The NFL is a non-profit!?
October 2013
How the NFL Fleeces Taxpayers
Taxpayers fund the stadiums, antitrust law doesn't apply to broadcast
deals, the league enjoys nonprofit status, and Commissioner Roger
Goodell makes $30 million a year. It's time to stop the public giveaways to
America's richest sports league—and to the feudal lords who own its teams.
Gregg Easterbrook
Sep 18 2013
Last year was a busy one for public giveaways to the National Football League. In Virginia,
Republican Governor Bob McDonnell, who styles himself as a budget-slashing
conservative crusader, took $4 million from taxpayers’ pockets and handed the money to
the Washington Redskins, for the team to upgrade a workout facility. Hoping to avoid
scrutiny, McDonnell approved the gift while the state legislature was out of session. The
Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at $1 billion. But even
billionaires like to receive expensive gifts.
Taxpayers in Hamilton County, Ohio, which includes Cincinnati, were hit with a bill for $26
million in debt service for the stadiums where the NFL’s Bengals and Major League
Baseball’s Reds play, plus another $7 million to cover the direct operating costs for the
Bengals’ field. Pro-sports subsidies exceeded the $23.6 million that the county cut from
health-and-human-services spending in the current two-year budget (and represent a
sizable chunk of the $119 million cut from Hamilton County schools). Press materials
distributed by the Bengals declare that the team gives back about $1 million annually to
Ohio community groups. Sound generous? That’s about 4 percent of the public subsidy
the Bengals receive annually from Ohio taxpayers.
In Minnesota, the Vikings wanted a new stadium, and were vaguely threatening to decamp
to another state if they didn’t get it. The Minnesota legislature, facing a $1.1 billion budget
deficit, extracted $506 million from taxpayers as a gift to the team, covering roughly half the
cost of the new facility. Some legislators argued that the Vikings should reveal their
finances: privately held, the team is not required to disclose operating data, despite the
public subsidies it receives. In the end, the Minnesota legislature folded, giving away public
money without the Vikings’ disclosing information in return. The team’s principal owner,
Zygmunt Wilf, had a 2011 net worth estimated at $322 million; with the new stadium deal,
the Vikings’ value rose about $200 million, by Forbes’s estimate, further enriching Wilf and
his family. They will make a token annual payment of $13 million to use the stadium,
keeping the lion’s share of all NFL ticket, concession, parking, and, most important,
television revenues.
After approving the $506 million handout, Minnesota Governor Mark Dayton said, “I’m not
one to defend the economics of professional sports … Any deal you make in that world
doesn’t make sense from the way the rest of us look at it.” Even by the standards of
political pandering, Dayton’s irresponsibility was breathtaking.
In California, the City of Santa Clara broke ground on a $1.3 billion stadium for the 49ers.
Officially, the deal includes $116 million in public funding, with private capital making up the
rest. At least, that’s the way the deal was announced. A new government entity, the Santa
Clara Stadium Authority, is borrowing $950 million, largely from a consortium led by
Goldman Sachs, to provide the majority of the “private” financing. Who are the board
members of the Santa Clara Stadium Authority? The members of the Santa Clara City
Council. In effect, the city of Santa Clara is providing most of the “private” funding. Should
something go wrong, taxpayers will likely take the hit.
The 49ers will pay Santa Clara $24.5 million annually in rent for four decades, which makes
the deal, from the team’s standpoint, a 40-year loan amortized at less than 1 percent
interest. At the time of the agreement, 30-year Treasury bonds were selling for 3 percent,
meaning the Santa Clara contract values the NFL as a better risk than the United States
government.
Although most of the capital for the new stadium is being underwritten by the public, most
football revenue generated within the facility will be pocketed by Denise DeBartolo York,
whose net worth is estimated at $1.1 billion, and members of her family. York took control
of the team in 2000 from her brother, Edward DeBartolo Jr., after he pleaded guilty to
concealing an extortion plot by a former governor of Louisiana. Brother and sister inherited
their money from their father, Edward DeBartolo Sr., a shopping-mall developer who
became one of the nation’s richest men before his death in 1994. A generation ago, the
DeBartolos made their money the old-fashioned way, by hard work in the free market.
Today, the family’s wealth rests on political influence and California tax subsidies. Nearly all
NFL franchises are family-owned, converting public subsidies and tax favors into high living
for a modern-day feudal elite.
Pro-football coaches talk about accountability and self-reliance, yet pro-football owners
routinely binge on giveaways and handouts. A year after Hurricane Katrina hit New
Orleans, the Saints resumed hosting NFL games: justifiably, a national feel-good story.
The finances were another matter. Taxpayers have, in stages, provided about $1 billion to
build and later renovate what is now known as the Mercedes-Benz Superdome. (All
monetary figures in this article have been converted to 2013 dollars.) The Saints’ owner,
Tom Benson, whose net worth Forbes estimates at $1.2 billion, keeps nearly all revenue
from ticket sales, concessions, parking, and broadcast rights. Taxpayers even footed the
bill for the addition of leather stadium seats with cup holders to cradle the drinks they are
charged for at concession stands. And corporate welfare for the Saints doesn’t stop at
stadium construction and renovation costs. Though Louisiana Governor Bobby Jindal
claims to be an anti-spending conservative, each year the state of Louisiana forcibly
extracts up to $6 million from its residents’ pockets and gives the cash to Benson as an
“inducement payment”—the actual term used—to keep Benson from developing a
wandering eye.
