The National Football League considers itself a trade association comprised of and funded by its 32-member teams. The league was an unincorporated nonprofit 501(c)(6) association until 2015.
Section 501(c)(6) of the Internal Revenue Code exempts “business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit, and no part of the net earnings of which inures to the benefit of any private shareholder or individual.”
In contrast, each individual club (with the exception of the non-profit Green Bay Packers) is taxed since they generate a profit.
Is the NFL an entertainment business? Is the NFL fake?
From the aforementioned, we cannot dispute the fact that The NFL is an entertainment business.
The NFL is the most profitable professional sports league in the world, with the most valuable clubs.
The NFL also boasts the world’s largest average attendance (67,591) and is the most popular sports league in the United States.
The Super Bowl is also one of the world’s most popular club athletic events, with individual games accounting for many of the most-watched television programs in American history and all occupying Nielsen’s Top 5 list of all-time most-watched U.S. television broadcasts by 2015.
Following public criticism, the NFL renounced its tax-exempt status in 2015; in a letter to club owners, Commissioner Roger Goodell called it a “mistake.” “”distraction,” he says, adding that “the effects of the league office’s tax-exempt status have been mischaracterized repeatedly in recent years…
Every money collected from broadcast rights fees, licensing agreements, sponsorships, ticket sales, and other sources is earned by the 32 clubs and is taxable in their respective jurisdictions.
This will be true even if the league office and Management Council file returns as taxable entities, and the change in filing status will have no meaningful impact on our operations.” As a result, the league office may owe almost US$10 million in income taxes, but it is no longer compelled to divulge this information.
