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.

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.

Presented by

Gregg Easterbrook is a contributing editor at The Atlantic. He writes the Tuesday Morning Quarterback column for ESPN.com and has been an on-air football commentator for ESPN and for the NFL Network. This story is adapted from The King of Sports: Football’s Impact on America, out this month.

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