NCPA - National Center for Policy Analysis


August 4, 2004

A provision in an export tax bill would permit new owners of pro sports franchises to write off the value of the team, which they couldn't do before. Tax experts say the 15-year write-off rule could add, on average, 5 percent to team values when they are sold.

Less tax liability means higher value for the underlying asset; however, observers say that not all teams will benefit.

  • The write-offs really involve media deals; these would benefit popular teams in larger markets.
  • Smaller and minor league teams, however, could face higher taxes under a "tax fairness" plan that hits those least able to pay.
  • Some National Basketball Association team owners would benefit from the change, but others would not, says NBA spokesman Mike Bass, because they had bigger player contracts that are already being written off.

Greg Aiello, National Football League vice president for public relations, says the sports write-off proposal was not controversial because the government said it would collect more taxes and the IRS and owners would spend less money fighting each other.

Attorney William H. Schweitzer promoted the tax change on Capitol Hill for Major League Baseball. Schweitzer says the change would have a slightly positive impact, varying from club to club, by eliminating IRS disputes, without significantly changing taxes.

Source: Editorial, "Raw, raw, raw -- deal," Pittsburgh Tribune Review, August 4, 2004, and Duff Wilson, "Bill Would Raise Franchise Value of Sports Teams," New York Times, August 2, 2004.

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