Twelve teams have turned a profit on stadium subsidies alone—receiving more money
than they needed to build their facilities.
In NFL city after NFL city, this pattern is repeated. CenturyLink Field, where the Seattle
Seahawks play, opened in 2002, with Washington State taxpayers providing $390 million of
the $560 million construction cost. The Seahawks, owned by Paul Allen, one of the richest
people in the world, pay the state about $1 million annually in rent in return for most of the
revenue from ticket sales, concessions, parking, and broadcasting (all told, perhaps $200
million a year). Average people are taxed to fund Allen’s private-jet lifestyle.
The Pittsburgh Steelers, winners of six Super Bowls, the most of any franchise, play at
Heinz Field, a glorious stadium that opens to a view of the serenely flowing Ohio and
Allegheny Rivers. Pennsylvania taxpayers contributed about $260 million to help build
Heinz Field—and to retire debt from the Steelers’ previous stadium. Most game-day
revenues (including television fees) go to the Rooney family, the majority owner of the
team. The team’s owners also kept the $75 million that Heinz paid to name the facility.
Judith Grant Long, a Harvard University professor of urban planning, calculates that
league-wide, 70 percent of the capital cost of NFL stadiums has been provided by
taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’
ongoing costs, by providing power, sewer services, other infrastructure, and stadium
improvements. When ongoing costs are added, Long’s research finds, the Buffalo Bills,
Cincinnati Bengals, Cleveland Browns, Houston Texans, Indianapolis Colts, Jacksonville
Jaguars, Kansas City Chiefs, New Orleans Saints, San Diego Chargers, St. Louis Rams,
Tampa Bay Buccaneers, and Tennessee Titans have turned a profit on stadium subsidies
alone—receiving more money from the public than they needed to build their facilities.
Long’s estimates show that just three NFL franchises—the New England Patriots, New York
Giants, and New York Jets—have paid three-quarters or more of their stadium capital costs.
Many NFL teams have also cut sweetheart deals to avoid taxes. The futuristic new field
where the Dallas Cowboys play, with its 80,000 seats, go-go dancers on upper decks, and
built-in nightclubs, has been appraised at nearly $1 billion. At the basic property-tax rate of
Arlington, Texas, where the stadium is located, Cowboys owner Jerry Jones would owe at
least $6 million a year in property taxes. Instead he receives no property-tax bill, so Tarrant
County taxes the property of average people more than it otherwise would.
In his office at 345 Park Avenue in Manhattan, NFL Commissioner Roger Goodell must
smile when Texas exempts the Cowboys’ stadium from taxes, or the governor of Minnesota
bows low to kiss the feet of the NFL. The National Football League is about two things:
producing high-quality sports entertainment, which it does very well, and exploiting
taxpayers, which it also does very well. Goodell should know—his pay, about $30 million in
2011, flows from an organization that does not pay corporate taxes.
That’s right—extremely profitable and one of the most subsidized organizations in
American history, the NFL also enjoys tax-exempt status. On paper, it is the Nonprofit
Football League.
This situation came into being in the 1960s, when Congress granted antitrust waivers to
what were then the National Football League and the American Football League, allowing
them to merge, conduct a common draft, and jointly auction television rights. The merger
was good for the sport, stabilizing pro football while ensuring quality of competition. But
Congress gave away the store to the NFL while getting almost nothing for the public in
return.
The 1961 Sports Broadcasting Act was the first piece of gift-wrapped legislation, granting
the leagues legal permission to conduct television-broadcast negotiations in a way that
otherwise would have been price collusion. Then, in 1966, Congress enacted Public Law
89‑800, which broadened the limited antitrust exemptions of the 1961 law. Essentially, the
1966 statute said that if the two pro-football leagues of that era merged—they would
complete such a merger four years later, forming the current NFL—the new entity could act
as a monopoly regarding television rights. Apple or ExxonMobil can only dream of legal
permission to function as a monopoly: the 1966 law was effectively a license for NFL
owners to print money. Yet this sweetheart deal was offered to the NFL in exchange only
for its promise not to schedule games on Friday nights or Saturdays in autumn, when many
high schools and colleges play football.
Public Law 89-800 had no name—unlike, say, the catchy USA Patriot Act or the Patient
Protection and Affordable Care Act. Congress presumably wanted the bill to be low-profile,
given that its effect was to increase NFL owners’ wealth at the expense of average people.
While Public Law 89-800 was being negotiated with congressional leaders, NFL lobbyists
tossed in the sort of obscure provision that is the essence of the lobbyist’s art. The phrase
or professional football leagues was added to Section 501(c)6 of 26 U.S.C., the Internal
Revenue Code. Previously, a sentence in Section 501(c)6 had granted not-for-profit status
to “business leagues, chambers of commerce, real-estate boards, or boards of trade.”
Since 1966, the code has read: “business leagues, chambers of commerce, real-estate
boards, boards of trade, or professional football leagues.”
The insertion of professional football leagues into the definition of not-for-profit
organizations was a transparent sellout of public interest. This decision has saved the NFL
uncounted millions in tax obligations, which means that ordinary people must pay higher
taxes, public spending must decline, or the national debt must increase to make up for the
shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league
and its all-important television contracts. Individual teams are for-profit and presumably pay
income taxes—though because all except the Green Bay Packers are privately held and do
not disclose their finances, it’s impossible to be sure.
