I also don't think it's fair to say the NFL runs the product.
You are quite mistaken. You have a source for that?
The NFL has revenues exceeding $4B which are nearly all "profit" (that is, revenues>opex). This cash flows through the league and then is distributed to the teams, who all of which run on essentially zero taxable profits. In other words, the revenues of the teams are the "profits" of the NFL non-profit. That is why there is no need for profits--because they distribute the cash out as 'expenditures'. The level of expednitures is aribitrary[1]...it is just set to maximize the flow of funds from the tax-exempt body with the least amount of tax.
At the lower level, the Teams are structured to run on nearly zero profits. This is why they can-not "afford" to build stadiums of pay taxes etc. This of course is also a highly-structure tax-avoidance setup, where inflated costs ("sweetheart" deals) are made with affiliate entities, which shelters the teams from paying taxes. The locations and corporate business structures of the "related entities" are likewise set up to be both opaque and tax-optimized in legal structure and jurisdicion.
The values of NFL franchises are staggering. Their debt-loads are also staggering. Hint: the banks would never lend them this money if they did not know more than your average punter. In part these investments are "ego-polishing" (like the America's cup), but there is quite a bit more money floating around the NFL, and this money is going to make rich people even richer...very little of it is being paid in tax.
[1] There is no "true sale" of the NFL non-profit's product; they take no risk in holding inventory. Their main purpose is to shield the teams from 2 things: (1) anti-trust; and (2) tax. To wit: a tax-exempt monopoly that makes no profits? Something should immediately trigger your sense of the non-obvious being present.
You are mistaken. These comments and stories keep appearing because Internet commenters see the word non-profit, and see the money the NFL makes and think some type of shady scam is going on. This is not the case. Also does everyone honestly think the biggest moneymaking sports franchise in the USA would not catch the eye of the IRS if they were exploiting the system?
Each NFL team pays taxes on their profits at the local level. The umbrella org disperses those funds around to all teams. This is how nfl teams vs something like the MLB can play on equal monetary footing. The umbrella org doesn't get taxed on the money because it already has been taxed.
"The NFL League Office is a not-for-profit organization. The NFL League Office receives funding from the 32 member clubs to cover its non-revenue overhead activities such as office rent, League Office salaries and game officiating. In addition, the NFL League Office collects revenues on behalf of the 32 member clubs and distributes those revenues to the clubs. 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."
Roger Goodell pays taxes on his large salary. The NFLs 990 tax form shows they posted a loss as of their last filing.
> These comments and stories keep appearing because Internet commenters see the word non-profit, and see the money the NFL makes and think some type of shady scam is going on.
Whatever else you might say, this does not appear to be the case for the person you are replying to and inserting it in there detracts from your own argument. None of that is helped by the fact that you reiterate points they have already addressed and acknowledged and the only facts you've added are that Roger Goodell pays taxes and that the NFL posted a loss. And I'm being generous, as this may be implied by parent post's discussion of maximizing the flow of funds out of the NFL.
The broader point--that the US supports a moneymaking enterprise by means of tax breaks, stadiums, etc. in ways that have questionable financial benefit to the public at large--does not appear to be well-addressed by your arguments.
FWIW, I don't think you'll find many people here who don't know that "non profit" doesn't mean "no money." And even if they did, there's nothing wrong with comparing what the public spends to what they get. There are plenty of ways for people to get "double" taxed, after all. Doesn't mean we don't have to pay them.
Sorry I guess I should have stopped repeating myself and just said that the posters above are just misinformed.
> of maximizing the flow of funds out of the NFL.
The money to the NFL org comes from the 32 teams which have already been taxed, some operating expenses are taken from this pool, then the cash is redistributed equally to the teams.
> The broader point--that the US supports a moneymaking enterprise by means of tax breaks, stadiums, etc. in ways that have questionable financial benefit to the public at large--does not appear to be well-addressed by your arguments.
This thread was mainly debunking the fact that the NFL is bilking the American public by it being a non-profit. I'd agree it is up in the air about subsiding big sporting arenas etc. My city built a $600 million stadium not too long ago and raised taxes so that we could host the Super Bowl. Apparently the city believed it was a net-net win for the state overall.
