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Darren Rovell, ESPN Senior Writer 9y

NFL league office relinquishing tax-exempt status

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In a memo sent Tuesday to league owners, NFL commissioner Roger Goodell said the league office would give up its tax-exempt status.

Goodell wrote in the memo, obtained by ESPN.com and other media outlets, that the owners voted to have both the league office and the Management Council, the organization the owners have set up to handle labor negotiations, file taxes for 2015, after the finance committee concluded that getting rid of that status wouldn't change the function of either.

In the memo, Goodell referred to the tax-exempt status, which the league has had since 1942, as a "distraction" as media and fans often confused the league office with the entire business of the league.

"The fact is that the business of the NFL has never been tax-exempt," Goodell wrote. "Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there."

There's also a benefit to the league's executives -- they no longer are obligated to publicly disclose their salaries. The league office in New York was required to disclose its filings because it was classified as a non-profit organization, which it no longer will be.

Goodell, who has earned an average of $18.8 million a year during his first eight years as commissioner, pulled in $44.2 million in 2012 and $35 million in 2013, according to the IRS filings.

The league's switch from tax-exempt to taxable does not affect its antitrust exemption, created in the Sports Broadcasting Act of 1961. That allows clubs to negotiate radio and TV broadcast rights together.

Sen. Richard Blumenthal, a Connecticut Democrat, said the NFL's move "seems more like a PR stunt than a real gain. The tax-exempt status produces a pittance compared to its congressionally granted antitrust exemption -- enabling billions in broadcast revenue."

Blumenthal said he would reintroduce legislation calling for a review of antitrust exemptions for the NFL, NBA, NHL and Major League Baseball.

Major League Baseball decided to forgo its tax-exempt status in 2007. The NHL, PGA and LPGA still have this distinction, while the NBA league office has never been classified as tax-exempt.

Earlier this year, Rep. Jason Chaffetz (R-Utah) introduced legislation that sought to end the tax-exempt status for the NFL and NHL league offices. Last year, the Joint Committee on Taxation said that getting rid of the non-profit status for all pro sports leagues would boost federal revenues by $109 million over a decade.

Goodell forwarded his letter to NFL owners to Rep. Paul Ryan (R-Wis.) and Rep. Sander Levin (D-Mich.). Ryan chairs the tax-writing House Ways and Means Committee and Levin is the ranking Democrat.

The Associated Press contributed to this report.

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