For Veterans Day last year, the NFL announced that it would donate cash to military
groups for each point scored in designated games. During NFL telecasts that weekend, the
league was praised for its grand generosity. The total donation came to about $440,000.
Annualized, NFL stadium subsidies and tax favors add up to perhaps $1 billion. So the NFL
took $1 billion from the public, then sought praise for giving back $440,000—less than a
tenth of 1 percent.
In the NFL, cynicism about public money starts at the top. State laws and IRS rules
generally forbid the use of nonprofit status as a subterfuge for personal enrichment. Yet
according to the league’s annual Form 990, in 2011, the most recent year for which
numbers are available, the NFL paid a total of almost $60 million to its leading five
executives.
Roger Goodell’s windfall has been justified on the grounds that the free market rewards
executives whose organizations perform well, and there is no doubt that the NFL performs
well as to both product quality—the games are consistently terrific—and the bottom line.
But almost nothing about the league’s operations involves the free market. Taxpayers fund
most stadium costs; the league itself is tax-exempt; television images made in those
publicly funded stadiums are privatized, with all gains kept by the owners; and then the
entire organization is walled off behind a moat of antitrust exemptions.
The reason NFL executives’ pay is known is that in 2008, the IRS moved to strengthen the
requirement that 501(c)6 organizations disclose payments to top officers. The NFL asked
Congress to grant pro football a waiver from the disclosure rule. During the lobbying battle,
Joe Browne, then the league’s vice president for public affairs, told The New York Times, “I
finally get to the point where I’m making 150 grand, and they want to put my name and
address on the [disclosure] form so the lawyer next door who makes a million dollars a year
can laugh at me.” Browne added that $150,000 does not buy in the New York area what it
would in “Dubuque, Iowa.” The waiver was denied. Left no option, the NFL revealed that at
the time, Browne made about $2 million annually.
Perhaps it is spitting into the wind to ask those who run the National Football League to
show a sense of decency regarding the lucrative public trust they hold. Goodell’s taking
some $30 million from an enterprise made more profitable because it hides behind its tax-
exempt status does not seem materially different from, say, the Fannie Mae CEO’s taking a
gigantic bonus while taxpayers were bailing out his company.
Perhaps it is spitting into the wind to expect a son to be half what his father was. Charles
Goodell, a member of the House of Representatives for New York from 1959 to 1968 and
then a senator until 1971, was renowned as a man of conscience—among the first
members of Congress to oppose the Vietnam War, one of the first Republicans to fight for
environmental protection. My initial experience with politics was knocking on doors for
Charles Goodell; a brown-and-white Senator Goodell campaign button sits in my mementos
case. Were Charles Goodell around today, what would he think of his son’s cupidity?
Roger Goodell has become the sort of person his father once opposed—an insider who
profits from his position while average people pay.
I wanted to put questions about the NFL’s finances to Roger Goodell. When I was
researching my book The King of Sports, from which this excerpt is drawn, I requested
interview time with Goodell, and he agreed. When NFL headquarters learned that my
questions would cover tax exemptions and health issues in the league, the interview was
promptly canceled. League spokesman Greg Aiello told me it was not in the NFL’s “best
interests” to discuss safety or subsidies.
One might suppose that with football raking in such phenomenal sums of cash, politicians
could win votes by assuming populist stances regarding NFL subsidies and exemptions.
Instead, in almost every instance, Congress and state legislatures have rolled over and
played dead for pro football. NFL owners pressure local politicians with veiled threats of
moving teams, though no franchise has moved since 1998. Public officials who back
football-stadium spending, meanwhile, can make lavish (if unrealistic) promises of jobs and
tourism, knowing the invoices won’t come due until after they have left office.
Roger Goodell has become the sort of person his father once opposed—an insider who
profits from his position while average people pay.
Politicians seem more interested in receiving campaign donations and invitations to luxury
boxes than in taking on the football powers that be to bargain for a fair deal for ordinary
people. Arlen Specter of Pennsylvania, a moderate who served 30 years in the Senate,
tried to pressure the NFL to stop picking the public’s pocket, but left Capitol Hill in 2011
and passed away the next year. No populist champion so far has replaced him. Specter
told me in 2007, “The NFL owners are arrogant people who have abused the public trust,
and act like they can get away with anything.”
Too often, NFL owners can, in fact, get away with anything. In financial terms, the most
important way they do so is by creating game images in publicly funded stadiums,
broadcasting the images over public airwaves, and then keeping all the money they
receive as a result. Football fans know the warning intoned during each NFL contest: that
use of the game’s images “without the NFL’s consent” is prohibited. Under copyright law,
entertainment created in publicly funded stadiums is private property.
When, for example, Fox broadcasts a Tampa Bay Buccaneers game from Raymond James
Stadium, built entirely at the public’s expense, it has purchased the right to do so from the
NFL. In a typical arrangement, taxpayers provide most or all of the funds to build an NFL
stadium. The team pays the local stadium authority a modest rent, retaining the exclusive
right to license images on game days. The team then sells the right to air the games.
Finally, the NFL asserts a copyright over what is broadcast. No federal or state law
prevents images generated in facilities built at public expense from being privatized in this
manner.
