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View Full Version : Sox Franchise Value Going Up


Lip Man 1
08-02-2004, 09:44 PM
From Fox sports. Perhaps the economic majors could explain this to us regular folks. Anyway if passed, it looks like Uncle Jerry will suddenly be getting much richer. Good maybe the payroll will go up!

http://msn.foxsports.com/story/2631078

Lip

DVsoxfan
08-02-2004, 09:47 PM
From Fox sports. Perhaps the economic majors could explain this to us regular folks. Anyway if passed, it looks like Uncle Jerry will suddenly be getting much richer. Good maybe the payroll will go up!
That would certainly be nice. Kenny would have a field day if this happens. Heck, we could sign a free agent for every position.

idseer
08-02-2004, 09:48 PM
From Fox sports. Perhaps the economic majors could explain this to us regular folks. Anyway if passed, it looks like Uncle Jerry will suddenly be getting much richer. Good maybe the payroll will go up!

http://msn.foxsports.com/story/2631078

Lip
it wouldn't seem to help much as i assume ALL teams interested in improving would likewise up their payroll. the others would pocket it thus widening the gap between the haves and the have mores.

voodoochile
08-02-2004, 09:55 PM
:reinsy
"Come on, Lip. You know it isn't profit until I sell. Feeling kind of happy recently. KW just put $3M in my pocket on Saturday. You guys wonder why I keep him around..."

StockdaleForVeep
08-03-2004, 12:49 AM
http://www.jatkoaika.com/albumit/chicago/Wirtz_William_Chicago.jpg "Jerry! Remember what i told you, dont win a championship, they cost too much! Now lets go buy some hoverbikes!"

Dadawg_77
08-03-2004, 10:07 AM
Actually I am not familiar with the bill but from reading the New York Times article, teams would only get the benefit from the law by selling. If Hokie knows anything and can talk about, he could provide an assist here also he should lobby if he can to get this pass, as it could make more likely JR would sell.

http://www.nytimes.com/2004/08/02/sports/02tax.final.html


The benefits would apply to newly acquired assets, so current owners would not actually pocket more money, but they could command higher prices when they sell.

Two directors at Lehman Brothers, the investment bank, who specialize in sports banking and tax policy said the change could add 5 percent to sports franchise values. If so, it would represent a $2 billion windfall to franchise values, which totaled $41 billion in 2002, according to Forbes magazine.Basically by being able to write off the value of the sports team, the teams owners could take a major tax benefit for 15 years, while increasing their cash. The Sox are approximately worth 225 million, now imagine deducting 225 million over 15 years from your income taxes. Tax issues are a major reason why major corporations have bought teams in the past, the tax benefits under the old system usally stop after about five years, so corporate owners then tried to flip the team. Since purposal would inceased that time frame to 15 years, teams would be owned by the same owners longer.

Write-offs like those proposed for franchise owners sometimes reduce taxes not only on sports teams but also, in some cases, on owner's other earnings. For example, if Donald Trump bought the Yankees for $1.5 billion, he could deduct about $100 million per year for 15 years on profits not only from the Yankees but from his other companies that made a profit.
The government maintains that this would increase tax on teams, but the industry people dispute that at the major league level. Minor league teams may get hurt since with no TV contracts, they may have to pay more in taxes.

KingXerxes
08-03-2004, 10:21 AM
The following is all guess work on my part - I'm no expert in how sports franchises are accounted for.

As the system exists now, when an entity purchases a team, the purchase price is allocated to the value of player contracts or to the franchise itself (now I'm pretty certain that there are also allocations to personal property, real property if a stadium is involved etc), but this legislation seems to imply that "sports franchise" allocated amount will now be able to amortize itself away much like a depreciable asset. I have to guess that these "franchise values" were previously deemed to be non-depreciable (much like land) - and now they would allow the amounts to be written off over 15 years or so.

This would help any franchise owner who has any valuation whatsoever placed upon the franchise, but in the case of teams that have been owned for quite some time by the same owner (White Sox, Yankees, Cubs) I don't think the resulting increased write off will amount to all that much. In any case, in writing off the "franchise value" it will all be recaptured eventually when the owners sells - albeit in some capital gain form unless they treat the amortized amounts as being subject to recapture. Who knows???

In any case - I hope they get this portion of the bill out. It infuriates me how professional sports goes after what is nothing more than a publicly funded welfare system.

Dadawg_77
08-03-2004, 11:11 AM
The following is all guess work on my part - I'm no expert in how sports franchises are accounted for.

As the system exists now, when an entity purchases a team, the purchase price is allocated to the value of player contracts or to the franchise itself (now I'm pretty certain that there are also allocations to personal property, real property if a stadium is involved etc), but this legislation seems to imply that "sports franchise" allocated amount will now be able to amortize itself away much like a depreciable asset. I have to guess that these "franchise values" were previously deemed to be non-depreciable (much like land) - and now they would allow the amounts to be written off over 15 years or so.

This would help any franchise owner who has any valuation whatsoever placed upon the franchise, but in the case of teams that have been owned for quite some time by the same owner (White Sox, Yankees, Cubs) I don't think the resulting increased write off will amount to all that much. In any case, in writing off the "franchise value" it will all be recaptured eventually when the owners sells - albeit in some capital gain form unless they treat the amortized amounts as being subject to recapture. Who knows???

In any case - I hope they get this portion of the bill out. It infuriates me how professional sports goes after what is nothing more than a publicly funded welfare system.
This is staying since both chamber agreed on the exact wording. According to the NYT article, experts agreed on about 5% increase in vaule.