While virtually everyone can benefit from having an estate plan of his or her own, proper planning is particularly important for people of means—for example, owners of professional sports teams. Let’s take a look at what happened following the death of three such owners.
Joseph Robbie was a highly successful businessman and attorney. He also owned one of the most successful teams in National Football League history, the Miami Dolphins. When Robbie passed away in 1990, his estate was valued at slightly less than $100 million, nearly 50 percent of which was lost to federal estate taxes. This, together with bitter infighting between family members, forced Robbie’s family to sell the team at a fraction of its value—a result that could have been avoided through proper planning.
George Steinbrenner, the owner of the New York Yankees, a team worth approximately $1.6 billion according to Forbes, passed away in 2010. However, at the time of his death, the franchise was 95 percent leveraged due to debt from construction of the Yankee’s new stadium. While this sounds like a recipe for disaster, Steinbrenner had the “good fortune” to die in a year when there was no federal estate tax. In effect, he saved his heirs approximately $600 million by passing away in 2010. In the world of sports, pundits often say, “It’s better to be lucky than good.” In Mr. Steinbrenner’s case, it would appear that this cliché rang true.
Ralph Wilson died earlier this year. He was the sole owner of the Buffalo Bills. He never made public his intentions for the franchise, so it is unknown if ownership will transfer to his family members, or the team will be put up for sale. The result may wind up revolving around the issue of estate taxes and whether Wilson put in place a plan to reduce or eliminate payment of these taxes upon his death.
If he did nothing, his family may have to pay hundreds of millions of dollars in state and federal estate taxes. However, if he left the team to his wife, his estate would pay nothing, thanks to the marital exemption. There are a number of other estate planning tools he could have used to protect the family’s assets, together with the Bill’s future in Buffalo. Given how little time has passed since Mr. Wilson’s death, it’s simply too early to tell what will happen to his estate and the franchise.
To learn more about the estate planning issues associated with these professional sports team owners, click on the links below.