When it comes to America’s favorite sports, owning a team comes with perks: the best seats in the house for you and your friends, access to the players and, of course, the option of lowering your taxes.
Some of the wealthiest owners in professional sports are taking advantage of strategies to reduce their tax burden, often paying a lower rate than the athletes who play for them, according to a report Thursday by ProPublica that cites confidential Internal Revenue Service documents.
Take the case of the National Basketball Association’s Los Angeles Clippers, owned by former Microsoft Corp. Chief Executive Officer Steve Ballmer. When purchasing the team, Ballmer was able to deduct part of the sale price—a reported $2 billion—against his income. All told, the Clippers have reported $700 million in losses for tax purposes recently, despite the team being among the most valuable in the league.
Such tactics are legal and lucrative for owners. ProPublica said Ballmer made $656 million in 2018 and paid $78 million in taxes—a 12% tax rate—which is about a third the rate that the Los Angeles Lakers Lebron James paid on the $124 million he made that year.
Ballmer is the world’s ninth-richest person, with a net worth in excess of $100 billion, according to the Bloomberg Billionaires Index.
Khan, Tepper
Other team owners who’ve benefited include Shahid Khan, founder of auto parts manufacturer Flex-N-Gate, who has a net worth of $7.9 billion. Khan, who owns the Jacksonville Jaguars, reported at least $79 million in losses on his stake in the National Football League franchise, according to ProPublica.
Hedge fund manager David Tepper, who’s worth $14.5 billion according to the Bloomberg index, paid $2.3 billion to buy the NFL’s Carolina Panthers in 2018. Based on IRS guidelines, that amount would produce amortization expenses of around $140 million per year, ProPublica said, enough to wipe out any Panthers profits for tax purposes.
Richest Owners
A spokesman for Ballmer told ProPublica that the billionaire has always “paid the taxes he owes, and has publicly noted that he would personally be fine with paying more.” Khan told the news outlet, “In the case of tax laws, the IRS applies and enforces the regulations, which are absolute. We simply and fully comply with those very IRS regulations.”
Tepper didn’t respond to requests for comment, ProPublica said.
The report is part of a series by ProPublica that has outlined tax strategies available to the top 0.1%. ProPublica has said the confidential tax information was sent unsolicited to the news outlet by a source whose identity it doesn’t know. The disclosure has since been referred to federal investigators, an IRS official has said.
—With assistance from Tom Maloney.
This article was provided by Bloomberg News.
