The National Football League (NFL) has faced scrutiny over the years for some of its financial practices, including its former tax-exempt status and the process of selecting Super Bowl host cities. Up until 2015, the NFL was registered as a 501(c)(6) non-profit organization, meaning it held federal tax-exempt status. The NFL gave up this preferential tax treatment in 2015 following mounting public criticism, but the organization still seems to be seeking tax benefits when it comes to the Super Bowl.
Too Long; Didn’t Read
- Prior to 2015, the NFL was qualified as a 501(c)(6) non-profit organization that did not have to pay federal income tax.
- The NFL ultimately gave up the 501(c)(6) status after facing scrutiny from the public.
- In 2019, The Atlanta bid committee estimated the local cost of hosting the Super Bowl and accounted for $2 million in estimated taxes (reimbursement) other than game tickets and an estimated $10 million from a sales-tax exemption on game tickets.
- Athletes may save big on taxes since Nevada (the host state of the 2024 Super Bowl) does not impose a state income tax.
Does the NFL Pay Taxes?
The NFL League Office filed as a 501(c)(6) non-profit organization up until 2015. This status meant the NFL had a tax-exempt status. The league office avoided paying federal taxes on massive revenue streams like TV deals worth billions of dollars. Today, the NFL no longer holds tax-exempt status.
Arguments For and Against Tax-Exemption
Defenders of the NFL’s former non-profit status claimed the league served an important public service. Football provides entertainment to millions and the league gives portions of revenue to charity. However, critics argued a massively profitable sports organization didn’t deserve tax subsidies, especially when profiting from publicly-funded stadiums. They saw the NFL as an incredibly lucrative business that didn’t need preferential treatment.
Public Outcry Leads to Change
As the NFL brought in staggering profits year after year, the public became increasingly critical of its tax-exempt status. In 2015, facing pressure from fans and media scrutiny, the league voluntarily gave up its 501(c)(6) status. The NFL asserted this move just simplified taxes, though many saw it as an acknowledgement their preferential treatment looked bad. Regardless, the NFL could no longer use non-profit status to avoid federal taxes.
Cities Offer Tax Incentives for Super Bowl Bids
Though the NFL itself no longer enjoys tax-exempt status, taxes still play a major role in determining Super Bowl locations. Cities compete fiercely for the prestige and revenue of hosting the big game. A key part of crafting competitive bids are tax incentives offered to the NFL.
Do Tax Breaks Impact Super Bowl Host Selection?
Victor Matheson, a sports economist and professor at Holy Cross, has studied the economic impact on Super Bowl host cities and determined that these cities aren’t seeing the return they anticipate. Why? Well, there are a number of reasons, taxes being one of them. In a conversation with AZPM, Matheson says, “they are not paying a dime of tax from ticket sales, no revenue sharing with the host city, that’s all money that’s going into the NFL pockets, and they are not even paying rent on the stadium that they are making a hundred million dollars on.”
The Atlanta bid committee estimated the local cost of hosting the 2019 Super Bowl and accounted for $2 million in estimated taxes (reimbursement) other than game tickets and an estimated $10 million from a sales-tax exemption on game tickets.
Is There A Tax Benefit to Hosting the Super Bowl in Las Vegas?
Absolutely. There are nine states in the US that do not impose a state income tax; Nevada being one of them. Players are subject to tax in their home state as well as where the money was earned (state the game is played in). While they still have to pay state tax where they reside, they may be able to save quite a bit on taxes.
Controversy Remains Over NFL’s Relationship with Taxes
In summary, taxes have played a controversial role in the NFL’s finances over the years. The league’s former tax-exempt status brought accusations of unfair benefits. And while no longer non-profit, the NFL still seemingly leverages municipal tax incentives to its advantage. This cozy relationship with taxes has brought scrutiny for decades, and will likely continue going forward. But as long as the Super Bowl remains such a coveted event, cities seem willing to put up with the costs of bringing it to town.
