mykeystrokes.com

"Do or Do not. There is no try."

“Getting The Sports Moguls Off Our Backs”: The Subsidy-Bloated Profits Generally End Up In The Pockets Of The Owners

It was not out of a sense of decency that the National Football League recently let go of its tax-exempt status. You see, as a tax-exempt organization, the NFL had to disclose Commissioner Roger Goodell’s compensation — $44.2 million in 2012. That seemed an excessive sum for the head of a “nonprofit” freed from having to pay any federal income tax. Now the NFL can keep it secret.

Tax exemption is a subsidy. The taxes the NFL money machine didn’t have to pay, everyone else had to pay. Thanks go to former Sen. Tom Coburn (R-OK), Rep. Jason Chaffetz (R-UT), and Rep. Elijah Cummings (D-MD), for railing against such unsightly deals.

But that’s not the only good news for citizens tired of being milked by billionaire sports moguls. Consider Verizon’s decision to let customers buy TV packages that do not include ESPN or other sports channels.

An explanation: Animal Planet and Food Network are not why TV bills are so ludicrously high. What drive them up are the enormous fees the sports channels extract for their programming.

ESPN alone tacks an estimated $7 on monthly bills. By comparison, USA Network adds less than $1.

An interesting calculation: If every month you put $7 into an investment with an annual return of 4 percent, you’d have $1,027 after 10 years. These things add up.

It was not charity that prompted Verizon to let its customers buy a smaller base package of channels, plus extra bundles containing the channels they actually watch, at lower cost. Every month, thousands of Americans — incensed by their monthly TV bills and now able to get most of what they watch from the Internet — have been “cutting the cord,” that is, dropping their cable, satellite, or fiber-optic TV service altogether.

Anyhow, ESPN has dragged Verizon Communications into court. The sports network, the Disney empire’s most lucrative business, claims that Verizon broke a contract requiring that ESPN channels be part of its basic offerings. Verizon says that any of its customers can obtain ESPN through a bonus bundle at no additional cost and that therefore it is included.

Never did I think I’d say this, but I am rooting for my pay-TV provider.

On to another reason to cheer. President Obama’s proposed budget would ban the financing of professional sports stadiums with tax-exempt bonds. Such bonds lower borrowing costs for the zillionaire team owners. Currently, 22 NFL teams play in stadiums financed by tax-exempt bonds, as do 64 professional baseball, basketball and hockey teams.

Why would tax-exempt bonds — created to help cities, towns, and states pay for needed infrastructure — go to benefit mega-businesses? Because the team owners have succeeded in conning locals to see sports arenas as economic magnets pumping money into their weary tax bases.

Lots of studies contradict this self-serving propaganda. First off, the economic activity generated by the teams often pales next to the concessions wrenched from the taxpayers. Secondly, many of the dollars spent at the games are dollars that would have otherwise been left at local businesses, such as restaurants.

Furthermore, the subsidy-bloated profits generally end up in the pockets of the owners and their magnificently paid players — who promptly take them out of town. With all due respect to Cleveland, one doubts that LeBron James spends many of his millions there.

Ending tax-exempt bonds for sports arenas might reduce our elected officials’ temptation to sacrifice their taxpayers in return for good tickets to the game. That would be the best outcome.

They who love professional sports should pay for them.

 

By: Froma Harrop, The National Memo, May 7, 2015

May 16, 2015 Posted by | Corporate Welfare, National Football League, Nonprofit Organizations | , , , , , | 1 Comment

“For The Patriots, Without Apology”: Even Though Loyalties Can Be Misplaced, A Life Lived Without Them Makes No Sense

I never knew how much fun it was to be loyal to a hated outlaw sports team until the whole world came down on my dear New England Patriots.

Having rooted over the years for Boston teams that many felt sorry for — God help us — and found psychologically interesting, it was a rush to hear MSNBC’s Joe Scarborough the other morning describe my Patriots as a “ruthless killing machine.” Wow!

It’s a long way from the early days of the quarterback-wide receiver combination of Babe Parilli and Gino Cappelletti (he was also a great kicker). Back then, many didn’t even take the upstart American Football League seriously. As a kid, I insisted on being faithful to our local guys, so I’ve been a Pats fan from the day they were created.

