Page 4 - SPLS104_Obery.A_Assessment Task 1

In my opinion, the greatest advantage of a non-profit is the fact that they do not pay tax and the

greatest advantage of a for-profit is their money-making ability. And this is where professional sports
leagues are causing controversy. As I previously stated, most sports leagues are registered as non-
profit organizations, as their purpose is primarily to provide opportunities for participation or
entertainment for the public. This is where we enter a grey area because most professional sports
leagues are non-profit and are therefore exempt from paying tax, but leagues such as the National
Football League (NFL) and the National Hockey League (NHL) are amongst the most profitable sports
leagues in the world (Rafiq, 2021). They are therefore reaping the greatest benefit of a for-profit

organization by making a lot of money, as well as the greatest benefit of a non-profit organization by
not paying taxes.

In the case of the NFL, the league was getting a lot of backlash from the public and even congress
members about the fact that even though they were a non-profit organization and were exempt
from paying taxes, they were making billions of dollars in profits. Many argued that the NFL should
revoke its non-profit status because of this. At the time, the NFL was facing other issues such as
mishandling concussions and these in combination with their tax-exempt status was distasteful in
the eyes of the public. As a result of the controversy, in 2015, the NFL decided to give up its non-

profit and tax-exempt status. (Touchdown. Pay up - NFL is a nonprofit no more, n.d.)
The NHL is still operating as a non-profit organization and is therefore exempt from tax, along with
other high earning sport structures such as the Professional Golfers Association (PGA) and as a result
of these leagues, the Properly Reducing Overexemptions for Sports Act (PRO Sports Act) was formed

and it is a legislation aimed at stripping professional sports leagues of their non-profit status if they
meet or exceed certain requirements (such as an annual revenue exceeding 10 million USD)
(Fornwalt, 2018).

Professional sports leagues are receiving the best of both worlds when it comes to for-profit versus
non-profit organizations, but as I stated before, non-profit organizations can certainly generate a
profit, but it’s their motive that is to be considered. These sports league’s primary goal is not to
make a profit, so their motive is on track, but I do agree with the PRO Sports Act that if they exceed a
certain annual revenue, then they should no longer be eligible for non-profit status, or the very least

should not be exempt from paying tax.