Are You Kidding Me?

Here’s a little nugget I just learned, the NFL, PGA and NHL are all non-profit organizations as far as the tax code is concerned. MLB was the same until 2007 when they gave up tax-exempt status. MLB apparently only gave it up because they didn’t want the salaries of their top executives to become public. Because the NFL didn’t give up their status, we know that Roger Goodell earned $29.5 million last year.

Look, I get the math as a sports fan. I am going to be ripped off if I attend a game and I am fine with that. After all, that is my choice. But, I draw the line at ripping off everyone, sports fans and non-sports fans alike by taking away tax revenue when we really need it. Major sports organizations should be stripped of their non-profit status. Major sports teams should not be allowed to benefit from municipal bonds. Democrats and Republicans don’t agree on much, but this should be an obvious one considering the size of our deficit.

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Comments

  • blmeanie  On February 16, 2013 at 2:41 pm

    corruption has no boundaries. Many non-profit organizations are corrupt with salaries paid to top executives running them. So back to sports, then 100% of owners use their franchises for tax-write offs and gain no profit from them?

    • nysportsfanatic  On February 17, 2013 at 11:43 am

      No, it’s not the franchises that are tax-exempt, but the leagues themselves. I believe, except for Green Bay, that every NFL franchise is a partnership. Same holds true for MLB, NBA, etc. The person identified as the owner of the team is actually the general or managing partner and the smaller owners are limited partners. (Best line ever was one of George Steinbrenner’s partners saying, “There is nothing more limiting than being one of Geroge’s limited partners.”

  • Mitchell  On February 17, 2013 at 4:57 pm

    What you’re suggesting needs a bit more noodling – you want to tax the entity shell, then the final recipient of the entity’s payments. Pass through entities are supposed to pass through revenues with taxation resting on the final recipient. It works just fine.

    And muni bonds come in all flavors, some of which taste and act like crap. Consider voting out the political idiots who approve the bonds and then don’t buy shares in the bond funds that accumulate these pieces of toxic debt.

    • nysportsfanatic  On February 17, 2013 at 7:17 pm

      No, I’m not suggesting that they tax the partnerships behind the teams any differently than they do today. But the fact that the league itself somehow gets non-profit status baffles me.

      And you are right about muni bonds, but these are usually issued by the Industrial Development Boards of the local municipalities so they get the same credit rating as the municipality. And since New York City has good credit, Yankees and Mets bonds are a long way from toxic.

  • Mitchell  On February 17, 2013 at 11:12 pm

    The league is another form of a pass through entity shell. It is not in the business of retaining any profits, it commits to making, annually, zero profit – and that happens by paying out everything every year. Yep, you can futz with the way that money gets distributed – but the distributions are taxed as pure income.

    BL is correct that this set up can and has been abused in many, many instances, but regardless of how the money falls out of the shell annually, it is taxed as pure income. And you, Peter, are correct in that the partners, both general and limited, are taxed for the revenues that are passed through to them on their K-1s, every year.

    IDAs can turn toxic quickly and the way they are structured, the investors typically have no recourse to the general tax revenues of the larger municipality as a backstop. Credit ratings are optics, the actual recourse provisions in a default are where the IDA bond buyers/holders can get schtupped. True, I have not read the actual covenants in The Stadium bonds, but that is the way IDA paper is typically written.

    • nysportsfanatic  On February 17, 2013 at 11:28 pm

      Mitchell something tells me we both have a similar background 😉

      That being said, isn’t the NFL essentially a corporation which has achieved non-profit status? I don’t believe the “shareholders” can receive passive losses?

      And yes, ratings certainly are optics, but they carry a lot of weight with the general public. Or put another way, there is no way that investors would accept the low interest rates they are receiving from the Yankees if they didn’t think that the City of New York was backstopping those bonds.

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