OT: "Cheap" Pegula and the tax benefits of sports franchises

[old kummelweck]

I started doing a little googling yesterday after Adam's response to questions about Pegula's financial support for the team. Running a few side-hustles myself and working with a real accountant, I have learned a lot about the tax system. Having some not-so-profitable enterprises myself, I have learned that a dollar spent is not always a dollar spent.

Bottom line, billionaires receive some very compelling tax benefits year-to-year, even when they buy a franchise that appreciates in value, and eating a coaching contract or two may not be as expensive or costly as is presented in the media, if it helps Terry reduce his overall tax burden a percentage or two.

The Billionaire Playbook: How Sports Owners Use Their Teams to Avoid Millions in Taxes

Owners like Steve Ballmer can take the kinds of deductions on team assets — everything from media deals to player contracts — that industrialists take on factory equipment. That helps them pay lower tax rates than players and even stadium workers.

www.propublica.org

Click to read more...

 

[Beerz]

Our tax system is the absolute worst.

We need a one page tax system.

I don't blame anyone for utilizing these deductions and stuff but it's all so smokey back roomy vibes.

 

[BuffaloMango]

The infamous "maintain family lifestyle" also had "taxes" in the same column.

 

[old kummelweck]

Our tax system is the absolute worst.

We need a one page tax system.

I don't blame anyone for utilizing these deductions and stuff but it's all so smokey back roomy vibes.

It's 100% written by the people who get the most advantage from it.

In the case of Pegula, every dollar spent on operational costs, like coach or player salary, can shift their effective tax rate down into lower percentages. Essentially, it's a tax subsidy to them.

So a response to 'Pegula is cheap' can be "yes, but it doesn't mean he minds eating a contract."

 

[tsujimoto74]

Our tax system is the absolute worst.

We need a one page tax system.

I don't blame anyone for utilizing these deductions and stuff but it's all so smokey back roomy vibes.

The thing is, “simpler” rules only really benefit people who have the money to plan around them. A lot of tax complexity is borne out of the cat trying to catch that loophole-finding mouse.

 

[slip]

While Pegula has maximized his tax savings with the Sabres, there is zero doubt that his out of pocket cash expenditures for the team are approaching multiple 9 figures. Nobody said hobbies are cheap.

 

[Beerz]

The thing is, “simpler” rules only really benefit people who have the money to plan around them. A lot of tax complexity is borne out of the cat trying to catch that loophole-finding mouse.

I dunno.. I think the more complexity it benefits those that can afford to hire people to find those loopholes.

Just give me a flat simple bracket in 3 categories.. one for the poor...one for the middle class and one for the rich. Reasonable rates with no loopholes, deductions or penalties

 

[old kummelweck]

While Pegula has maximized his tax savings with the Sabres, there is zero doubt that his out of pocket cash expenditures for the team are approaching multiple 9 figures. Nobody said hobbies are cheap.

Zero doubt? Have you seen his taxes?

It would not surprise me to find out that his ownership of the team is at the very least cost-neutral, and that is not even taking into consideration the 13% year-over-year appreciation of the team valuation.

Professional franchises are tax instruments.

 

[missingmika]

The thing is, “simpler” rules only really benefit people who have the money to plan around them. A lot of tax complexity is borne out of the cat trying to catch that loophole-finding mouse.

A real tax return based on simplicity.

https://s3.amazonaws.com/pdfs.taxnotes.com/2024/W_Wilson_1915.pdf

But then we’d be out of jobs.

 

[tsujimoto74]

I dunno.. I think the more complexity it benefits those that can afford to hire people to find those loopholes.

Just give me a flat simple bracket in 3 categories.. one for the poor...one for the middle class and one for the rich. Reasonable rates with no loopholes, deductions or penalties

Yeah that might fly for individual income tax (though I think the net effect would actually be to make the system less progressive because you’re removing all of the refundable credits that benefit low-income taxpayers), but there’s absolutely no way you could replace the business and international parts of the code with something like that and expect better results.

(I don’t want to get *actually* into this topic on HF, but tax law is where I make my living, so I am pretty familiar with it lol.)

 

[Beerz]

Yeah that might fly for individual income tax (though I think the net effect would actually be to make the system less progressive because you’re removing all of the refundable credits that benefit low-income taxpayers), but there’s absolutely no way you could replace the business and international parts of the code with something like that and expect better results.

(I don’t want to get *actually* into this topic on HF, but tax law is where I make my living, so I am pretty familiar with it lol.)

You're right.. lets leave it at that. And yes I was speaking individually

 

[slip]

Zero doubt? Have you seen his taxes?

It would not surprise me to find out that his ownership of the team is at the very least cost-neutral, and that is not even taking into consideration the 13% year-over-year appreciation of the team valuation.

Professional franchises are tax instruments.

No amount of accounting legerdemain can recover real cash losses caused by a massive discrepancy between income and expenses. I would say with the value of the team appreciating he's still up a couple of hundred million from where he first bought'em, but I peg his real, actual losses after the tax breaks to be north of 150 million.

 

[Gras]

I dunno.. I think the more complexity it benefits those that can afford to hire people to find those loopholes.

Just give me a flat simple bracket in 3 categories.. one for the poor...one for the middle class and one for the rich. Reasonable rates with no loopholes, deductions or penalties

Replace the income tax with FairTax

 

[Old Navy Goat]

Replace the income tax with FairTax

10% flat tax no deductions, no loopholes, no bs