Corporate Welfare: NFL, ESPN Cost Taxpayers Billions
A new New York Times investigation has found that ESPN, the nation’s largest sports network, has received $260 million in tax breaks and credits over the last 12 years despite earning more than $6 billion in viewer subscription fees each year. Worse, the network’s biggest focus, the NFL, has been completely exempt for over 40 years despite bringing in more than $9 billion in revenues per year.
The Times report focuses on new Connecticut Governor Daniel Malloy’s cozy relationship with one of the state’s largest employers. ESPN employs 4,000 Connecticut residents. In August of 2011, Governor Malloy showed up at ESPN headquarters with a hard hat and a $25 million taxpayer-funded incentive package to celebrate the opening of the network’s 19th building. Since 2000, the network has received $260 million in tax credits.
Supporters of the taxpayer funded subsidies believe it’s important to keep ESPN happy since they create jobs in the state and could opt to move their headquarters elsewhere. Critics argue that the network is highly unlikely to abandon their 123 acre headquarters in Bristol.
While the media giant collects hundreds of millions in tax breaks, the National Football League doesn’t pay a cent in taxes on their $9 billion in annual revenues. Despite the massive profits, and the fact that the league’s five highest paid executives each earn more than $60 million a year, the NFL is considered a non-profit.
The non-profit status goes back to an obscure law in 1966 that allowed the NFL and AFL to merge and monopolize television rights. In return, they were banned from scheduling games on Fridays and Saturdays in the fall when high schools and colleges play football. That law, very quietly, also changed a section of the tax code that amended the 501(c)6 non-profit status law from “business leagues, chambers of commerce, real-estate boards, or boards of trade” to “business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues.”
That’s not to mention building of football stadiums, 70 percent of which has been taxpayer-funded.
For all the talk about the 47 percent and “the lazy welfare state”, the nation’s most popular sport and most popular sports network bring in over $15 billion per year combined and still manage to remain a burden on the tax system.
(Image courtesy of Rob Poetsch)