Posted on 07/16/2008 6:31:50 AM PDT by Zakeet
The citizens of Pittsburgh are getting an unpleasant lesson in the consequences of punitive taxation, courtesy of their beloved NFL franchise. Inside the Pittsburgh Steeler boardroom, a fraternal squabble is under way over future ownership—thanks in part to a sacking from the realities of estate and capital gains taxes.
One of the league's iconic teams, the Steelers have been owned by the Rooney family since 1933. The five sons of the original owner, Art Rooney, control 80%—and they are getting into their 70s. With the team's value estimated at $700 million or more, the 45% federal death tax rate could put each brother on the hook to the IRS for tens of millions of dollars.
That may be more than they can afford. NFL franchises have appreciated quickly in the past decade, and the more a franchise goes up in value, the greater the challenge for estate planning. While a given brother's share of the team may be worth more than $100 million on paper, that doesn't mean he or his heirs have half again that much in cash to fork over to the IRS.
[Snip]
Adding urgency to the Pittsburgh transaction is the prospect of a Democratic President in 2009 who opposes repeal of the death tax and wants to raise the tax rate for capital gains. Barack Obama has promised to raise the rate from 15% to at least 25%, and perhaps the Clinton-era peak of 28%.
(Excerpt) Read more at online.wsj.com ...
When taxes force a family to sell a business, the losers are often the community as much as the next generation, as teams leave and neighborhood fixtures fade away. Mr. Obama is planning to accept his nomination for President in the football stadium of the Denver Broncos in August. The irony will be noted in Pittsburgh, which may lose the Steelers thanks to a tax regime that forces thousands of American families to sell their businesses.
The Steelers aren’t going anywhere. The team may be sold, but there is no way they will move.
Attn Admin/Mods: Unless you are Seahawk fans, could you please fix the headline? The Steelers are only known as the Stealers in Seattle.
The Rooney’s are one of the best owners in league history. With all they’ve done for the NFL I can’t imagine them letting the Rooney’s lose control of the franchise. I guess McCain has just become a Steelers fan eh?
Sounds fair.
It may not apply to the Steelers, but many organizations have brought this situation on themselves by supporting politicians with campaign cash simply because they have a “D” behind their name when the “D”s are in power.
5 Sons own 80% at $700 mil.
$560 mil= $112 mil each. Taxed at 45%= each nets $50.4 mil.
oops= each of the sons’ families would net $50.4 mil.
That's what they said in Brooklyn....and Atlanta....and Baltimore....and LA.....
Sorry....didn’t mean Atlanta.Make that Milwaukee.
maybe rush limbaugh and friends will buy it.
That’s the actual headline. The WSJ is making a point about how estate taxes are “stealing” from the community and the Rooney family.
The NFL needs to do right by the Rooneys. Best case: rescind the public ownership rule for Pittsburgh and let the Steeler Nation buy shares to become Dan Rooney's minority partners.
So, in a way.... the IRS owns 45% of the Steelers...
Stealers, indeed!
GET OVER IT
One of the reasons I like the soccer World Cup. I guess the citizens of the country own the team, not some person with a load of money. I am not aware of a problem similar to what happened in Cleveland a few years back where the owner moved the team from Cleveland to Baltimore. I don’t think the Polish team will be moving to Germany any time soon.
But Germany will just get the best Polish players (Podolski and Klose).
Well, if it were just horse racing perhaps they’d get a pass. And maybe they could negotiate a deal with the NFL to give up the slots if they help with tax problem. It would be a shame to lose the Rooney’s. Wellington Mara of my beloved Giants passed away a couple of years ago, and a part of the NFL’s legacy died with him. If the Rooney’s go who’s left Jerry Jones?, Al Davis? Oh God.
A: None. Because of the loyalty of Steelers fans and the success of Heinz Field, the Steelers are a successful business. The team generates $200 million in revenue and profits are reportedly at $20 million a year. The franchise is worth between $800 million and $1.2 billion. To move a franchise, a team must post financial losses for a few years. That's not happening in Pittsburgh. The Steelers are a winner on and off the field. The Steelers brand is one of the best in sports. The plan is for Dan and Art II to buy out some of Dan's four brothers, which will have an impact on operating expenses in years to come because they will have to borrow money to buy out their family members.
Each family will keep 61.6 million. The government nets 50.4 million.
Don’t forget Cleveland....
“The Steelers aren’t going anywhere. The team may be sold, but there is no way they will move.”
Suggest that you don’t bet “your inheritance” that the Steelers won’t relocate. The list is a long one of various sports teams that have done so. As cities decline (and Pittsburg certainly is dying) pro sports teams have to give consideration to the bottom line as after it’s all said and done they are businesses. Btw, as soon as the current owner of the Bills passes, look for that franchise to relocate as well.
