The Supreme Court of Utah ruled last Thursday that a volunteer activities healthcare service that every tests tens of thousands of blood and urine tests for the NFL, MLB, and U.S. Anti-Doping Agency must pay property taxes as well as administering a comparable number of samples for charities and government agencies for free or at discounted prices.
The controversy over the tax rules governing volunteer organizations, including those involved in sports, is highlighted by the case of Salt Lake County’s Board of Equalization.
Much of the event centers on how sports medicine is defined by tax law.
Founded in 2003 after the 2002 Olympic Games in Salt Lake City, Sports Medicine operates in a 30, 000 square feet, state-of-the-art hospital in South Jordan, Utah, that was built in 2019. The nonprofit is” supported solely by testing income and study provides,” according to the World Anti-Doping Agency and the American Association of Laboratory Accreditation. Most of Sports Medicine’s annual revenue, which has recently ranged from$ 9 million to$ 12 million, derives from testing.

According to the nonprofit’s articles of incorporation, it operates “exclusively for generous, medical, and academic purposes” and advocates for “effective drug tests as a barrier to prevent athletes from using performance enhancing and various prohibited substances.” Sports Medicine also conducts research, does research and accumulates information, including on the clinical results of blood transplants. Its research and findings are officially available, which WADA requires for approval.
Four years ago, Sports Medicine applied to have its ( then ) new facility declared property tax exempt by a county board. The nonprofit’s program was turned down by the board because its property “was not used exclusively for generous purposes,” the board after said. The Supreme Court of Utah heard an appeal next made.
As summarized by Chief Justice Matthew Durrant, Sports Medicine’s key arguments for tax deduction are simple but unfortunately unconvincing.
Sports Medicine, Durrant writes, says it “needs to perform tests on professional athletes” at market rates “in order to sustain its philanthropic mission”. Because of the revenue gains made by testing the NFL, MLB, and other athletes, Sports Medicine’s losses are offset by the cost of testing for charities and government agencies that are offered for free or discounted. Stated differently, while Sports Medicine ( obviously ) does n’t contend its profit-motivated testing of professional athletes is charitable in and of itself, that testing is” substantially related” and, arguably, inextricably linked to Sports Medicine’s ability to offer charitable testing.
Durrant rejected this argument. He cited a case from Utah that supports the claim that using property to generate income does not qualify as charitable activity, even when that income is used to support a charitable cause.

Sports Medicine also contends that it can only be successful in carrying out its charitable mission by gathering sufficient data on current trends in drug use. A lot of tests are required to produce that data. Sports Medicine partly succeeds in that goal by testing professional athletes.
Even if that reason could be empirically proven, Durrant claimed that it “does n’t explain why Sports Medicine charges market rates for those tests.” He reiterated that “profit generation is not a charitable use of property” and astutely observed that” Sports Medicine would be able to gather even more data and experience if it offered to perform all testing at below-market rates.”
Durrant was also unconvinced by Sports Medicine’s third rationale. A portion of the South Jordan property, according to the nonprofit, will be used for charitable purposes. Because the state’s constitution “does not permit a property tax exemption to be granted in the present based solely on the promise of charitable use in the future,” Durrant wrote, this argument falls short.
The decision serves as a recommendation for sports-related nonprofits. Their tax exemption eligibility might be compromised if they enter deals with leagues in an effort to redirect money raised to charities.