And I now understand far better what life is like for those who work as spinmeisters. In a fight like this, you look for whatever arguments come to hand and judge their merits later, in a quiet room with fellow fans.

If those footballs were deflated, why didn’t the refs, who handled them dozens of times, notice? Maybe the balls lost air. Besides, didn’t you catch the fact that Tom Brady did far better with the regulation, non-deflated balls in the second half of the Indianapolis Colts game? And anyway, everybody messes with the football, right?

All Patriots fans are Taylor Swift partisans these days: “The haters gonna hate, hate, hate, hate, hate.” She didn’t invent the line, but many loyalists are using her buoyant and defiant lyrics to shake off the Pats’ critics as jealous souls who just can’t stand this team’s dominance in the long Tom Brady-Bill Belichick era.

Already, I can imagine the sighs of impatience from those who think loyalty to professional sports teams is a silly and even pernicious waste of energy. Aren’t they just a bunch of businesses owned by rich guys who use them to make more money and stroke their already large egos by paying a share of that cash to athletes, some of whom get wealthy themselves? Didn’t we see what a moral mess the National Football League made of the Ray Rice affair?

And isn’t loyalty itself a questionable virtue that can lead people to overlook many ethical issues and to ignore more important moral callings?

On the last question, I share what the 19th-century philosopher Josiah Royce called a “loyalty to loyalty.” Of course loyalty can be misplaced, as Royce acknowledged. “A family engaged in a murderous feud, a pirate crew, a savage tribe, a Highland robber clan of the old days — these might constitute causes to which somebody has been, or is, profoundly loyal,” Royce wrote, and he agreed that such relationships are problematic.

But even though loyalties can be misplaced, a life lived without them makes no sense. They are defined by the legal scholar George Fletcher in his fine book Loyalty as obligations “implied in every person’s sense of being historically rooted in a set of defining familial, institutional, and national relationships.” There really are, he argues, “groups and individuals that have entered into our sense of who we are.”

For many, sports teams become part of this fabric, usually through powerful regional ties (I really do love New England), bonds of friendship (only a fellow fan could understand what it felt like to lose the 2008 Super Bowl to the Giants, or to win the “Snow Bowl” against the Raiders in 2002), and the draw of history (see everything above).

Do the owners of these teams exploit such feelings? You bet, which is why fans feel so outraged and betrayed when a team gets moved from one place to another. But is there anything intrinsically wrong with their loyalties, or with the admiration of fans for heroism in an athletic encounter involving “their” team? I don’t think so.

Given such strong sentiments, the people who own these teams have an obligation to stewardship that they don’t always discharge. Even as a profoundly loyal Patriots fan, I’d be upset if the team and the league simply threw a locker room attendant under the bus to get out of their problem. Loyalty runs both ways, and it most certainly extends to the locker room attendant. (And if he did deflate 11 balls in 90 seconds, he should have been in the Pro Bowl.)

But I know which side I’ll be on this Sunday, without any mental reservations. The Patriots, including the attendant, are my guys.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post; The National Memo, January 29, 2015

February 1, 2015 Posted by | National Football League, New England Patriots, Super Bowl | , , , , , , | Leave a comment

“A Protection Racket”: The Corrupt Bargain Between Politicians And The NFL

For a number of years, I have been uneasy about the symbiotic and corrupt relationship between lawmakers and professional sports leagues, especially football. Many years ago, I got a call from a reporter with Sports Illustrated. I returned the call, mostly out of curiosity about why a sports reporter was calling a politics/Congress person. It turned out there was a legitimate reason. The SI reporter had noticed that Senator John Warner of Virginia served on the board of directors of the Washington Redskins; he wondered whether that was allowed under the ethics rules of the Senate—and if so, why?

