The NFL ABUSES This Tax Loophole to Steal BILLIONS

(00:00.63)

The NFL and private equity, black box, meet other black box. Yeah, what I mean by black box is, hey, we say it’s worth this, so it must be worth this. Well, here’s the story. My team, the New York Giants, are putting a limited stake in the team on the market.

This process is likely to set a record for an NFL franchise valuation. The Giants are looking into the possibility of selling up to 10 % of the team. The Marra and Tisch families each own 50 % of the Giants. They’re considered one of the most valuable teams because…

I don’t know, they were in New York, their history, New York market. Again, stadium sucks. TV market though, the TV revenues are, leave a lot to be desired. But again, know, a lot of it, quite frankly, again, people, it’s black box. And what do I mean by black box? Who actually puts evaluations on these things? What’s the multiple? Does anybody ever know? Does it even…

matter. Well, I’ll try to break this down for you. Owning a professional sports franchise is

It’s license to print money. Does anybody actually ever see the books in these things? I mean, they say, okay, this franchise is worth five billion. This one’s worth six billion. And again, I understand certain franchises like Dallas Cowboys, the assets that they have, they built their own stadium. They’ve got their own practice facility that they use for other events. Certain franchises have had their stadiums paid for.

(01:58.286)

with bonds and those bonds are, you know, are municipal bonds are tax-free and they may actually change that moving forward in regards to whether or not they’re going to allow those to be tax-free. But one of the things is that the way it works, because again, these franchises just keep going up in value because they say they do.

Again, bye.

I always say, can I see your numbers are actually, it doesn’t matter. Because you buy a franchise the way that the tax laws work at this point in time. You can amortize that over a 15 year period of time. So you write down that purchase price every single year, little by little by little. And these people that buy it again, they can obviously that’s going to reduce their tax bill.

a great deal. There’s also certain caveats and rules with the IRS where the owner of the franchise, if he works for the franchise at least 500 hours a year, they can get more or greater tax benefits. But the reality of the situation is, that it’s almost like a national commodity to some degree that only goes up in value.

And if it only goes up in value, you’re purchasing something. Let’s say you buy a franchise for $5 billion. You can write it down over a 15 year period of time that in 15 years, you know, because that’s just way it is. They keep going up in value and having an asset that keeps going up in value allows you to what?

(03:55.918)

allows you to go and use that asset as collateral to do other things. You can borrow against that asset. I mean, it’s one of the things that people often talk about. know, know, Bezos and those guys, and I’ve discussed this as well. I said, you know, they, they’re not getting any salary. They either are selling shares of their stock, which they do periodically, or they can borrow against the shares that they own.

You can also borrow against the franchise that you own. Not to mention, again, you’re running a sports franchise. You’ve got a lot of high paid contracts there. You don’t think that these accountants can find a way to make sure that that franchise could literally lose money for 15 years every single year run in the red. And still be worth more.

Again, I’m in Tampa, Florida right now. There’s an ongoing debate about what’s going to happen with the Rays, the baseball team and the stadium and the worst, awful stadium in St. Petersburg got wrecked in the hurricane. Prior to that, there was negotiations. It was supposed to redevelop an area there in St. Petersburg and put the stadium. Politicians getting into a bit of a tizzy and a fight.

Now they don’t know what’s going to happen, where the raise is going to go. know, a couple years left on their stadium contract that they have to go by. But again, they have to spend how many millions of dollars to rebuild it, even though they want to either build it or move into a new one or somewhere else. It’s a disaster. But the reality is, is you go and they got some of the worst attendance in baseball.

So the worst attendance in baseball, the Tampa Bay Rays. The other one, the Miami Marlins.

(05:58.446)

Yet their value of their franchise just keep going up.

(06:05.302)

Anyway, can you name for me other businesses out there that can lose money forever and the value continues to go up? private equity can do that. They can ladder companies up over a period of time. In essence, it’s kind of what a franchise is in some respects. And again, it’s just accepted now that they’re going to continue to go up in value because again, it’s a great

It’s a great tax deal for these owners. Now, Donald Trump has said that he wants to do away with the special tax treatment for these franchises. We’ll see how that pans out. We’re see how that pans out, but I agree. I don’t have any problem with that. But again, the parallels between private equity and the NFL and how they put out valuations,

It’s extraordinary and natural that private equity is gonna wanna get involved in this game. Watchdogonwallstreet.com.