NFL gives up Tax Exempt Status

[PP2]

You implied that they hid revenue, that would be against the law.

Exploiting a loophole isn't breaking the law. Sure, it's inconvenient for everyone else, but still not breaking the law. Good example:

http://www.nytimes.com/2013/05/21/b...ressional-panel-says.html?pagewanted=all&_r=0

I don't find it that way. I find it generous to donate that large amount of money.

We will have to disagree, then. I find it disingenuous that only 5-8% goes directly to cancer research.

I disagree. They were added to the type of organziations that are allowed to be not for profit because they fit the critieria, and I'm sure they asked, why wouldn't they? What 'enormous pressure' are they under? This was not even a topic until they made the announcement. 99.99% of everyone doesnt care.

http://sports.yahoo.com/blogs/nfl-s...us-amid-congressional-pressure-172126574.html

There is nothing to find. You seem to want to lump the league and its teams together. The league isn't making money. If it were, it would just end up going to the teams anyway. The owners of the teams own the league. Ultimately any dollar that comes into the league gets transfer to the teams (after expenses).
There never was a financial benefit to the designation, which is why they don't care to change it.

Then how come the NFL is capable of, and does make enormous loans to teams to build stadiums? For example, it lent $300 million to to the building of the Jets/Giants stadium.

 

[BSR]

Then how come the NFL is capable of, and does make enormous loans to teams to build stadiums? For example, it lent $300 million to to the building of the Jets/Giants stadium.

Simple...they don't. The League office does not make the loans anymore. The loans are made by NFL Ventures, LP a for profit entity owned by all 32 teams. How does that entity get the funds? They borrow it.

 

[primetime]

Then how come the NFL is capable of, and does make enormous loans to teams to build stadiums? For example, it lent $300 million to to the building of the Jets/Giants stadium.

Presumably it's taking shared money from the teams and outlaying it as loans. Interest collected on those loans is likely then distributed back to the member franchises. The loans are made at really low interest rates, from what I understand, making them effectively a redistribution of profit within the NFL. But the league office itself here is little more than the middleman pushing all this money around with paid staff whose jobs are to administer the league's operations and the money being pushed around.

Simple...they don't. The League office does not make the loans anymore. The loans are made by NFL Ventures, LP a for profit entity owned by all 32 teams. How does that entity get the funds? They borrow it.

And that makes even more sense, since the middleman organization here is a for-profit entity (presumably an LLC).

 

[Ring 6]

Exploiting a loophole isn't breaking the law. Sure, it's inconvenient for everyone else, but still not breaking the law. Good example:

http://www.nytimes.com/2013/05/21/b...ressional-panel-says.html?pagewanted=all&_r=0

Hiding revenue is not a loophole its a crime.
That article is not at all comparable to what we are discussing. You are implying the league just didn't report revenue.

We will have to disagree, then. I find it disingenuous that only 5-8% goes directly to cancer research.

Fine, many companies are happy to make 5-8% profit, so I'm not sure how much you expected them to donate.

http://sports.yahoo.com/blogs/nfl-s...us-amid-congressional-pressure-172126574.html

Meh, someone wrote it. Each of the claims that the NFL is getting an unfair benefit were all steeped in misunderstanding that the league was not the profit maker.

Interestingly, to the other part of our discussion, this quote was in your sourced article.


All national revenues (e.g. broadcast TV payments) collected and paid to the member clubs, as well as local revenues earned individually by the clubs, are subject to tax at the club level."

Then how come the NFL is capable of, and does make enormous loans to teams to build stadiums? For example, it lent $300 million to to the building of the Jets/Giants stadium.

Why is that confusing?
The league is an organization of owners. "THE NFL" is the league offices and employees that are shared among the 32 owners. The 32 owners own the NFL.
Simplistically, but not inaccurately, the money comes in to the league, it pays its expenses, then gives what is left to the 32 owners, who pay tax on it.
Its like you and I form XYZ partnership to sell widgets. All of our revnue goes into it, all of our bills come out of it. Whats left we split and pay taxes on. What would XYZ need to pay taxes? There is nothing left to pay taxes on.

 

[primetime]

Its like you and I form XYZ partnership to sell widgets. All of our revnue goes into it, all of our bills come out of it. Whats left we split and pay taxes on. What would XYZ need to pay taxes? There is nothing left to pay taxes on.

With added caveat that XYZ is also paying, say, an administrative assistant for both of you, but all the outlays are going to either the partners or to personnel.

 

[QuantumMechanic]

Simplistically, but not inaccurately, the money comes in to the league, it pays its expenses, then gives what is left to the 32 owners, who pay tax on it.

Actually, that is inaccurate. According to the NFL's 2012 IRS Form 990, virtually all of the NFL's revenues (around $310 million) are membership dues paid by the teams (plus $900K of "coach/club fines").

So it's really that the money comes in to the teams and they pay dues of (roughly) $10mil each to the NFL, which pays its expenses and holds on to whatever's left (which isn't much -- in 2012 what was left over was around $9mil. In 2010 and 2011 there were losses in the tens of millions of dollars).

However, that does not detract from your larger point that the owners pay tax on their profits and that the sweet, sweet TV, merchandising, etc. revenues go to the teams.

 

[Ring 6]

Actually, that is inaccurate. According to the NFL's 2012 IRS Form 990, virtually all of the NFL's revenues (around $310 million) are membership dues paid by the teams (plus $900K of "coach/club fines").

So it's really that the money comes in to the teams and they pay dues of (roughly) $10mil each to the NFL, which pays its expenses and holds on to whatever's left (which isn't much -- in 2012 what was left over was around $9mil. In 2010 and 2011 there were losses in the tens of millions of dollars).

However, that does not detract from your larger point that the owners pay tax on their profits and that the sweet, sweet TV, merchandising, etc. revenues go to the teams.

I'm unclear as to whether the money passes through the league to the teams, and I'm not sure declaring it on the return is the proof. Conceptually, he was arguing that the league signed the TV contracts and gets the money, so whether they have the network cut 32 checks or 1 isn't really relevant. I admit I have no clue how that would affect the accounting principals, but the net result would be the same.