Flashback: Professional Sports Loophole Costs Taxpayers $91 Million

Flashback: Professional Sports Loophole Costs Taxpayers $91 Million

What do the National Football League (NFL), the Professional Golf Association (PGA), and the National Hockey League (NHL) have in common with charitable groups? 

According to a report released by Oklahoma Senator Tom Coburn (R), “Seeing the advantage in operating largely tax-free, the NFL, NHL, and PGA are registered with the Internal Revenue Service (IRS) as nonprofit organizations.” 

The report also stated that “smaller sports leagues, such as the National Lacrosse League, are also using the tax status.”

The non-profit classification, called the “professional sports loophole” in Coburn’s report, has allowed the NFL, the NHL, the PGA and the smaller leagues “to exempt themselves from federal income taxes on earnings.”

As a result, “taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits.” 

The report further highlighted how “the NFL may have lived every taxpayer’s dream” during the 2012 Super Bowl in Indianapolis when “…hotels and restaurants [did not tax] National Football League employees.”

“The NFL [used] its tax-exempt status as a 501(c)(6) to avoid paying taxes, in addition to fuel, auto rental and admissions taxes,” the report said. 

Apparently, “the history of the NFL’s tax exemption status stems from the 1966 merger of the then-American Football League (AFL) and NFL. Congress passed a law granting specific antitrust exemptions to the new NFL.”