Bill that would strip $9 billion-per-year NFL of tax-exempt status gains support from Maine’s congressional delegation

Angus King
Angus King
Posted Jan. 29, 2014, at 3:42 p.m.
Last modified Jan. 29, 2014, at 5:20 p.m.
Roger Goodell
ERIC THAYER | REUTERS
Roger Goodell

PORTLAND, Maine — Sen. Angus King and Rep. Chellie Pingree on Wednesday announced their support for a bill that would prevent the National Football League and other multimillion-dollar sports leagues’ central offices from receiving tax exemptions meant for nonprofit trade organizations.

U.S. Rep. Mike Michaud also gave the measure his tentative backing, but said he still needs to review the specifics of the bill. Sen. Susan Collins, R-Maine, didn’t react Tuesday to the sports league exemptions, but her spokesman said she wants to see an ambitious overhaul of the tax code, “top to bottom.”

The PRO Sports Act would amend the federal tax code to block professional sports leagues with annual revenues greater than $10 million from claiming the same nonprofit tax-exempt status as trade associations and other public interest groups.

The Professional Golfers’ Association, the National Hockey League and the NFL — the latter of which is in the spotlight this week as it prepares for Sunday’s Super Bowl game — enjoy the aforementioned tax status.

“Most Americans would be shocked to learn of all the tax loopholes that companies and organizations are able to take advantage of to boost their bottom line and which end up costing taxpayers millions per year,” King said in a statement. “Section 501(c)(6) of the tax code is intended to exempt organizations that exist to promote specific industries and professions, not league-specific brands. This is just a common-sense issue to me. I like the NFL, but I don’t think it’s unfair to ask their central office to pay its share in taxes.”

The Joint Committee on Taxation estimates that stripping the sports leagues of their tax-exempt statuses would generate $109 million in federal taxes over the next decade, according to King, an independent who caucuses with Senate Democrats.

The PRO Sports Act was introduced to the Senate by U.S. Sen. Tom Coburn, R-Okla.

“The exclusion seems out-of-date given the growth of the NFL and its status compared to other organizations that have the same exemptions, and if a similar bill comes to the House I’d likely support it,” Pingree, a Democrat who represents Maine’s 1st Congressional District, told the Bangor Daily News in a statement.

Ed Gilman, spokesman for Michaud, a Democrat who represents Maine’s 2nd Congressional District and a candidate for governor, told the BDN that “the congressman strongly supports tax reform.”

“While he’ll need to review the specifics of the bill, this sounds like a tax loophole that should be closed and something that he could support,” Gilman said.

Kevin Kelley, spokesman for Collins, didn’t respond to the PRO Sports Act specifically but said the senator hopes Congress “will undertake a careful review of all our nation’s tax laws.”

“She believes the tax code needs to be overhauled, from the top to bottom,” Kelley said. “Tax reform should be aimed at creating a simpler, fairer, and more pro-growth tax code which should lower rates for jobs creators and middle-income Americans.”

In the high-profile case of the $9 billion-a-year NFL, only the league’s central administrative office receives the tax-exempt status, while its 32 franchise teams pay taxes as for-profit businesses.

Jimmy Spector, the NFL’s outside tax counsel, told USA Today last month the league’s central office handles about $250 million in franchise dues annually, and that money is entirely spent on league expenses, such as referee and executive payroll, or organizing showcase events such as the college draft.

Spector said none of the central office’s activities generate revenue for the league, and that the current tax exemptions do not shelter any profits from the IRS. In that way, he said, the central office is more like the industry or trade organizations — such as chambers of commerce — that are typically covered under the 501(c)(6) exemptions.

According to the sports news organization ESPN, revenues from the league-run cable television station NFL Network, national sponsorships or merchandise sales flow through a legal entity known as NFL Ventures, a for-profit company that does pay taxes and is jointly owned by all the franchises.

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