Family offices that invest in sports teams are closely monitoring a Trump administration proposal to potentially eliminate special tax breaks for team owners.
Currently, team owners can get enormous tax benefits through amortization — deducting the initial purchase cost from their taxable income over 15 years. This has benefited owners because it significantly reduces their tax burden even if their teams enjoy huge profits. Former Microsoft CEO Steve Ballmer saved about $140 million through such a tax break as the owner of the Los Angeles Clippers of the National Basketball Association.
Among prominent family offices with investments in sports are the Ryan family (Chicago Bears of the National Football League), the Gilbert family (Cleveland Cavaliers of the NBA), and NBA greats LeBron James (Major League Pickleball, Liverpool in the English Premier League) and Kevin Durant (Brooklyn Aces of Major League Pickelball).
The Trump administration hasn’t provided more specifics, but lawyers say the proposal may be intended to cut back on the use of tax-exempt private activity bonds to fund sports complexes and arenas, according to a note to clients from the law firm Debevoise & Plimpton.
Wealth managers say it might be difficult to make such a change since amortization is a common business tax rule, and it would be challenging to apply such an exception just to the narrow world of sports team owners.
“It seems like singling out sports owners in particular and not other businesses that benefit from a multitude of tax breaks may not hold up,” said Frank Mentone, a senior wealth adviser with Miami-based Focus Partners Wealth, which works with current and retired pro athletes and their family offices. “I think it could be pretty difficult to pass that over the goal line.”
Mentone doesn’t think such a rule change is going to make sports investing any less attractive. “I don’t think it’s going to prevent billionaires from buying teams — the barrier to entry is so high. It’s the ultimate flex to own a sports franchise.”
Sports investing in general, Mentone noted, has become so popular because of the revenue from streaming companies, the global growth of franchises and surging attendance records.
In addition, he said, investing in a sports franchise is an inflation hedge since it’s uncorrelated in general to economic trends — especially amid growing concerns that tariffs will increase prices of consumer goods.
“Regardless of what happens,” Mentone said, “people are going to continue to watch sports.”