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Should the nfl be tax exempt?

Discussion in 'Packer Fan Forum' started by ivo610, Apr 6, 2013.

  1. ivo610
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    ivo610 Cheesehead

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  2. texaspackerbacker
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    texaspackerbacker Cheesehead

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    This was part of Vince Lombardi's legacy - he was more than just a great coach hahaha. He and George Halas and a few others got this rammed through Congress back in the day. The argument then and the argument still is that the country is a better more enjoyable place because of the NFL. Yeah, I suppose you could make the same argument for other sports and whatever other entertainment items. That might be justification for giving them similar status as the NFL, but taking the favored status away from the NFL would be a step toward making the life we enjoy get worse.
  3. NorthWestCheeseHead
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    NorthWestCheeseHead Just talk about FACTS, baby

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    No; every business should pay tax.
  4. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    This is perhaps the easiest question ever posed in a thread. Of course the NFL should not be tax exempt. It’s exemption from anti-trust laws is based upon its agreement with the NFLPA and that’s as far as “special” treatment should go for the league. In fact, tax exempt status only makes sense for one franchise in the league and that of course is the Packers: The franchise can’t be sold for a profit and owners don’t receive dividends, or even a return of principal (that looks very much like a charitable contribution) so it is “not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual”. But of course it doesn’t make sense for one team in a league to be carved out for tax-exempt status, so none of them should be.

    BTW, I’m not sure Lombardi had much to do with legislation passed in 1966. While at the peak of his fame at the time, his “in” in DC was with JFK and it helped the Packers immensely when Vince called the President and asked him to get Paul Hornung’s Christmas leave adjusted so he could play in the 1961 championship game.
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  5. HardRightEdge
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    HardRightEdge Cheesehead

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    This article has a deceptive spin to it. It raises more questions than it answers.

    1. "It may seem absurd that a collection of teams that generated at least $9 billion in revenue last season would be given tax-exempt status...."

    2. "Virtually all of the leagues $192.3 million in revenue in 2009 came from 'membership dues & assessment.'"

    3. "I don't intend to mislead -- some taxes certainly get paid here. The teams are considered for-profit and pay regular taxes."

    The tax exempt status applies to the league ("league office"), not the teams. The Packer franchise, which is unique in being not-for-profit, is not tax exempt...the writer conflates the two statuses in his first sentence, which is neither here nor there, but might be confusing to a Packer fan. The Packers pay income taxes like any other team.

    According to this piece, the amount of overall revenue attributable to the league office ($192.3 million) is approximately 2% of the overall $9 billion total. As for quote 3. above, it is safe to say that more than "some taxes" get paid.

    Most importantly, this article begs the question of what the total taxable income of the teams would look like if all profit or loss at the league office level was distributed back to the teams. Since the league office operated at a loss last year (and the year before according to the tax return linked in the article), would it not stand to reason that distributing the loss back to the teams would actually decrease their tax liability?

    The next question is whether the league office functions like an off-balance sheet entity for the teams where tax-exempt profits are stashed on the league office books. Actually, it's the opposite. League office liabilities exceed assets.

    There appear to be complexities in this arrangement to which the article does not do justice.
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  6. NorthWestCheeseHead
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    NorthWestCheeseHead Just talk about FACTS, baby

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    I love reading well written informative posts by people who know more about the subject than I.
  7. texaspackerbacker
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    texaspackerbacker Cheesehead

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    Taxes on businesses are just passed on to customers anyway, so the ones being penalized if the NFL's tax exampt status is taken away are the ticket buyers. It's ultimately not a big deal one way or the other, but IMO, there is more harm than good in changing the status.
  8. HardRightEdge
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    The more I read about this topic, the more I find it to be a red herring in the internet echo chamber with a reach all the way to the floor of Congress. Sheesh.

    It would appear some individuals are using the tax exempt red herring to leverage greater disclosure regarding compensation in the league office. Evidently, some think the guys there are overpaid. Well, the owners are paying them out of their own pocket via those annual "dues", so it's their problem, or at worst the union's problem to whatever extent it affects the salary cap.

    I've not yet seen anybody demonstrate the tax avoidance savings.

    In fact, the MLB league office had the same status as the NFL league office, and ditched it in lieu of a taxable LLC structure. This was actually noted by the lawyer who wrote the source piece for the OP blog piece, citing a source by footnote that the tax consequences are non-existent, but then questioned the veracity of that source with no support! Do you think MLB did that to pay MORE taxes just to avoid certain disclosures? I think not. This seems to boil down to crankiness over executive compensation.

    Here's another gem from the lawyer's original law review piece. He notes that one of the league office's key functions is to make 0% loans to the franchises for stadium improvements, as though this is some kind of scam. I don't know about the 0%, but it's beside the point. The league office financials show $1 billion in borrowings, $800 million in loans to teams, and an interest expense of about $50 million. So, even if the loans to the teams are at 0%, the owners are collectively paying about 5% interest on those borrowings through the league office, paying that interest via their dues. If anything, the function of the financing arm of the league office is to spread the financing costs across all teams...stadium financing as a collective endeavor. That makes sense...a large chunk of gate receipts are shared.

    Until somebody walks through an example of how this tax exempt arrangement saves owners on taxes, I'd be highly skeptical.
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  9. ivo610
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    ivo610 Cheesehead

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    My bigger issue is teams and the league not funding the stadiums and instead leaning on the states
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  10. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    That was a very good "catch" HardRightEdge - as you pointed out the league office is such a small percentage of the overall league in terms of revenue it really doesn't matter if it's tax-exempt or not, particularly if it shows a loss or at times a small profit. As far as salaries for league office employees, it was reported the Goodell made almost $30M in 2011. But as you said, that's really the owners' concern.
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  11. DevilDon
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    DevilDon Inclement Weather Fan

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    Thanks for the analysis HRE, glad I don't have to do any research to uncover the red herring.
    I was sceptical as soon as I read it was a Huffington Post article. That blog is a complete rag.
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  12. ivo610
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    ivo610 Cheesehead

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    I don't think anything was that misleading as far as whether it was the entire nfl or just the league office...

    Taken directly from the link: "The individual teams, in turn, pay their "dues and assessments" to the NFL. I don't intend to mislead -- some taxes certainly get paid here. The teams are considered for-profit and pay regular taxes."

    I guess I should have pointed that out in the beginning.
  13. PWT
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    The Green Bay Packers must must make public their Annual Financial Statements by having their Finanacial Statements published in the Green Bay Press-Gazette.

    The Packers are they only franchise in NFL, that must do this, because Green Bay Packers, Inc. are the only pubically owned NFL franchise. Green Bay Packcrs, Inc. is owned by its Stockholders.

    Packers yearly paid income taxes that were in milllions of dollars range, somewhere between $4M to $12M range in early 2000's.

    All the other NFL franchises are privately owned by one owner or owned by partners, thus don't have to make their annual Fanancial Statements public.

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