NFL As Tax Exempt Less Than Meets The Eye?

A good article explaining why eliminating the NFL status as a non-profit is political cheer-leading with no real effect on actual taxes collected. http://www.forbes.com/sites/peterjreilly/2013/06/01/nfl-as-tax-exempt-less-than-meets-the-eye/
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From the Form 990 we learn that the NFL has just over a quarter billion in revenue. Does that strike you as kind of low ? What with all those TV advertisements and everything. The thing is that money does not belong to the NFL. The bulk of the NFL’s revenue is membership dues. It also collects about half a million in fines and penalties and has slightly less than $200,000 in investment income. There are some people making good money working for the NFL. President Roger Goodell had reportable compensation of nearly thirty million. The really big money is not with the NFL. Rather it is with the 32 teams that constitute its members. From Part XIV of Schedule D, we learn:

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Is There A Tax Gimmick Here ?

The only gimmick I could think of is that the 501(c)(6) could set the dues higher than they needed to be. That would give the members a deferral of sorts, since belonging to your professional organization is an ordinary and necessary business expense. It is probably not something that the AICPA could pull off, since there are too many members, but the NFL with only 32 members probably could. The owners could sit around and say we are having a really great year, lets kick up the dues. Probably if it got extreme, the IRS would have a way of cracking down on that, possibly taking the position that the excess dues are not really ordinary and necessary. The odd thing is, though, that they are not doing that at all.

Does Being Tax Exempt Cost Them Taxes ?

The NFL had expenses in excess of revenue of $77,628,857 for the year ended 3/31/2012 and $52,195,407 for the prior year. Apparently, that is nothing new. The liabilities of the NFL exceeded its assets by $316,642,454 at 3/31/2012. Superficially, my reasoning would be that if the NFL was organized as an LLC, instead of as an exempt organization, the member teams would have had nearly a third of a billion more in deductions since inception. I’m sure it is more complicated than that, but I suspect that the motivation for the way it operates may be to keep liabilities off the balance sheets of the member organizations. It appears to me that if there is a game there, it is a GAAP (generally accepted accounting principles) game, not a tax game.

Superficially, it appears that, if the NFL were not an exempt organization, it would not owe federal income taxes, because it has not been making money. If you view the NFL in conjunctions with its member teams, it appears that it has the effect of increasing aggregate taxable income. (meaning that the NFL as a whole pays more taxes as a non-profit than if it were a LLC).