Baseball, basketball, ice hockey, and other sports also benefit from this same process. But
the fact that others take advantage of the public too is no justification. The NFL’s
sweetheart deal is by far the most valuable: This year, CBS, DirecTV, ESPN, Fox, NBC,
and Verizon will pay the NFL about $4 billion for the rights to broadcast its games. Next
year, that figure will rise to more than $6 billion. Because football is so popular, its
broadcast fees would be high no matter how the financial details were structured. The fact
that game images created in places built and operated at public expense can be privatized
by the NFL inflates the amounts kept by NFL owners, executives, coaches, and players,
while driving up the cable fees paid by people who may not even care to watch the games.
In too many areas of contemporary life, public subsidies are converted to private profit.
Sometimes, such as with the bailout of General Motors, once the subsidies end, society is
better off; sometimes, as with the bailout of AIG, subsidies are repaid. Public handouts for
modern professional football never end and are never repaid. In return, the NFL creates
nothing of social value—while setting bad examples, despite its protests to the contrary,
regarding concussions, painkiller misuse, weight gain, and cheating, among other issues.
The No. 1 sport in a nation with a childhood-obesity epidemic celebrates weight gain; that’s
bad enough. Worse, the sport setting the bad example is subsidized up one side and down
the other.
The NFL’s nonprofit status should be revoked. And lawmakers—ideally in Congress, to
level the national playing field, as it were—should require that television images created in
publicly funded sports facilities cannot be privatized. The devil would be in the details of
any such action. But Congress regulates health care, airspace, and other far-more-
complex aspects of contemporary life; it can crack the whip on the NFL.
If football images created in places funded by taxpayers became public domain, the league
would respond by paying the true cost of future stadiums—while negotiating to repay
construction subsidies already received. To do otherwise would mean the loss of billions in
television-rights fees. Pro football would remain just as exciting and popular, but would no
longer take advantage of average people.
In 2010, the National Football League moved its annual Pro Bowl away from Honolulu for
the first time in 30 years. At the very time Hawaii was cutting its budget for public schools,
state lawmakers voted to pay the NFL $4 million per game to bring the event back to their
capital. The lawmakers’ gift-giving was bad enough. What was disgraceful was that the rich,
subsidized owners of the NFL accepted.
Until public attitudes change, those at the top of the pro-football pyramid will keep getting
away with whatever they can. This is troubling not just because ordinary people are taxed
so a small number of NFL owners and officers can live as modern feudal lords and ladies. It
is troubling because athletics are supposed to set an example—and the example being set
by the NFL is one of selfishness.
Football is the king of sports. Should the favorite sport of the greatest nation really be one
whose economic structure is based on inequality and greed?
October 2013
How the NFL Fleeces Taxpayers
Taxpayers fund the stadiums, antitrust law doesn't apply to broadcast
deals, the league enjoys nonprofit status, and Commissioner Roger
Goodell makes $30 million a year. It's time to stop the public giveaways to
America's richest sports league—and to the feudal lords who own its teams.
Gregg Easterbrook
Sep 18 2013
Last year was a busy one for public giveaways to the National Football League. In Virginia,
Republican Governor Bob McDonnell, who styles himself as a budget-slashing
conservative crusader, took $4 million from taxpayers’ pockets and handed the money to
the Washington Redskins, for the team to upgrade a workout facility. Hoping to avoid
scrutiny, McDonnell approved the gift while the state legislature was out of session. The
Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at $1 billion. But even
billionaires like to receive expensive gifts.
Taxpayers in Hamilton County, Ohio, which includes Cincinnati, were hit with a bill for $26
million in debt service for the stadiums where the NFL’s Bengals and Major League
Baseball’s Reds play, plus another $7 million to cover the direct operating costs for the
Bengals’ field. Pro-sports subsidies exceeded the $23.6 million that the county cut from
health-and-human-services spending in the current two-year budget (and represent a
sizable chunk of the $119 million cut from Hamilton County schools). Press materials
distributed by the Bengals declare that the team gives back about $1 million annually to
Ohio community groups. Sound generous? That’s about 4 percent of the public subsidy
the Bengals receive annually from Ohio taxpayers.
In Minnesota, the Vikings wanted a new stadium, and were vaguely threatening to decamp
to another state if they didn’t get it. The Minnesota legislature, facing a $1.1 billion budget
deficit, extracted $506 million from taxpayers as a gift to the team, covering roughly half the
cost of the new facility. Some legislators argued that the Vikings should reveal their
finances: privately held, the team is not required to disclose operating data, despite the
public subsidies it receives. In the end, the Minnesota legislature folded, giving away public
money without the Vikings’ disclosing information in return. The team’s principal owner,
Zygmunt Wilf, had a 2011 net worth estimated at $322 million; with the new stadium deal,
the Vikings’ value rose about $200 million, by Forbes’s estimate, further enriching Wilf and
his family. They will make a token annual payment of $13 million to use the stadium,
keeping the lion’s share of all NFL ticket, concession, parking, and, most important,
television revenues.
After approving the $506 million handout, Minnesota Governor Mark Dayton said, “I’m not
one to defend the economics of professional sports … Any deal you make in that world
doesn’t make sense from the way the rest of us look at it.” Even by the standards of
political pandering, Dayton’s irresponsibility was breathtaking.
In California, the City of Santa Clara broke ground on a $1.3 billion stadium for the 49ers.
Officially, the deal includes $116 million in public funding, with private capital making up the
rest. At least, that’s the way the deal was announced. A new government entity, the Santa
Clara Stadium Authority, is borrowing $950 million, largely from a consortium led by
Goldman Sachs, to provide the majority of the “private” financing. Who are the board
members of the Santa Clara Stadium Authority? The members of the Santa Clara City
Council. In effect, the city of Santa Clara is providing most of the “private” funding. Should
something go wrong, taxpayers will likely take the hit.
