House GOP Bill Aims To Reduce Tax Break For Sports Owners, Potentially Lowering Value Of Franchises

In the domestic policy bill advanced by the House Republicans last week is a change to the tax code that could potentially cool the current frenzy among the very wealthy to own professional sports teams.

Owners of teams in the NFL, NBA, MLB and other major leagues have been able to write off the entire value of their team’s “intangible assets,” which include player contracts, media rights and sponsorships, over 15 years.

Team owners would be able to deduct from their taxes only half the value of those intangible assets over that period, under the House plan.

The tax break can amount to hundreds of millions of dollars. Intangible assets make up the bulk of a team’s worth, and because team values have been steadily rising, the tax breaks have as well.

The tax break has transformed teams into a form of tax shelter, helping to fuel the prices that investment firms and billionaires have paid for teams in recent years.

The House bill would not affect current owners, but it threatens to have a chilling effect on future sports ownership.

NFL owners were briefed on the provision. According to team executives, the owners were encouraged to call senators in their home states to pressure them not to include similar provisions in the Senate version of the policy bill. One team president, who spoke on the condition of anonymity because he feared potential fallout from the president, said that the provision “felt punitive.”

Some observers speculated that President Donald Trump wants leverage over the owners.

“The president is committed to ensuring that sports teams overcharging ticketholders do not receive favorable tax treatment,” White House spokesman Harrison Fields said in a statement. “His focus is on fairness for fans, not team ownership.”

It’s unclear if the provision was targeting the NFL, which Trump has sparred with over many years, since it affects all major leagues. That could be by design, said Mark Weinstein, who is a partner at the law firm Hogan Lovells.

“If it was just the NFL, then it leads to the conclusion it is punitive, right? If it’s all sports leagues, maybe there’s some wiggle room,” Weinstein said. “It’s classic Trump, if you think about it, in that he might intend it to be punitive, but he presents it in a way – maybe it is, maybe it is not.”