Of course, as a general matter, members of Congress could not serve on corporate boards. But somehow, the sports team was viewed differently. It should not have been. The Redskins, then owned by Jack Kent Cooke, was a very large for-profit company, with clear and important interests in front of the federal government. Professional football had an antitrust exemption, worth a fortune and even then controversial. The Redskins, like the other National Football League teams, enjoyed very favorable depreciation rules for its players, tax advantages that meant less revenues for the government and more profits for the owners. Warner was a great senator, a man of integrity. But as a member of the board of the team, he had a fiduciary responsibility to look after its interests. And as a senator, he had a duty to look after the interests of Virginia and America. What if those duties clashed?

The Redskins, back then, were the only game in town, an obsession for Washington. Cooke’s owner’s box each weekend was filled with Washington power brokers, including senators, House leaders, the chairman of the Fed, cabinet officers, and others. Cooke reveled in their friendship; they reveled in their access.

The buddy-buddy relationship between the NFL and lawmakers led to the antitrust exemption in 1961. This is a multibillion-dollar business; why should it be given an exemption denied to other businesses and industries not doing professional sports? There was even less legitimacy to the decision Congress made subsequently to enable the NFL itself to function as a nonprofit organization, with all the benefits that accrue to other nonprofits. Nonprofit? Find me a nonprofit that pays its CEO $44 million! Of course, the NFL is not a nonprofit in reality, and it has spun a web of offshoots that pull in bundles of money for licensing and other lucrative businesses.

The unhealthy and unholy relationship the NFL has long maintained with Congress has also been evident with local and state governments that eagerly jump in to make taxpayers pay through the nose to attract or keep teams through separate tax breaks; public financing of stadiums; giveaways or bribes in the form of granting luxury boxes and their huge streams of revenue to the team owners instead of to the taxpayers footing the bill for the stadiums; and so on. If local politicians are not eager enough, team owners bludgeon them into submission with threats to move the teams. As Steve Almond wrote in The Washington Post, this is crony capitalism plain and simple—I would add, along with a dose of a protection racket.

Roger Goodell, the NFL commissioner, has his own links to Washington. His father, whom I knew and deeply admired, was a Republican senator from New York who was courageous in his deep opposition to American involvement in Vietnam, infuriating the Nixon administration—not the only position he took that broke from party orthodoxy. I became disillusioned with son Roger long before the current fiasco, when he quickly blew off the Obama administration’s request to have the NFL help uninsured football fans learn about their access to health insurance under the Affordable Care Act. This was not about endorsing or supporting a political side; it was about informing people about getting insurance. No doubt many younger NFL fans play football themselves—and some otherwise healthy athletes will get concussions, fractures, spinal injuries, and more while doing so; without insurance, they could have their lives devastated. Goodell’s move was a craven one.

Now he is under siege for his stumbles and missteps over domestic violence. He is also facing criticism for the league’s longtime indifference to the brain injuries suffered by so many players in the violent sport. But he is for the moment secure in his job; the owners are firmly behind him. And why not? His stewardship, built on that crony capitalism, makes these very wealthy people even wealthier, and they have been happy to reward him with staggering benefits.

I am a sports nut and an ardent football fan. Whether Goodell stays or goes is not really the issue here. To me, the issue is that it is past time for Congress to reexamine its unhealthy relationship to this huge set of businesses, to reconsider both the antitrust exemption and the farcical nonprofit status of the league. Football is sport, its fan base is huge, including members of Congress. But it is first and foremost a business, and it is simply wrong to ignore that reality in making public policy.

 

By: Norm Ornstein, The Atlantic, September 25, 2014

September 26, 2014 Posted by | Congress, Major League Sports, National Football League | , , , , , , | 1 Comment

“The NFL Is Not A Nonprofit”: So Why Does It Get To Act Like One?

The National Football League generates about $9.5 billion in revenue each year. It is, by Forbes’ estimate, the most valuable sports league in the world. Its commissioner, Roger Goodell, makes $44 million in a year. And yet, the NFL’s head office has long been allowed to operate as a tax-exempt nonprofit—as if its sole purpose for existence wasn’t to extract wads of cash from the wallets of American sports fans.

This week two Democratic senators have announced bills that would put this obvious farce to an end. In response to the outrage swirling over the NFL’s apparent tolerance of domestic abuse, New Jersey’s Cory Booker introduced legislation that would prohibit tax-free status for all major sports leagues. (The National Hockey League and PGA Tour are also nonprofits.) Washington state’s Maria Cantwell, meanwhile, is offering a bill targeted directly at the NFL’s tax-exempt status, prompted by its refusal to force the Washington, D.C., franchise to change its name from a racial slur against Native Americans.