The 49ers will pay Santa Clara $24.5 million annually in rent for four decades, which makes
the deal, from the team’s standpoint, a 40-year loan amortized at less than 1 percent
interest. At the time of the agreement, 30-year Treasury bonds were selling for 3 percent,
meaning the Santa Clara contract values the NFL as a better risk than the United States
government.
Although most of the capital for the new stadium is being underwritten by the public, most
football revenue generated within the facility will be pocketed by Denise DeBartolo York,
whose net worth is estimated at $1.1 billion, and members of her family. York took control
of the team in 2000 from her brother, Edward DeBartolo Jr., after he pleaded guilty to
concealing an extortion plot by a former governor of Louisiana. Brother and sister inherited
their money from their father, Edward DeBartolo Sr., a shopping-mall developer who
became one of the nation’s richest men before his death in 1994. A generation ago, the
DeBartolos made their money the old-fashioned way, by hard work in the free market.
Today, the family’s wealth rests on political influence and California tax subsidies. Nearly all
NFL franchises are family-owned, converting public subsidies and tax favors into high living
for a modern-day feudal elite.
Pro-football coaches talk about accountability and self-reliance, yet pro-football owners
routinely binge on giveaways and handouts. A year after Hurricane Katrina hit New
Orleans, the Saints resumed hosting NFL games: justifiably, a national feel-good story.
The finances were another matter. Taxpayers have, in stages, provided about $1 billion to
build and later renovate what is now known as the Mercedes-Benz Superdome. (All
monetary figures in this article have been converted to 2013 dollars.) The Saints’ owner,
Tom Benson, whose net worth Forbes estimates at $1.2 billion, keeps nearly all revenue
from ticket sales, concessions, parking, and broadcast rights. Taxpayers even footed the
bill for the addition of leather stadium seats with cup holders to cradle the drinks they are
charged for at concession stands. And corporate welfare for the Saints doesn’t stop at
stadium construction and renovation costs. Though Louisiana Governor Bobby Jindal
claims to be an anti-spending conservative, each year the state of Louisiana forcibly
extracts up to $6 million from its residents’ pockets and gives the cash to Benson as an
“inducement payment”—the actual term used—to keep Benson from developing a
wandering eye.
Twelve teams have turned a profit on stadium subsidies alone—receiving more money
than they needed to build their facilities.
In NFL city after NFL city, this pattern is repeated. CenturyLink Field, where the Seattle
Seahawks play, opened in 2002, with Washington State taxpayers providing $390 million of
the $560 million construction cost. The Seahawks, owned by Paul Allen, one of the richest
people in the world, pay the state about $1 million annually in rent in return for most of the
revenue from ticket sales, concessions, parking, and broadcasting (all told, perhaps $200
million a year). Average people are taxed to fund Allen’s private-jet lifestyle.
The Pittsburgh Steelers, winners of six Super Bowls, the most of any franchise, play at
Heinz Field, a glorious stadium that opens to a view of the serenely flowing Ohio and
Allegheny Rivers. Pennsylvania taxpayers contributed about $260 million to help build
Heinz Field—and to retire debt from the Steelers’ previous stadium. Most game-day
revenues (including television fees) go to the Rooney family, the majority owner of the
team. The team’s owners also kept the $75 million that Heinz paid to name the facility.
Judith Grant Long, a Harvard University professor of urban planning, calculates that
league-wide, 70 percent of the capital cost of NFL stadiums has been provided by
taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’
ongoing costs, by providing power, sewer services, other infrastructure, and stadium
improvements. When ongoing costs are added, Long’s research finds, the Buffalo Bills,
Cincinnati Bengals, Cleveland Browns, Houston Texans, Indianapolis Colts, Jacksonville
Jaguars, Kansas City Chiefs, New Orleans Saints, San Diego Chargers, St. Louis Rams,
Tampa Bay Buccaneers, and Tennessee Titans have turned a profit on stadium subsidies
alone—receiving more money from the public than they needed to build their facilities.
Long’s estimates show that just three NFL franchises—the New England Patriots, New York
Giants, and New York Jets—have paid three-quarters or more of their stadium capital costs.
Many NFL teams have also cut sweetheart deals to avoid taxes. The futuristic new field
where the Dallas Cowboys play, with its 80,000 seats, go-go dancers on upper decks, and
built-in nightclubs, has been appraised at nearly $1 billion. At the basic property-tax rate of
Arlington, Texas, where the stadium is located, Cowboys owner Jerry Jones would owe at
least $6 million a year in property taxes. Instead he receives no property-tax bill, so Tarrant
County taxes the property of average people more than it otherwise would.
In his office at 345 Park Avenue in Manhattan, NFL Commissioner Roger Goodell must
smile when Texas exempts the Cowboys’ stadium from taxes, or the governor of Minnesota
bows low to kiss the feet of the NFL. The National Football League is about two things:
producing high-quality sports entertainment, which it does very well, and exploiting
taxpayers, which it also does very well. Goodell should know—his pay, about $30 million in
2011, flows from an organization that does not pay corporate taxes.
That’s right—extremely profitable and one of the most subsidized organizations in
American history, the NFL also enjoys tax-exempt status. On paper, it is the Nonprofit
Football League.