You’re right. I screwed up. Was going to ask the mods to delete but decided to leave the post up to humble myself. :-)
We're not talking about the corner drugstore, we're talking about a near-billion dollar estate. Other owners have navigated the issues of succession - witness my own Kansas City Chiefs - without forcing sales or excessive tax burdens, the Rooney family did not. It was their own poor planning.
The NFL has been patient with the "gambling" issue. (Though why horse gambling is OK and slots aren't is a mystery.)
The brothers who owns tracks don't want to lose the slots. They aren't involved in running the football team.
So it's a perfect storm where the NFL and the IRS are both putting pressure on the family to break up.
The Syria Temple is now a parking lot. Soldiers & Sailors is still there and is County property, Pitt doesn’t own it.
Forbes Field went for several buildings. The Pitt Social Science building has home plate under glass. The Pitt Law School is on the third base side. The Katz School of Business is on the right field side, appropriately along Clemente Drive. Behind the two, across from the Carnegie Library, is the section of outfield wall that Maz’ home run went over in 1960.
Pitt Stadium is gone, replaced by a convocation center/arena.
Even with all that, the neighborhoods are still the neighborhoods. You can still get the best deli in Squirrel Hill, the best pierogi in McKees Rocks, italian food in Bloomfield, etc.
Dan Rooney said another 75 years, and that’s good enough for me.
And Cleveland.
Stanley Druckenmiller (prospective owner) worked for George Soros. With that resume, I expect he’d sell his mother to an Afgani warlord if the deal looked good to him.
Too bad. I still can see in my mind Art Rooney with a cigar holding the Lombardi Trophy. He is certainly missed.
If the Rooney Bros. performed a mass suicide on 12/31/2010 (or on any day during 2010 for that matter) there would be no federal estate tax, because under Bush’s tax reforms of 2002 it goes away completely for 2010. However, for 2011 it returns to 2001 levels - because Democrats in Congress just couldn’t give it up.
And what do the Pols call these guys?
At the moment it supports two football franchises.
There's room for another one somewhere in Northern Virginia ~ and at least a dozen locations have been sited already, with the best right over I-95 on the "abandoned landfill" ~ about 2,000 acre of prime "settled" real estate surrounded by interstate highways, freeways, parkways, METRO, regular rail, restaurant districts, and a burgeoning Fort Belvoir establishment.
So, go ahead Steelers fan base ~ screw up this one and your team his histoire!
Thanks for the update. One day I’ll have to get back for more that a few days and a happier reason.
You hear the word "traitors" used a lot.
That's what they said about the Baltimore Colts many moons ago. Besides the Packers, everybody else in the NFL is game.
Dream on.
I’m surprised they havn’t received the “Figo” treatment.
Ping
Proof that you reap what you sow. Dan Rooney endorsed Barack Hussein Obama during the PA primary season.
As far as their gambling interests are concerned, Art Rooney, Sr. supposedly won the money with which he purchased the Steelers’ franchise in the 30s betting on a horse.
The family owns Yonkers Raceway north of New York City, which now has a large slot machine casino. They also own one of the finest little racetracks in the world, the Palm Beach Kennel Club, directly across Belvedere Road from the West Palm Beach airport, where there is a decent sized poker card club; and slot machine gaming may soon be coming to this track (slots are legal in Broward and Dade Counties, but not yet in the other Florida counties).
I have a question for a Pittsburgher; I recently spent several weeks there. Why is it that you folks haven’t figured out how to drive though a tunnel without slamming on your brakes? Fort Pitt I can kind of understand, but the same thing happens at Squirrel Hill.
HA! I wondered when they changed their name from Steelers.
Communist Manifesto Plank # 3:
-Abolition of all rights of inheritance.
When did Pennsylvania rescind their inheritance tax? Tack another 6% on top of the fed.
You are very right. If one thing can be accomplished by this crisis we are having now, it’s that the failures of the Democrats come to light. I would go through a little tough times for people to wake up and see it.
And when all the big names in Hollywood that are running their mouth start to die out, and their kids are left footing the death tax bill, I hope they eat their words too.
Tunnels are scary. You never know if that’s an actual opening in the hillside, or if Wile E. Coyote just painted it black.
Seattle can call then the “Stealers” if they want. The fact is the Seahawks had terrible clock management and play-calling and were unable to overcome even the smallest adversity.
That being said, it is absolutely a possibility the Steelers could be bought and moved.
A pretty paltry sum when you consider it will take over 15 years profits just to pay the estate taxes. Actually a lot longer than that because first they will have to pay income tax on the profits, then what is left over can can apply toward recouping the cost of the estate tax.
If the cost of the estate tax is somehow rolled over into the expense of ownership, the franchise will no longer show a profit and can be courted by a sweetheart deal from some other city.
Steelers fans should be afraid and wake up before they have to learn the lesson the hard way. The Democrats have no idea how economics really works. When they try to punish the rich, they end up stomping on everyones head.
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