Even if it’s taken a series of national scandals to give this idea a fresh push, it’s nice to see common sense gaining more steam. Previously, Republican Sen. Tom Coburn of Oklahoma (whose state lacks an NFL team) and the House Ways and Means Committee have proposed legislation that would strip sports leagues of their nonprofit status. But if senators representing Giants, Jets, and Seahawks fans suddenly feel comfortable getting behind this idea, that’s progress.

Chances are, yanking away the NFL’s tax exemption wouldn’t drastically change its finances. Only the league office, which considers itself a trade association for its clubs—just like the U.S. Chamber of Commerce or the National Dairy Council—is a nonprofit; the teams themselves are purely for-profit. As a result, pro football’s copious TV revenues are taxed once they’re passed down to the franchises. A separate, for-profit company called NFL Ventures, co-owned by the teams, handles the league’s merchandising and sponsorship earnings. Finally, the league office often operates at a loss—in 2011 it finished more than $77 million in the red, while in 2012 it only had $9 million left at year’s end. Without profits, of course, there’s nothing for the government to tax.

The case of Major League Baseball is instructive for what might happen to the NFL if it were to lose its exemption. In 2007, MLB gave up its nonprofit status, reportedly because of new IRS rules that would have required public disclosure of its executives’ salaries. Later, it said the move was “tax-neutral.”

Congress itself doesn’t think the NFL’s tax bill would be that big. Coburn has suggested that taxing the NFL and NHL alone would raise about $91 million per year. But the Congressional Joint Committee on Taxation—probably a bit more credible in this instance—believes ending tax exemptions for all sports leagues would bring in just under $11 million per year. Booker hopes his bill would raise about $100 million over a decade, which would go to support domestic abuse programs. That’s a mere trickle compared with the geyser of cash the NFL generates each year.

So if money isn’t really the issue, what is? It’s about principles. Letting the NFL operate tax-free makes a mockery of the entire concept behind nonprofits, which is that we should give a special break to organizations that do the useful, unprofitable work normal corporations won’t.

The NFL’s lawyers like to point out that the IRS has a long history of treating sports leagues as tax-exempt. The government first gave the league office its nonprofit status in 1942, they note, and hasn’t questioned it since. Citing this history is a reasonable response to critics, such as Gregg Easterbrook, who claim that the NFL is simply benefiting from a special tax loophole that came about thanks to some brilliant lobbying in the 1960s—Congress actually inserted “professional football leagues” into the list of nonprofit trade groups covered by Section 501(c)(6) of the tax code. The code had previously covered “business leagues, chambers of commerce, real-estate boards, or boards of trade.” But this legislative carve-out doesn’t explain why, for instance, pro hockey and pro golf also get to operate tax-free.

The problem is that the NFL should never have been considered a trade association in the first place. Love or hate the lobbying they do in Washington, trade groups are supposed to work for the benefit of entire industries, and be open to any business in that industry that would like to join. If you own a butter-making factory, then by God, you can pay dues and become a member of the American Butter Institute. The NFL, in contrast, operates a legally sanctioned sports cartel. It’s not in the league’s interest to let in more teams, because that could hurt the value of existing franchises.

“To be a 501(c)(6) organization, anyone who meets your requirements for who’s part of the industry has to be allowed to join the association as a member,” Jeffrey Tenenbaum, chairman of the nonprofit organizations group at the law firm Venable, explained to ESPN last year. “With professional sporting leagues, that’s not the case; it’s a very closed circle. You can’t start a professional football team and join the NFL.”

If NFL executives were out lobbying on behalf of college football teams or arena football, we might have a different story. But they’re not. The league office is the enforcement wing and rule-making body of a profit-making operation. The same goes for leagues like the NHL, which exist for the express purpose of excluding competition.