This situation came into being in the 1960s, when Congress granted antitrust waivers to
what were then the National Football League and the American Football League, allowing
them to merge, conduct a common draft, and jointly auction television rights. The merger
was good for the sport, stabilizing pro football while ensuring quality of competition. But
Congress gave away the store to the NFL while getting almost nothing for the public in
return.
The 1961 Sports Broadcasting Act was the first piece of gift-wrapped legislation, granting
the leagues legal permission to conduct television-broadcast negotiations in a way that
otherwise would have been price collusion. Then, in 1966, Congress enacted Public Law
89‑800, which broadened the limited antitrust exemptions of the 1961 law. Essentially, the
1966 statute said that if the two pro-football leagues of that era merged—they would
complete such a merger four years later, forming the current NFL—the new entity could act
as a monopoly regarding television rights. Apple or ExxonMobil can only dream of legal
permission to function as a monopoly: the 1966 law was effectively a license for NFL
owners to print money. Yet this sweetheart deal was offered to the NFL in exchange only
for its promise not to schedule games on Friday nights or Saturdays in autumn, when many
high schools and colleges play football.
Public Law 89-800 had no name—unlike, say, the catchy USA Patriot Act or the Patient
Protection and Affordable Care Act. Congress presumably wanted the bill to be low-profile,
given that its effect was to increase NFL owners’ wealth at the expense of average people.
While Public Law 89-800 was being negotiated with congressional leaders, NFL lobbyists
tossed in the sort of obscure provision that is the essence of the lobbyist’s art. The phrase
or professional football leagues was added to Section 501(c)6 of 26 U.S.C., the Internal
Revenue Code. Previously, a sentence in Section 501(c)6 had granted not-for-profit status
to “business leagues, chambers of commerce, real-estate boards, or boards of trade.”
Since 1966, the code has read: “business leagues, chambers of commerce, real-estate
boards, boards of trade, or professional football leagues.”
The insertion of professional football leagues into the definition of not-for-profit
organizations was a transparent sellout of public interest. This decision has saved the NFL
uncounted millions in tax obligations, which means that ordinary people must pay higher
taxes, public spending must decline, or the national debt must increase to make up for the
shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league
and its all-important television contracts. Individual teams are for-profit and presumably pay
income taxes—though because all except the Green Bay Packers are privately held and do
not disclose their finances, it’s impossible to be sure.
For Veterans Day last year, the NFL announced that it would donate cash to military
groups for each point scored in designated games. During NFL telecasts that weekend, the
league was praised for its grand generosity. The total donation came to about $440,000.
Annualized, NFL stadium subsidies and tax favors add up to perhaps $1 billion. So the NFL
took $1 billion from the public, then sought praise for giving back $440,000—less than a
tenth of 1 percent.
In the NFL, cynicism about public money starts at the top. State laws and IRS rules
generally forbid the use of nonprofit status as a subterfuge for personal enrichment. Yet
according to the league’s annual Form 990, in 2011, the most recent year for which
numbers are available, the NFL paid a total of almost $60 million to its leading five
executives.
Roger Goodell’s windfall has been justified on the grounds that the free market rewards
executives whose organizations perform well, and there is no doubt that the NFL performs
well as to both product quality—the games are consistently terrific—and the bottom line.
But almost nothing about the league’s operations involves the free market. Taxpayers fund
most stadium costs; the league itself is tax-exempt; television images made in those
publicly funded stadiums are privatized, with all gains kept by the owners; and then the
entire organization is walled off behind a moat of antitrust exemptions.
The reason NFL executives’ pay is known is that in 2008, the IRS moved to strengthen the
requirement that 501(c)6 organizations disclose payments to top officers. The NFL asked
Congress to grant pro football a waiver from the disclosure rule. During the lobbying battle,
Joe Browne, then the league’s vice president for public affairs, told The New York Times, “I
finally get to the point where I’m making 150 grand, and they want to put my name and
address on the [disclosure] form so the lawyer next door who makes a million dollars a year
can laugh at me.” Browne added that $150,000 does not buy in the New York area what it
would in “Dubuque, Iowa.” The waiver was denied. Left no option, the NFL revealed that at
the time, Browne made about $2 million annually.
Perhaps it is spitting into the wind to ask those who run the National Football League to
show a sense of decency regarding the lucrative public trust they hold. Goodell’s taking
some $30 million from an enterprise made more profitable because it hides behind its tax-
exempt status does not seem materially different from, say, the Fannie Mae CEO’s taking a
gigantic bonus while taxpayers were bailing out his company.
Perhaps it is spitting into the wind to expect a son to be half what his father was. Charles
Goodell, a member of the House of Representatives for New York from 1959 to 1968 and
then a senator until 1971, was renowned as a man of conscience—among the first
members of Congress to oppose the Vietnam War, one of the first Republicans to fight for
environmental protection. My initial experience with politics was knocking on doors for
Charles Goodell; a brown-and-white Senator Goodell campaign button sits in my mementos
case. Were Charles Goodell around today, what would he think of his son’s cupidity?
Roger Goodell has become the sort of person his father once opposed—an insider who
profits from his position while average people pay.
I wanted to put questions about the NFL’s finances to Roger Goodell. When I was
researching my book The King of Sports, from which this excerpt is drawn, I requested
interview time with Goodell, and he agreed. When NFL headquarters learned that my
questions would cover tax exemptions and health issues in the league, the interview was
promptly canceled. League spokesman Greg Aiello told me it was not in the NFL’s “best
interests” to discuss safety or subsidies.
