“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.
“Pitting The Poor Against The Other Poor”: America Should Treat All Poor People As Well As It Treats Poor Veterans
The message about American soldiers is almost always the same across partisan lines: They are hard-working, courageous, brave heroes, the essence of upstanding, wholesome, and industrious citizenry.
This picture may well be true. But there’s a troubling underbelly to this ideal: Our culture’s respect and admiration for the troops is matched in extremity by its disrespect for the poor.
The poor in this country are often described in polar opposite terms of those employed to exalt soldiers. The poor are takers, morally degenerate, lazy, and so welfare-addicted that they can’t even have life dreams and projects. In our depictions of soldiers and veterans, we construct paragons of virtue. In our depictions of the poor and downtrodden, we construct paragons of vice.
However, lurking behind this contrast is an uncomfortable reality: The two groups substantially overlap.
In 2011, nearly 1 in 7 of our country’s homeless were veterans, nearly 1 in 3 veterans between the ages 18 and 24 were unemployed, and veterans lived in 1 in 5 households poor enough to qualify for low-income heating assistance. Last year, nearly 1 million veterans were on food stamps, and many more doubtlessly received low-income transfer payments like the Earned Income Tax Credit, the kinds of transfers being pilloried by those who decry the “47 percent.”
The poor are often veterans, and veterans are often poor.
This fact occasionally puts conservative lawmakers and commentators who heap disdain on the poor in very tough spots. After all, how do you level rhetorical attacks on the poor and the programs that serve them without also attacking the poor veterans whom we lionize in their capacity as former soldiers?
One way conservatives deal with this tension is to just flatly exclude veterans from their welfare bashing. So for instance, when Senate Republicans sought an accounting of all of the means-tested benefits paid out by the federal government each year, they directed the Congressional Research Service to specifically exclude means-tested welfare programs for veterans. After all, if you are going to construct a list of programs that you intend to trash as wasteful, you can’t have it include means-tested veterans’ health care and means-tested veterans’ pensions. That would be far too disrespectful and intolerably dissonant with pro-troop messaging.
On the liberal side of the aisle, the existence of poor and economically suffering veterans presents a huge rhetorical opportunity, but one that the left constantly manages to bungle. Right now, big name Democrats talk about poor veterans in ways that tend to preserve the notion that they are particularly special. So for instance, when Cory Booker discussed the impact of cutting unemployment insurance on veterans, he emphasized that this was a special crime because “these men and women who fought for our country … are not lazy.” Instead of using this opportunity to defend the poor at large, we get special pleading based on the notion that poor and struggling veterans are somehow different from and more virtuous than the other program beneficiaries.
The more sensible move here, both on the merits and politically, is not to sequester poor veterans off into their own special category of poor people. Such hiving off only reinforces the toxic and illegitimate distinction we make between the deserving and undeserving poor. Instead of separating veterans out, they should be depicted as being very much like most people who find themselves in economic trouble.
The reason why veterans — people who in prior years proved themselves capable of adhering to extreme discipline and undertaking grueling amounts of difficult labor — wind up poor or unemployed is because poverty and unemployment are mainstream conditions that affect huge swaths of our population, not just some mythical class of degenerate scum. Four out of five Americans spend at least one year of their adult life in or near poverty, jobless, or reliant on welfare. Over half of American adults spend at least one year of their life in poverty and nearly 1 in 7 Americans report having been homeless at some point in their life.
As the the President’s Commission on Income Maintenance Programs pointed out in 1969, “our economic and social structure virtually guarantees poverty for millions of Americans. Unemployment and underemployment are basic facts of American life.”
It’s time to reform mainstream understanding of the poor. Ask yourself: If the exemplars of greatness in our society can fall into poverty and unemployment, then who else might be in those ranks alongside them?
By: Matt Bruenig, The Week, February 6, 2014
“Drifting Towards Another Middle East War?”: Remember What Happened When Democrats Supported An Avoidable War With Iraq
As the White House sharpens its criticism of congressional efforts to short-circuit negotiations with Iran via a new sanctions regime, progressives are slowly waking up and smelling the campfire coffee of another Middle East “war of choice.”
In part because active resistance has been limited, there are an awful lot of Democratic fingerprints on the sanctions legislation, and even more de facto defiance of Obama from Democrats who have fallen silent. Here’s how Greg Sargent sums up the current situation:
The basic storyline in recent days has been that the pro-sanctions-bill side is gaining in numbers, while the anti-sanctions-bill side hasn’t — even though the White House has been lobbying Dems very aggressively to back off on this bill, on the grounds that it could imperil the chances for a historic long-term breakthrough with Iran. As Josh Rogin puts it, “the White House’s warnings have had little effect.”
We’re very close now to the 60 votes it needs to pass. The Dem leadership has no plans to bring it to the floor, but there are other procedural ways proponents could try to force a vote. And if the numbers in favor of the bill continue to mount, it could increase pressure on Harry Reid to move it forward. Yes, the president could veto it if it did pass. But we’re actually not all that far away from a veto-proof majority. And in any case, having such a bill pass and get vetoed by the president is presumably not what most Democrats want to see happen.
At TNR, our own Ryan Cooper looks at Cory Booker’s decision to support sanctions, and concludes he’s just not afraid of the heat he will eventually receive from an awakened Democratic Left.
You will hear some Democrats and even a few Republicans claim they are trying to strengthen the adminstration’s hand in their negotiations, but that’s a shuck. The whole idea is to torpedo the talks because Bibi Netanyahu believes they are aimed at the wrong goal: keeping Iran from developing nuclear weapons, as opposed to Bibi’s demand that Iran lose its capability of developing nuclear weapons. If that means war, so be it.
This time around, of course, those in the Democratic Party opposing a drift into war have the White House on their side, and the precedent of what happened when a lot of Democrats supported a similarly avoidable war with Iraq. But if antiwar Democrats don’t start making some real noise, the configuration of forces in Congress will continue to deteriorate, and we could be looking at a war foisted on an unwilling commander-in-chief.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, January 14, 2014
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