providing stadium jobs and sparking the opening of new hotels, restaurants and other business ventures around the venue.

Minnesota is just one of those cities or states on that long list. The state and the city of Minneapolis have agreed to give the privately held Minnesota Vikings football team $498 million in public money toward a $975 million stadium project.

“This stadium continues to be a bad deal for Minnesota,” says Republican state Sen. Dave Thompson and 2014 gubernatorial candidate. “In general, I don’t like it [for] picking winners and losers and subsidizing businesses, especially very profitable ones like the NFL.”

However, at least one major U.S. city has said enough.

Atlanta Mayor Kasim Reed agreed to a deal this fall in which the city will give its NFL team, the Atlanta Falcons, $150 million to $200 million in public money toward  a new stadium.

But he let the Atlanta Braves take its baseball operation to bordering Cobb County, instead of agreeing to a stadium deal that would have cost taxpayers additional millions.

“We’re not going to put the city on its back financially,” said Reed, citing a roughly $900 million infrastructure backlog.

Beyond the benefit of a tax break, NFL teams make money through a variety of ways including ticket sales, concessions, merchandizing and TV revenue — now worth an estimated $42 billion over roughly 11 years.

Judith Grant Long, a Harvard university urban planning professor, argues the recent recession’s impact on tax revenues should “influence thinking about all new capital projects and the role of public debt.”

She also points to studies showing stadium projects create only modest increases in overall tax revenue and job creation.

“These urban development benefits … are slow to materialize,” Long said.