With critics pressing for NFL Commissioner Roger Goodell to resign over his handling of Ravens’ running back Ray Rice, there’s one reason that keeps surfacing for why Goodell has such a strong hold on his job: he keeps the NFL wildly profitable.
Goodell, who was paid $44 million last year, has been able to ink extraordinarily lucrative broadcast and cable deals for the league’s powerful owners.
But it’s not all Goodell’s work, according to sports economists. The league also benefits from a litany of benefits from federal and state governments — many of which were conceived decades ago when the NFL was still a fledgling organization and Americans were just tuning in to watch games on television.
The NFL has come a long way since then, though, with massive power now over the entire entertainment industry and with huge revenue being distributed among team owners. If the controversy around Goodell continues to grow, the league could face political blowback against its significant taxpayer benefits.
Some lawmakers have already criticized Goodell, pointing out that the league has a particular commitment to the public because of how much it benefits from taxpayer money.
“The NFL has an obligation to do better, and a position of public trust – benefiting from broad anti-trust exemptions granted by Congress, and hundreds of millions of dollars in taxpayer benefits,” Sen. Richard Blumenthal (D-Conn.) said in a statement last week.
The NFL did not return requests for comment.
To understand just how the government has helped the NFL on its meteoric rise, here are the top three ways:
An antitrust exemption: In 1961, Congress approved legislation that allowed professional football teams to pool together when negotiating radio and television broadcasts rights. The law, signed by President John F. Kennedy, was the first action by the federal government that would spur the growth of a multi-billion-dollar enterprise, academics say. CBS paid $2 million for the right to broadcast the NFL’s championship game in 1966, the year Congress approved the NFL’s merger with the AFL and expanded the combined league’s antitrust exemption. The idea was to support the fledgling sports league. Today, however, the NFL makes an estimated $7 billion in revenues just from their television deals. Hands down, NFL games are the most popular programming on television. Last fall, 34 of the 35 most-watched TV shows were NFL games.
“Apple or ExxonMobil can only dream of permission to function as a monopoly: the 1966 law was effectively a license for the NFL owners to print money,” wrote Gregg Easterbrook, author of “The King of Sports: Football’s Impact on America,” in an article for The Atlantic.
Some critics say that government policies are more responsible for the NFL’s success than Goodell, who has now become something of a lightning rod.
“Roger Goodell is the paid enabler for the 32 lords of the NFL realm. To give this expendable front man credit for NFL’s revenue growth would be like giving the rooster credit for dawn,” said John Vrooman, a professor of sports economics at Vanderbilt University.
Tax-Free: At the same time the NFL was given an antitrust exemption, the Internal Revenue Service expanded its definition of non-profit entities to include “professional football leagues.” That special status, added to Section 501(c)6 of the Internal Revenue Code, means the NFL’s headquarters in New York led by Goodell is spared tax payments that some estimate to be $10 million annually. Sen. Tom Coburn (R-Okla.) last year pushed unsuccessfully for legislation that would strip the NFL, PGA and other professional sports organizations of their tax exemptions. He said he could not get other lawmakers to support his cause, which he estimated amounts to about $100 million in lost taxes from all non-profit sports leagues. He said earlier this year in a USA Today story that “career politicians are afraid to touch it,” highlighting the power of the NFL’s lobbying operations. The NFL defends its status, saying its individual teams are profit-making and do pay taxes.
Stadiums, Facilities: Local subsidies have helped NFL teams fund new stadiums and all the infrastructure around them. About 30 stadiums have been built with some or all-public financing, according to David Goodfriend, head of the Sports Fan Coalition, a lobbying group that has pushed for a repeal of a federal television blackout rule. Today, the city of Cincinnati is still reeling from its decision in 1996 to use an increase in sales taxes to build and maintain stadiums for the Bengals and baseball team, the Reds. Sales taxes didn’t cover the expenses, and the city is struggling with $43 million in annual expenses to maintain the stadiums. Similar stories exist for the Minnesota Vikings and New Orleans Saints. In 2102, former Virginia governor Bob McDonnell announced the state would contribute $4 million to keep the Redskins’ headquarters and training facility in Loudoun County, Virginia.