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The league will no longer be required to make public the salary of Commissioner Roger Goodell.
Photo by: GETTY IMAGES
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The NFL more than a year ago began planning for the move to drop its league office’s tax-exempt status. Last week, the league announced it would indeed shift that status to taxable.
What followed were questions about why the move was made, and what it means for the NFL — and for other groups — going forward.
The NFL has always paid taxes, despite assertions from critics who maintained that the league as a tax-exempt group allowed it to forgo paying taxes; it was only the league office headquarters that had the tax-exempt status. But with hundreds of millions of dollars of stadium bonds flowing through the league — the income on the bonds is taxable — the league had an arduous task of changing the terms on the bond certificates that enabled it to make its move.
“This is part of what they have been working on for the last year,” said Marc Ganis, a sports consultant with close ties to the league.
No doubt the increasingly image-conscious NFL, in the wake of the Ray Rice scandal, grew weary of having to rebut charges it did not pay taxes. And while some politicians might have found the NFL headquarters’ tax-exempt status a useful populist issue, the league could in fact end up paying less in taxes with the changed status.
The $12 billion the league anticipates taking in this year in revenue is taxed at the team level and through the NFL’s for-profit entities, like NFL Media. The teams in fiscal year 2014 paid an assessment of $9.2 million per club to the NFL to fund the league’s operations.
Now that the NFL office is taxable, it can always budget a slight loss or break even to avoid taxes. In fact, in the most recent tax return, the NFL reported a deficit of $13.5 million, meaning if the league had been taxable then, it could have taken a tax credit for future years.
There is some cost to the move as well, though not in extra taxes. Banks have to reserve more assets for loans to for-profit entities, so the league as a for-profit group will bear those associated costs, which are thought to be in the seven figures annually.
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Insiders at the NFL say the move had nothing to do with shielding executive compensation from view. The league now will not be required to disclose executive compensation after one additional forthcoming public tax return, due in February. Their point is Commissioner Roger Goodell’s pay has already been public, and the disclosure never bothered the super-wealthy owners of the NFL teams who paid him — an amount that was about $80 million in fiscal 2013 and 2014 combined. Nevertheless it can’t be discounted that over the years ahead that Goodell’s pay will cease to become an annual story, the way former MLB Commissioner Bud Selig’s pay dropped from the news after that league also shifted to a taxable status in 2007.
