Scandals put the NFL in Congress' crosshairs

Recent bills spurred by Ray Rice case and debate over Washington Redskins name

September 21, 2014|By Jeff Barker | The Baltimore Sun

Several U.S. senators have proposed stripping the NFL of its tax-exempt status — a warning analysts say the image-damaged league can't afford to ignore even if the threat proves hollow.

Just as it did during Major League Baseball's steroid scandal nearly a decade ago, Congress is using its bully pulpit — and threatening legislation — to prod change on another of the nation's pastimes.

Lawmakers introduced bills last week threatening to revoke the league's tax exemption for two different reasons.

Sen. Cory Booker, a New Jersey Democrat, unveiled legislation to boost funding for domestic violence prevention programs by revoking the tax exemption of the NFL, technically a nonprofit organization, and nine other professional sports leagues.

The bill came as the NFL and its commissioner, Roger Goodell sought to repair the league's image following its indefinite suspension of former Ravens' running back Ray Rice for knocking his then-fiancee unconscious in February in an Atlantic City casino elevator, and domestic or child abuse allegations against other players.

Just days later, Sen. Maria Cantwell of Washington, Sen. Harry Reid of Nevada and Sen. Tim Johnson of South Dakota — all Democrats — introduced a measure to eliminate the league's tax protection if it continues to support the Washington team name, "Redskins."

"It is not right that the National Football League continues to denigrate an entire population," said Reid, referencing Native Americans generally and the 27 tribes in his state.

"I wish Roger Goodell and the NFL's leadership team would take a stand," the Senate majority leader added.

The Redskins responded Friday with a statement it has issued before. "Our position remains consistent with more than 80 percent of Americans who do not want to change the Washington Redskins name," the team said.

For years, Congress has coerced sports leagues into action with the threat of removing legal or tax protections. Chastised and embarrassed at public hearings, Major League Baseball increased penalties more than fivefold for a first steroid offense in 2006, and imposed a lifetime ban for a third violation.

"It is so difficult to have Congress agree on anything," University of Richmond law professor Carl Tobias said. "Still, threats can be effective in moving those who are the targets to taking some action. And the NFL, like many others, does not want the adverse publicity."

Essentially a monopoly, Major League Baseball has a long-held antitrust exemption. Baseball uses the exemption to pool resources among its teams and engage in other behavior that might not be permitted by other businesses.

Major League Baseball has often been threatened with the loss of its antitrust exemption when it diverged with Congress on various issues. For example, lawmakers raised the issue in 2002 when baseball considered folding teams that were struggling financially. It was raised again in Congress during debates over baseball's steroid policies in 2005.

Baseball's antitrust exemption allows it control whether its franchises relocate or fold. It was upheld by the Supreme Court in 1922.

But, ultimately, it wasn't the threat of legislation that accelerated steroids reforms, said sports economist Andrew Zimbalist of Smith College.

Rather, it was the images of former slugger Mark McGwire declining to answer most questions about steroids and then-Oriole Rafael Palmeiro, who tested positive for steroids five months later, famously shaking his finger and denying using the drugs during a congressional hearing in 2005.

"Congress has a bully pulpit," Zimbalist said. "They put McGwire on national television. It caused a lot of attention and baseball — like football today — is very concerned about its image."

But Zimbalist doesn't believe the NFL will be influenced by threats to alter its tax status.

"I happen to like Cory Booker, but I think that he's grandstanding," Zimbalist said. The "tax status that the central office of the NFL has doesn't amount to a hill of beans."

The 32 for-profit NFL teams — not the league's central office — claim most of the billions of dollars in annual revenue flowing to the league, and each pays taxes. The Ravens alone were valued at $1.5 billion by Forbes magazine in August.

Zimbalist characterized the central office as merely "an administrative body that coordinates activities for the 32 teams." He said the office receives licensing money, media money and other revenue and distributes most of it to the teams. An NFL tax form showed $326.8 million in revenue and $317.8 million in expenses for the year ending after March 2013, leaving a balance of about $9 million. Goodell earns $44 million a year, according to the league tax documents.

Calls and emails to NFL officials on Friday were not returned.

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