The outrage over the NFL league office's nonprofit status is out of bounds, says Todd Schoenberger, founder of LandColt Trading.
Just in time for Halloween, we receive word that 275,000 people are dressing up as Robin Hood. Actually, scratch that. We have 275,000 people who think they are Robin Hood and intend to live this way in real life.
It seems this group of "merry men" is really upset with the NFL and its league office being categorized as a nonprofit trade association; so they have chosen to sign a petition asking Congress to remove the nonprofit status. Sure, like corporations and individuals aren't taxed enough. Keep taking from those who contribute to society and further inflate the tax rolls for inept politicians. This is a great idea!
Scratch that one too. It's an awful idea. The NFL is taxed enough, and the fact that its league office is exempt from paying tax on approximately $250 million per year helps create additional opportunities in the form of employment and community economics. Force the league to pay an additional tax will result in a giant negative for fans, which trickles down to fiscal problems for cities hosting NFL teams.
Here are the facts: According to the NFL's 990 federal tax form filed in 2012, the league office reported $255.3 million in revenue and $332.9 million in expenses. Due to its 501(c) 6 trade association qualification, the NFL is exempt from paying tax on the revenue and declaring the expenses as a deduction.
Keep in mind, the NFL (and its owners) is obligated to pay the tax on the $9 billion in annual revenue received from network-television contracts, jersey sales, ticket proceeds and other sources; and this amount flows to all 32 NFL teams. Add an additional tax to the league and guess who can anticipate paying for it? Yes, you Mr. Football Fan.
The argument being told by many who object to this nonprofit status, such as Republican Senator Tom Coburn, is about the fan subsidizing a tax break for a sports league. Of course, Sen. Coburn represents the great state of Oklahoma, which doesn't have a professional football team. Many proponents like to point out the average cost to attend an NFL game as being the reason why the tax exemption doesn't pass the "fairness" test.
Piling on one more tax doesn't mean this cash is going to roll to the NFL fan. I'm not quite sure why there's a disconnect. After all, Americans are over-taxed as it is. Why push an entity, which is known to provide civic pride and economically contribute to municipalities, to pay more in tax that will eventually cost the fan more money to cheer on their favorite team? If the Robin Hoods in this story think this tax will result in lower prices at the stadium - or a more competitive team - they are simply being naïve.
Todd M. Schoenberger is the founder and managing partner of LandColt Capital LP, and serves as Portfolio Manager of the LandColt Onshore and Offshore Funds. Follow him on Twitter @TMSchoenberger.
image: © Matt McGee