The deeper issue at play here is that nonprofits exist to do things for the public good—things that for-profit companies generally don’t do. That’s why we give nonprofits a break from the IRS. And it’s why the government should be stingy about which kinds of organizations count and which don’t. We know that sports leagues won’t suddenly disappear if we treat them like normal corporations and ask them to pay, at most, a few million dollars to the government. Major League Baseball certainly hasn’t gone anywhere. The NFL won’t either.

 

By: Jordan Weissmann, Senior Business and Economics Correspondent; Slate, September 18, 2014

September 21, 2014 Posted by | IRS, National Football League, Tax Exempt Status | , , , , , , , | Leave a comment

“The NFL’s Twisted Sense Of Justice”: The Priorities Are Wildly Out Of Proportion

Where would NFL Commissioner Roger Goodell have gotten the idea that a two-game suspension was an appropriate sanction against a player who beat up his fiancée? Maybe from the example set by prosecutors and the criminal justice system.

Baltimore Ravens player Ray Rice yesterday was cut from the team and suspended indefinitely by the NFL. But that obvious punishment came long after the attack, and only after the NFL – rather improbably – said it had just seen a damning video of the event.

The grainy, jerky tape is sickening. There’s a beefy professional football player, beating his then-fiancee Janay unconscious and proceeding to drag her out of the elevator like she was a too-heavy sack of potatoes.

For this behavior, Rice initially got a two-game suspension – not much to complain about when you have a $35 million contract and have collected more than $28 million from the league already. He avoided not just jail, but even probation, and was instead slapped on the knuckles with a “diversionary” program. What’s more, the Ravens stood by their domestic abuser, tweeting that “Janay Rice says she deeply regrets the role that she played the night of the incident.”

It’s hard to separate out who is the worst actor here. Rice himself is an obvious choice. There’s no way to interpret the terrifying video other than to conclude that he beat the woman he supposedly loved until she fell helplessly onto an elevator floor, unable to even get out of the car, while her husband-to-be slung her onto the floor and pushed her legs together with his foot. That’s the sort of behavior that will get you, at the least, a personal foul in the NFL – that’d be 15 yards – when done to another muscled and football-padded man. But little happened to Rice when he did it to a much smaller and weaker woman.

That brings us to the Ravens, who had the insensitivity to treat the abuse like it was just a little couple’s spat, and worse, suggested that the victim herself was at fault. The fact that Janay Rice commented on her “role” in the assault only proves how endangered she was and is – and anyone who has an elementary school level of education, or who has watched even a single episode of “Law and Order: SVU,” ought to know that.

Then there is the NFL, whose authorities claimed not to have seen the videos – a more detailed one was revealed this week – that show the brutal assault. One wonders how that is even possible, unless Goodell was determined to stick his head in the AstroTurf to protect the right of players to be violent, and the mission of teams to keep them amped up and aggressive.

But Rice still avoids time behind bars, which is no surprise. The criminal justice system takes the same distorted and twisted view of infractions as has the NFL. A first-time drug offender in the NFL, for example, can get a four-game suspension without pay; a third-timer could go a year without pay. That’s much worse than the penalties imposed – and recently increased, in light of the Rice incident – for pounding your fiancée into unconscious submission.

And in the criminal justice system? Rapists, who do the math, can feel pretty confident. Just three out of 100 rapists will spend a day behind bars, according to an analysis of Justice Department statistics by the Rape, Abuse and Incest National Network, a victims’ advocacy group. While one in five women will be raped at least once in her lifetime and one in three women will experience some kind of domestic abuse, the Centers for Disease Control recently reported, fewer than half of rapes are reported, since victims are afraid to come forward. A fourth of reported rapes result in arrests, and a fourth of arrests end up with a felony conviction or incarceration, according to the victims’ advocacy group.

But for drugs? The average sentence for a federal drug offender is about six years and for a crack cocaine violator, eight years.

The NFL – and Goodell’s – priorities are wildly out of proportion, putting abuse of a person’s own body ahead of the assault of a woman’s body. But the example set by prosecutors and the criminal code are just as bad.

 

By: Susan Milligan, U. S. News and World Report, September 9, 2014

September 10, 2014 Posted by | Domestic Violence, National Football League, Violence Against Women | , , , , | Leave a comment

%d bloggers like this: