The artist's take:
“In a late 1985 interview in Rolling Stone magazine, Knopfler expressed mixed feelings on the controversy:
"I got an objection from the editor of a gay newspaper in London – he actually said it was below the belt. Apart from the fact that there are stupid gay people as well as stupid other people, it suggests that maybe you can't let it have so many meanings – you have to be direct. In fact, I'm still in two minds as to whether it's a good idea to write songs that aren't in the first person, to take on other characters. The singer in "Money for Nothing" is a real ignoramus, hard hat mentality – somebody who sees everything in financial terms. I mean, this guy has a grudging respect for rock stars. He sees it in terms of, well, that's not working and yet the guy's rich: that's a good scam. He isn't sneering."
By this he most likely means that the so called "Fa****" knows what he is doing and has a life of luxury, not meaning at all a racial slur. Not withstanding, it might seem controversial, but instead is a tribute to the credit of the LGBTQIA community, especially in rock and roll.” [song wiki]