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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.

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?

https://www.theatlantic.com/magazine/archive/2013/10/how-the-nfl- fleeces-taxpayers/309448/

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