How do you like your tax money spent?

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Originally Posted by mlmpetert

On football!!!! And other sports!

The U.S. Senate may — and should — review the NFL’s tax-exempt status


While member teams obviously operate for profit, the interesting wrinkle here is that the league itself claims not to. And one way to avoid profitability is to pay your current and former executives up the wazoo, which the NFL has done. In 2012 alone, the league paid approximately $53.8 million to its big -ticket execs, including $11.6 million to Commissioner Roger Goodell and $8.5 million to former Commissioner Paul Tagliabue, who replaced Rozelle in 1989 and ran the league until Goodell replaced him in 2006. In 2011, Goodell received a $22.3 million bonus after negotiating several enormously lucrative extensions with the television networks that provide the predominant percentage of the league's revenues.

The league collects $6 million in annual membership dues from each team, the teams write off those dues as "charitable donations," and the NFL in turn takes that $192 million and puts it into a stadium fund that gives owners interest-free loans as long as they secure public financing for their new or renovated stadiums. That means we’re left with two bills: Not only do taxpayers lose out on federal tax revenue, we pay for new stadiums that generate profits which enrich only the owners.

As Andrew Delaney pointed out in the Vermont Law Review in 2010, those stadium funds don't do much to benefit the cities that house the structures.

Technically, the city owns the stadium. Personal seat licenses or PSLs are sold through a public agency, tax-free. Profits are then used to pay down the owner’s share of the NFL loan. The money from the PSLs never goes directly to the teams, though the teams save millions of dollars in taxes and the loan from the NFL is paid down significantly, providing a very significant benefit to the owners.

Now, it would appear that the government is reviewing how this all came about. On April 24, Oklahoma Senator Tom Coburn (R.) introduced an amendment to the Marketplace Fairness Act that would end the practice that allows professional sports leagues to qualify for tax-exempt status.
In his 2012 "Waste Book" tome, which chronicles government waste, Coburn outlined his theory.

The National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers’ Association (PGA) classify themselves as non-profit organizations to exempt themselves from federal income taxes on earnings. Smaller sports leagues, such as the National Lacrosse League, are also using the tax status. Taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits. Taxpayers should not be asked to subsidize sports organizations already benefiting widely from willing fans and turning a profit, while claiming to be non-profit organizations.

Teams in the NFL especially would have a hard time meeting the standards of organizations that, per the Revenue Code, have a setup in which “[n]o part of a business league’s net earnings may inure to the benefit of any private shareholder or individual and it may not be organized for profit to engage in an activity ordinarily carried on for profit.”

The thing is all those profits have to be paid out and whats paid out is taxed at probably around 33%. Not sure why they are listed as tax exempt but its not like they are not paying any taxes.