Why was the NFL a Nonprofit?
We’re halfway through the NFL football season, and it’s got us thinking about nonprofits and sports. When you think of a nonprofit, what do you envision—benevolent volunteers, helping those less privileged out of the kindness of their hearts?
Well, for decades, the NFL was a nonprofit, which brought to question why an organization generating billions of dollars could be structured this way. There is a long history and plenty of reasoning behind the NFL’s nonprofit status, with both benefits and limitations of this structure.
History of the NFL’s Nonprofit Status
The NFL’s story as a nonprofit entity stretches back decades. Officially, the NFL operated as a 501(c)(6) tax-exempt organization until 2015. Typically, 501(c)(6) tax exemptions are saved for business leagues whose purpose is to promote businesses.
In the mid-20th century, the NFL was growing rapidly, gaining national attention, and drawing in huge profits as it slowly became one of America’s top favorite sports and revenue drivers. However, the league itself—responsible for scheduling games, setting rules, handling referees, and more—was not directly responsible for generating revenue. Instead, its role was administrative, coordinating team owners, and creating consistency across franchises.
Timeline of NFL’s nonprofit history
By forming a 501(c)(6) nonprofit, the NFL could separate the league’s administrative functions from its team’s business operations, bringing transparency to league governance without affecting the for-profit status of individual teams. Here’s how the NFL’s nonprofit status and history has changed over the years:
|
Year |
Event |
| 1920 | NFL Founded – The NFL was founded as the American Professional Football Association (APFA) and rebranded as the National Football League in 1922. |
| 1942 | First Nonprofit Filing – The NFL initially operated as a for-profit but filed for nonprofit status under Section 501(c)(6) to designate its central office as a trade association. |
| 1966 | Antitrust Exemption – The U.S. Congress passed the Sports Broadcasting Act of 1961, allowing the NFL an antitrust exemption. Congress approved a tax-exempt status in exchange for allowing games to be broadcast nationally, establishing the 501(c)(6) framework for the league office. |
| 1970s | Establishment of Revenue-Sharing – Revenue-sharing agreements between teams, along with collective bargaining for players, set up the structure that differentiated the league office’s nonprofit status from the for-profit operations of individual teams. |
| 2000s | Scrutiny Over Tax-Exempt Status – Increased media scrutiny and public criticism began to focus on the NFL’s nonprofit status, especially given the league’s growing revenues, which exceeded $10 billion by the end of the decade. |
| 2013 | Legislative Pushback – Congressional pressure grew around the NFL’s 501(c)(6) status, led by Senators Tom Coburn and Angus King, questioning why a billion-dollar organization received tax exemptions. |
| 2015 | NFL Voluntarily Gives Up 501(c)(6) Status – Under pressure and public scrutiny, the NFL voluntarily relinquished its nonprofit status. The league office became fully taxable, though individual teams remained for-profit entities. Commissioner Roger Goodell announced that the decision would reduce “distractions and misconceptions.” |
| Post-2015 | Taxable Status Established – Since relinquishing its 501(c)(6) status, the NFL’s league office operates as a taxable entity, aligning it more closely with the structure of other major U.S. sports leagues. |
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Nonprofit benefits for the NFL
The 501(c)(6) status gave the NFL’s league office a financial structure that reduced overhead and improved efficiency. As a nonprofit:
- It operated tax-free, maximizing funds available for league administration and expansion.
- League officials had greater flexibility in allocating resources for league activities without traditional for-profit tax constraints.
- The NFL could build a reputation as a community-minded organization, focusing on the growth of American football, even though teams themselves remained for-profit entities.
Nonprofits, including 501(c)(6) structures, can provide transparency, regulatory ease, and a specific tax framework that appeals to certain types of organizations, particularly those structured around groups of affiliated entities, like leagues or associations.
Why did the NFL give up its nonprofit status?
They were essentially bullied out of it as public scrutiny of the NFL’s tax-exempt status grew over time. Some argued that a league generating billions of dollars shouldn’t avoid taxes, even if individual teams paid.
The Problem Nonprofits Solve for Community Sports Teams
If you’re a part of a community sports team, it probably isn’t generating anywhere near as much money as the NFL. It’s still helping out the community and promoting the business of the game. Many community sports teams often struggle to secure steady funding, manage operational costs, and build credibility within their communities. Considering nonprofit status can be a game-changer, giving your team the stability and resources to thrive and make a lasting community impact.