One might suppose that with football raking in such phenomenal sums of cash, politicians
could win votes by assuming populist stances regarding NFL subsidies and exemptions.
Instead, in almost every instance, Congress and state legislatures have rolled over and
played dead for pro football. NFL owners pressure local politicians with veiled threats of
moving teams, though no franchise has moved since 1998. Public officials who back
football-stadium spending, meanwhile, can make lavish (if unrealistic) promises of jobs and
tourism, knowing the invoices won’t come due until after they have left office.
Roger Goodell has become the sort of person his father once opposed—an insider who
profits from his position while average people pay.
Politicians seem more interested in receiving campaign donations and invitations to luxury
boxes than in taking on the football powers that be to bargain for a fair deal for ordinary
people. Arlen Specter of Pennsylvania, a moderate who served 30 years in the Senate,
tried to pressure the NFL to stop picking the public’s pocket, but left Capitol Hill in 2011
and passed away the next year. No populist champion so far has replaced him. Specter
told me in 2007, “The NFL owners are arrogant people who have abused the public trust,
and act like they can get away with anything.”
Too often, NFL owners can, in fact, get away with anything. In financial terms, the most
important way they do so is by creating game images in publicly funded stadiums,
broadcasting the images over public airwaves, and then keeping all the money they
receive as a result. Football fans know the warning intoned during each NFL contest: that
use of the game’s images “without the NFL’s consent” is prohibited. Under copyright law,
entertainment created in publicly funded stadiums is private property.
When, for example, Fox broadcasts a Tampa Bay Buccaneers game from Raymond James
Stadium, built entirely at the public’s expense, it has purchased the right to do so from the
NFL. In a typical arrangement, taxpayers provide most or all of the funds to build an NFL
stadium. The team pays the local stadium authority a modest rent, retaining the exclusive
right to license images on game days. The team then sells the right to air the games.
Finally, the NFL asserts a copyright over what is broadcast. No federal or state law
prevents images generated in facilities built at public expense from being privatized in this
manner.
Baseball, basketball, ice hockey, and other sports also benefit from this same process. But
the fact that others take advantage of the public too is no justification. The NFL’s
sweetheart deal is by far the most valuable: This year, CBS, DirecTV, ESPN, Fox, NBC,
and Verizon will pay the NFL about $4 billion for the rights to broadcast its games. Next
year, that figure will rise to more than $6 billion. Because football is so popular, its
broadcast fees would be high no matter how the financial details were structured. The fact
that game images created in places built and operated at public expense can be privatized
by the NFL inflates the amounts kept by NFL owners, executives, coaches, and players,
while driving up the cable fees paid by people who may not even care to watch the games.
In too many areas of contemporary life, public subsidies are converted to private profit.
Sometimes, such as with the bailout of General Motors, once the subsidies end, society is
better off; sometimes, as with the bailout of AIG, subsidies are repaid. Public handouts for
modern professional football never end and are never repaid. In return, the NFL creates
nothing of social value—while setting bad examples, despite its protests to the contrary,
regarding concussions, painkiller misuse, weight gain, and cheating, among other issues.
The No. 1 sport in a nation with a childhood-obesity epidemic celebrates weight gain; that’s
bad enough. Worse, the sport setting the bad example is subsidized up one side and down
the other.
The NFL’s nonprofit status should be revoked. And lawmakers—ideally in Congress, to
level the national playing field, as it were—should require that television images created in
publicly funded sports facilities cannot be privatized. The devil would be in the details of
any such action. But Congress regulates health care, airspace, and other far-more-
complex aspects of contemporary life; it can crack the whip on the NFL.
If football images created in places funded by taxpayers became public domain, the league
would respond by paying the true cost of future stadiums—while negotiating to repay
construction subsidies already received. To do otherwise would mean the loss of billions in
television-rights fees. Pro football would remain just as exciting and popular, but would no
longer take advantage of average people.
In 2010, the National Football League moved its annual Pro Bowl away from Honolulu for
the first time in 30 years. At the very time Hawaii was cutting its budget for public schools,
state lawmakers voted to pay the NFL $4 million per game to bring the event back to their
capital. The lawmakers’ gift-giving was bad enough. What was disgraceful was that the rich,
subsidized owners of the NFL accepted.
Until public attitudes change, those at the top of the pro-football pyramid will keep getting
away with whatever they can. This is troubling not just because ordinary people are taxed
so a small number of NFL owners and officers can live as modern feudal lords and ladies. It
is troubling because athletics are supposed to set an example—and the example being set
by the NFL is one of selfishness.
Football is the king of sports. Should the favorite sport of the greatest nation really be one
whose economic structure is based on inequality and greed?
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& Holtz
Silence is Golden
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Ex-Chargers DB Paul
Oliver commits suicide at
29
Lindsay H. Jones
USA TODAY September 25,
2013
Former San Diego Chargers
defensive back Paul Oliver died
Tuesday night of a self inflicted
gunshot at a residence in
Marietta, Ga., Mike Bowman,
public information officer for the
Cobb County Police
Department, said Wednesday.
Bowman said the weapon was a
handgun, but he did not know
the location of the wound. Death
occurred at approximately 6:45
p.m., he said.
Oliver, who played from the
Chargers from 2007-2011, was
29.
