A detailed view of the NFL shield logo on the field during a preseason game between the Los Angeles Rams and the Houston Texans at NRG Stadium on August 24, 2024 in Houston, Texas.
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Sports team owners who benefit from rising team values ​​also face new pressures from two of the oldest certainties in American wealth: death and taxes.
As the average age of team owners increases and teams become worth billions, owners and leagues are increasingly focused on how to ensure a smooth transition of ownership to the next generation of buyers. While today’s owners have well-developed tax and succession plans, even the best plans can be undermined by family disputes or unexpected tax changes.
“People who have bought sports teams for a long time have found that a large portion, if not the vast majority, of their long-term holdings are now the value of the team,” says Stephen Amdur, co-chair of the mergers and acquisitions and private equity practice at Pillsbury Winthrop Shaw Pittman, who advises several billionaire sports team owners. “They’re thinking a lot about who’s going to keep it for the next generation and what they’re going to do with it.”
Succession and taxes are especially important in the National Football League, where the average age of team owners is now over 72 and team values ​​are skyrocketing. CNBC’s official list of 2024 NFL team valuations, which ranks all 32 professional franchises, will be released Thursday.
NFL owners face two agonizing choices: Sell the team while they are alive, which could result in huge capital gains tax bills, or pass the team on to their families, which could result in estate taxes or prolong family battles for control.
Former Denver Broncos owner Pat Bowlen created a detailed succession and tax plan for the team a decade before his death in 2019. However, a bitter dispute between family members, both before and after his death, led to the team being sold in 2022 to Walmart Heir Rob Walton for $4.65 billion.
Then-Tennessee Titans owner Bud Adams signs autographs during a preseason game against the Minnesota Vikings at LB Field on August 13, 2011 in Nashville, Tennessee.
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Tennessee Titans founder Bud Adams, who died in October 2013, had divided ownership of the team among three branches of his family, which he thought would keep the peace. But the split created a public battle for control that eventually led to an intra-family agreement. Now, Amy Adams Strunk, Bud’s daughter, is the team’s controlling owner.
Tom Benson, the longtime owner of the New Orleans Saints, sparked years of litigation when he removed his daughter and two grandchildren from his estate and transferred ownership of the NFL team and the NBA's New Orleans Pelicans to his wife, Gayle, when he died in 2018. She still retains control of the Saints.
Then-New Orleans Saints owner Tom Benson and his wife Gayle before a game at the Mercedes-Benz Superdome on August 26, 2016 in New Orleans, Louisiana.
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Perhaps the most poignant cautionary tale in NFL history is that of legendary Miami Dolphins owner Joe Robbie, who left the team to his wife and nine children when he died in 1990. Family feuds and estate taxes of more than $45 million forced the family to sell most of the team in 1994.
Under current U.S. tax law, estates worth more than $13.6 million for individuals or $27.2 million for couples are taxed at a 40 percent rate. And since NFL and NBA teams are now worth billions of dollars, all team owners could be subject to hundreds of millions of dollars in taxes without proper planning.
There’s another problem: It’s not clear whether estate tax rates will change in 2025, when current levels expire. So property owners will have to plan for the possibility of more punitive estate taxes in the years ahead.
Trust and estate attorneys say today’s partnership owners have a much broader set of tools at their disposal to minimize the tax impact of succession. One of the most common is a family limited partnership, which makes family members minority shareholders and leaves the primary owner, as the general partner, in control. By dividing ownership, the partnership can reduce the value of the assets (and thus the taxable estate) of the general partner.
Owners can also divide ownership among family members through individual trusts, as George “Papa Bear” Halas Sr., owner of the Chicago Bears, did with his 13 grandchildren. They can also transfer a stake in the team to an irrevocable trust through a partnership or limited liability company.
Chicago Bears coach George Halas watches his team play the Los Angeles Rams at the Coliseum on November 2, 1958.
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“Property owners are spending more time thinking about long-term estate planning to ensure they get the most tax-efficient outcome possible,” Amdur said.
That's assuming the team stays in the family, of course. While club owners often hope to pass on their passion and financial commitment to the team to their children, subsequent generations often have different financial interests or goals, which may mean relinquishing some ownership of the team.
Now there is a new group of potential buyers.
Last week, the NFL voted to allow select private equity firms to buy minority stakes in teams, giving owners and their families the opportunity to withdraw money that they can then reinvest in their teams or invest in non-sports assets to better diversify their investments — all while retaining control.
“I think it’s appropriate to give teams that liquidity to reinvest in the game and in their teams,” NFL Commissioner Roger Goodell said in announcing the move.