> The NFL has revenues exceeding $4B which are nearly all "profit" (that is, revenues>opex). This cash flows through the league and then is distributed to the teams, who all of which run on essentially zero taxable profits. In other words, the revenues of the teams are the "profits" of the NFL non-profit. That is why there is no need for profits--because they distribute the cash out as 'expenditures'. The level of expednitures is aribitrary[1]...it is just set to maximize the flow of funds from the tax-exempt body with the least amount of tax.
Well, at one level the NFL mysteriously making $4B despite doing mostly organizational/marketing/legal work would seem to support the argument that the teams/games are the product. The NFL makes that money from giant TV contracts, licensing deals, and merchandise that are only popular because the sport is popular. The revenue distribution is somewhat unique -- and granted, opaque -- but not necessarily a tax-avoidance scheme. One relevant example is the MLB giving up its tax-exempt status in 2007, which had no impact on its annual taxes.
> At the lower level, the Teams are structured to run on nearly zero profits. This is why they can-not "afford" to build stadiums of pay taxes etc. This of course is also a highly-structure tax-avoidance setup, where inflated costs ("sweetheart" deals) are made with affiliate entities, which shelters the teams from paying taxes. The locations and corporate business structures of the "related entities" are likewise set up to be both opaque and tax-optimized in legal structure and jurisdicion.
If you don't consider the money they receive from the NFL, then each team runs at a huge loss. Of course, they have gigantic payrolls to their athletes and operating expenses for a stadium (this does vary by team, although the NY Jets & NY Giants funded the construction of MetLife stadium using zero public funding, for example). If you take into account the NFL's revenue distribution, then most teams make millions each year[1]. I am not sure what other tax-avoidance setups you're referring to and would be curious to read about that. Optimizing your business structure to minimize taxes doesn't seem particularly criminal.
> There is no "true sale" of the NFL non-profit's product; they take no risk in holding inventory. Their main purpose is to shield the teams from 2 things: (1) anti-trust; and (2) tax. To wit: a tax-exempt monopoly that makes no profits? Something should immediately trigger your sense of the non-obvious being present.
Of course they take risk. It's not particularly likely the NFL would go out of business anytime soon, but every investment they make carries risk. I think the one questionable aspect of the NFL's setup is that each team writes off its NFL membership dues (~$6m/year) as a business expenditure while the NFL's operating expenses (Goodell's salary, marketing, etc) are untaxed.
You are quite mistaken. You have a source for that?
The NFL has revenues exceeding $4B which are nearly all "profit" (that is, revenues>opex). This cash flows through the league and then is distributed to the teams, who all of which run on essentially zero taxable profits. In other words, the revenues of the teams are the "profits" of the NFL non-profit. That is why there is no need for profits--because they distribute the cash out as 'expenditures'. The level of expednitures is aribitrary[1]...it is just set to maximize the flow of funds from the tax-exempt body with the least amount of tax.
At the lower level, the Teams are structured to run on nearly zero profits. This is why they can-not "afford" to build stadiums of pay taxes etc. This of course is also a highly-structure tax-avoidance setup, where inflated costs ("sweetheart" deals) are made with affiliate entities, which shelters the teams from paying taxes. The locations and corporate business structures of the "related entities" are likewise set up to be both opaque and tax-optimized in legal structure and jurisdicion.
The values of NFL franchises are staggering. Their debt-loads are also staggering. Hint: the banks would never lend them this money if they did not know more than your average punter. In part these investments are "ego-polishing" (like the America's cup), but there is quite a bit more money floating around the NFL, and this money is going to make rich people even richer...very little of it is being paid in tax.
[1] There is no "true sale" of the NFL non-profit's product; they take no risk in holding inventory. Their main purpose is to shield the teams from 2 things: (1) anti-trust; and (2) tax. To wit: a tax-exempt monopoly that makes no profits? Something should immediately trigger your sense of the non-obvious being present.