Denver Broncos cornerback
Quentin Jammer, who played
five seasons with Oliver in San
Diego, including two when they
started together in the
Chargers' secondary, said he
was shocked to learn of Oliver's
death.
"He was a good friend of mine.
Great guy. Great guy," Jammer
told USA TODAY Sports. "I
mean, the early reports were
that he committed suicide, and
he just didn't seem like that type
of guy. You never know what
somebody is going through,
what's going on in somebody's
life."
Jammer recalled Oliver as a
talented player whom the
Chargers converted to safety
after Oliver arrived in San Diego
in 2007. The Chargers released
Oliver in the 2011 offseason,
but re-signed him later that year
because of injuries to other
players.
Oliver, who also spent time with
the New Orleans Saints, has
been out of the NFL since his
contract with the Chargers
expired after the 2011 season.
"I hadn't talked to him in a while.
I wish now I could reach out to
him. If I'd have known," Jammer
said, his voice trailing off.
The Chargers selected Oliver in
the fourth round of the 2007
supplemental draft, and he
played in 57 games, with 12
starts. He became a free agent
in 2012.
"Everyone in the Chargers
family is sad today after hearing
the news about Paul," the team
said in a statement. "He was
part of our family for five years.
At just 29 years old, he had a
lifetime in front of him."
Oliver starred at cornerback for
the University of Georgia but
was ruled academically ineligible
before the 2007 season, and he
entered the supplemental draft.
He made seven interceptions,
114 tackles and three sacks
during his three seasons in
Athens.
Georgia coach Mark Richt
described Oliver's death as
"heartbreaking" on a conference
call Wednesday morning.
"I was crushed this morning
when I heard it, quite frankly,"
Richt said. "I haven' t been able
to keep it off my mind, to be
honest with you. We have to find
a way to reach out and help any
way we can."
A native of Kennesaw, Ga., and
graduate of Harrison High
School, Oliver arrived in Athens
before the 2003 season. He
red-shirted his first year before
playing the 2004-06 seasons for
the Bulldogs.
One of Oliver's highlights was
holding current Detroit Lions
and former Georgia Tech
receiver Calvin Johnson to two
catches for 13 yards in 2006.
Oliver had an interception in the
game's final minute to help the
Bulldogs win, 15-12.
Oliver leaves behind his wife,
the former Chelsea Young, and
two children. Funeral
arrangements have not been
finalized.
Contributing: Lindsay H. Jones
in Denver and Gary Mihoces.
Oliver commits suicide at
29
Lindsay H. Jones
USA TODAY September 25,
2013
Former San Diego Chargers
defensive back Paul Oliver died
Tuesday night of a self inflicted
gunshot at a residence in
Marietta, Ga., Mike Bowman,
public information officer for the
Cobb County Police
Department, said Wednesday.
Bowman said the weapon was a
handgun, but he did not know
the location of the wound. Death
occurred at approximately 6:45
p.m., he said.
Oliver, who played from the
Chargers from 2007-2011, was
29.
Denver Broncos cornerback
Quentin Jammer, who played
five seasons with Oliver in San
Diego, including two when they
started together in the
Chargers' secondary, said he
was shocked to learn of Oliver's
death.
"He was a good friend of mine.
Great guy. Great guy," Jammer
told USA TODAY Sports. "I
mean, the early reports were
that he committed suicide, and
he just didn't seem like that type
of guy. You never know what
somebody is going through,
what's going on in somebody's
life."
Jammer recalled Oliver as a
talented player whom the
Chargers converted to safety
after Oliver arrived in San Diego
in 2007. The Chargers released
Oliver in the 2011 offseason,
but re-signed him later that year
because of injuries to other
players.
Oliver, who also spent time with
the New Orleans Saints, has
been out of the NFL since his
contract with the Chargers
expired after the 2011 season.
"I hadn't talked to him in a while.
I wish now I could reach out to
him. If I'd have known," Jammer
said, his voice trailing off.
The Chargers selected Oliver in
the fourth round of the 2007
supplemental draft, and he
played in 57 games, with 12
starts. He became a free agent
in 2012.
"Everyone in the Chargers
family is sad today after hearing
the news about Paul," the team
said in a statement. "He was
part of our family for five years.
At just 29 years old, he had a
lifetime in front of him."
Oliver starred at cornerback for
the University of Georgia but
was ruled academically ineligible
before the 2007 season, and he
entered the supplemental draft.
He made seven interceptions,
114 tackles and three sacks
during his three seasons in
Athens.
Georgia coach Mark Richt
described Oliver's death as
"heartbreaking" on a conference
call Wednesday morning.
"I was crushed this morning
when I heard it, quite frankly,"
Richt said. "I haven' t been able
to keep it off my mind, to be
honest with you. We have to find
a way to reach out and help any
way we can."
A native of Kennesaw, Ga., and
graduate of Harrison High
School, Oliver arrived in Athens
before the 2003 season. He
red-shirted his first year before
playing the 2004-06 seasons for
the Bulldogs.
One of Oliver's highlights was
holding current Detroit Lions
and former Georgia Tech
receiver Calvin Johnson to two
catches for 13 yards in 2006.
Oliver had an interception in the
game's final minute to help the
Bulldogs win, 15-12.
Oliver leaves behind his wife,
the former Chelsea Young, and
two children. Funeral
arrangements have not been
finalized.
Contributing: Lindsay H. Jones
in Denver and Gary Mihoces.