The Rise of NFL Teams' Values and Estate Taxes

The average age of NFL team owners is over 72, and the average NFL team is worth $6.49 billion, with no team valued at less than $5.25 billion. This combination presents a significant challenge for owners as they consider estate taxes and succession planning.

• As team values soar, the tax burden on estates grows significantly.
• Owners face a choice between selling the team during their lifetime, which creates massive capital gains taxes, or passing it to their families, which can trigger estate taxes or family disputes.
• The potential for estate taxes of 40% on estates over $13.6 million for individuals or $27.2 million for couples means that owners could face hundreds of millions of dollars in taxes.

Examples of Succession Challenges

Several high-profile cases illustrate the difficulties of succession planning for NFL teams.

• The Denver Broncos were sold to Walmart heir Rob Walton after a bitter family dispute over the team's ownership.
• The Tennessee Titans founder, Bud Adams, divided ownership among his family, leading to a public battle for control.
• The New Orleans Saints ownership faced years of litigation after Tom Benson removed his daughter and grandchildren from his estate and passed ownership to his wife.
• The Miami Dolphins were forced to sell a majority of the team after the legendary owner, Joe Robbie, left the team to his wife and nine children, leading to a family feud and high estate taxes.

Strategic Succession Planning for NFL Teams

Trust and estate attorneys are working with NFL team owners to develop a range of strategies to minimize the tax impact of succession.

• Family limited partnerships allow family members to be minority stakeholders while the primary owner retains control.
• Individual trusts can be used to split ownership among family members, as George "Papa Bear" Halas Sr. did with the Chicago Bears.
• Irrevocable trusts can be used to transfer an interest in the team through a partnership or LLC.

NFL's Decision on Private Equity

The NFL's recent vote to allow private equity firms to buy minority stakes in NFL teams provides owners with a new opportunity for liquidity and diversification.

• This decision allows owners to draw down cash and reinvest it in their teams, invest in nonsports assets, or simply diversify their portfolio.
• NFL Commissioner Roger Goodell supports the decision, stating that it provides teams with liquidity to reinvest in their operations and the game.

Future of NFL Team Ownership

The future of NFL team ownership is evolving as owners face new challenges, including estate taxes, succession planning, and the potential for a new generation of owners with different interests.

• While owners often hope to pass their passion and financial commitment to their children, the next generation may have different financial goals or interests, leading to the sale of team ownership.
• The NFL's decision to allow private equity firms to buy minority stakes in NFL teams could accelerate the trend of diversification and liquidity for owners.

Impact on Sports Team Ownership

The evolving landscape of NFL team ownership is not unique to the NFL. Other sports leagues are also seeing a shift in the way teams are owned and managed.

• The increasing value of sports franchises has created opportunities for private equity firms to invest in these assets.
• As families navigate succession planning and estate taxes, they are considering the benefits of bringing in outside investors to help manage and grow their franchises.