How the New Tax Bill Could Complicate Team Sales

Irwin Kishner, co-chair of Herrick's Sports Law Group and co-chair of Herrick's Corporate Department, spoke to The Minnesota Star Tribune on how the new tax bill could affect sales of sports franchises. 

The article notes that under the "Big Beautiful Bill" a tax benefit sports team owners have used to reduce their overall taxes will be cut in half, which would only affect those who buy teams after the law goes into effect. The current owners of the Twins put the team up for sale last year and the Timberwolves and Lynx are also in the process of a sale. "For the next owners of the Twins and the NBA/WNBA Timberwolves/Lynx organization, it’s a race to the finish line to keep the lucrative tax break intact." 

As it stands now, team owners can write off a large percentage of the market value of their franchise, which can translate into business losses on paper even if the team is profitable. This can offset an owner's financial gains elsewhere and reduce taxable income. 

According to the article, "The House bill would cut that widely used business tax benefit in half for sports teams, allowing owners to deduct just half of a team’s intangible assets through 15 years. That accounts for the value of a team beyond the physical property it owns: player contracts, media deals, intellectual property, the fan base and more."

“In traditional economic theory, you would say the asset is less valuable because it has lost an attribute of value [in the tax benefit],” said Irwin. “But then there’s supply and demand. I don’t think we’re going to have to hold a bake sale for professional sports teams anytime soon.”

Kishner expects there to be good competition for the Twins, with a projected sales price of $1.5 billion to $1.7 billion.

“It’s a very worthwhile thing to own,” he said. “Owning a major sports team has proven time and again to be a darn good investment.”

Read the full article in The Minnesota Star Tribune here. Access may require a subscription.