Goodell’s Income Embarrassing for NFL

Dave Mitchell February 19, 2013 Comments Off

GoodellAn epidemic that infiltrated American businesses several years ago has reached the NFL. It’s something Major League Baseball fixed, but Roger Goodell is suffering through now.

The Sports Business Journal, a very well respected journalism entity, reported last week Goodell’s total compensation for 2011 was over $29 million. For one year! His salary increased from roughly $11.6 million in 2010 to a take-home of $29.49 million in 2011, much of it in bonuses for unknown benchmarks. Let’s put that into perspective.

For all intents, Goodell is to the NFL as Commissioner as a CEO is to a major business. That means Goodell, according to the model corporations use today, should be the highest paid employee by the league because he runs it.

If you agree with that logic, and in realism only business owners do, Goodell’s pay is typical with the rest of the Fortune 500 CEO’s.

The NFL is one of the highest profiting companies, not only in America, but world wide. However not by a long punt is Goodell the highest paid. According to Forbes, if you place Goodell’s income against other CEO’s, he would have been the 28th-highest-paid CEO in America. Only 28th!

What’s mind boggling is Goodell was $348 million behind the top earning CEO, Apple’s Tim Cook, who made over $375 million in 2011.

Goodell is the NFL’s most polarized Commissioner in history. He is taking a beating in and out of the courts, on and off the field. Goodell is looking at anything and everything he can to change the game, under the guise of making it safer. Many think his methods are not only making the game safer, but killing the “golden goose”.

He certainly isn’t a favorite among the players around the league. According to a recent poll in the “USA Today”, 61% of players in the NFL disapprove of Goodell’s job performance. Roddy White, the star Wide Receiver of Atlanta Falcons is one of the 61%. White said on Twitter “How in the hell can u pay a man this much money that can’t run, tackle or catch?”

Place Goodell up against one of the highest paid players in the league, Tom Brady. Goodell made $11.49 million more than Brady, and Brady had 39 more touchdown passes.

Certainly fines have increased since he became commissioner. Along with the influx of fine money to the NFL coffers, profits have gone up too. Could that be coincidental?

Paul Tagliabue held the office of Commissioner before Goodell took over. In his final year, the NFL made $6.16 billion in 2005. In 2011, it made $9.5 billion.

Even with the income Goodell receives, something else is more unbelievable. With all the profits and money-making enterprises the NFL is involved in, a little known Tax Loophole allows the league to be a NON-PROFIT Organization. That’s right! Non-Profit.

In the eyes of the United States government tax code, there is an exemption allowing the league to be exempt from federal corporate taxes. This is so complicated and convoluted an explanation is required.

Oklahoma Senator Tom Coburn explains it best. He described what is happening in an October, 2012 article by Jay Bookman in the Atlanta Journal-Constitution. For the sake of making sure this is conveyed correctly, Bookman wrote the following…..

Coburn points out, “state and local governments usually exempt these organizations from state income and sales tax as well….”. In a report by the Indiana Business Journal, the NFL wasn’t charged State and Local taxes when the Super Bowl was held in Indianapolis.

Hotels and restaurants weren’t allowed to tax NFL employees. The NFL is using its tax-exempt status as a 501(c)(6) to avoid paying the taxes, in addition to fuel, auto rental and admissions taxes. This is only for NFL employees, not players under contract for teams.

In 2010, the registered NFL nonprofit alone received $184 million from its 32 member teams. It holds over $1 billion in assets. Together with its subsidiaries and teams, many of which are for-profit, taxed entities, the NFL generates an estimated $9 billion annually. Each of its teams are among the top 50 most expensive sports teams in the world, ranking alongside the world’s famous soccer teams. Almost half of professional football teams are valued at over $1 billion.

How did the NFL get this distinction? Easy. In 1966 Congress passed a law at the time of the merger with the old American Football League, specifically allowing “professional football leagues” to enjoy 501(c)(6) status as tax-exempt trade organizations. Other leagues have piggy-backed on that legislation to claim that status themselves.

The PGA and NHL also have the same exemption. So did Major League baseball. But they rescinded it. In 2007 baseball felt the embarrassment caused by releasing their tax returns, effectively making public executive salaries was too much. MLB decided protecting that information from the public was more important than escaping taxes.

Good or bad, Roger Goodell reigns over a league that makes money every year. Only the league itself can destroy it. Goodell is the head of that business and is not popular among the fans. Now with this revelation, especially among players, how much longer can Goodell wield his power?

Not very long.

 

Dave Mitchell co-hosts with Mark Donahue the UST talk show “Ohio Baseball Weekly,” highlighting the Cleveland Indians and Cincinnati Reds. The Show returns on March 4th, at 9pm with a two-hour special. If you have a comment on this or any other article,email Dave at dmitch@ultimatesportstalk.com or on twitter @ohbbcohost.

 



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