The agreed purchase of the Seattle Seahawks by the Khosla family set a record price for an NFL sale at $9.61 billion. By virtue of the deal’s size, tech billionaire Vinod Khosla and his wife Neeru could also secure a record tax break for an NFL team transaction.
While final details of the new ownership group’s cap table have not been disclosed and are likely still in flux, federal tax law provides a powerful tool for new owners of teams or any business to cut personal or business income.
Through amortization, the new business owner can write off intangible assets over 15 years. With a sports team, nearly the entire value—90% or more in most cases—is made up of intangible assets, from player contracts, media rights and goodwill, among other examples.
“If you look at a sports team, their balance sheet is going to be pretty simple,” Chris Migliaccio, partner at accounting and advisory firm PKF O’Connor Davies, said in a phone interview. “Amortization can be a very powerful thing, especially if you are someone who’s generating income on a regular basis from non-sports sources. The fact that you have a large tax write-off can make the financial pain of buying a team significantly less.”
Migliaccio walked through the example of a team sold for $10 billion with 90% of the price able to be amortized over 15 years. He said it could potentially provide the buyer $600 million annually to offset other income, with cumulative tax savings of $3.3 billion based on a top federal rate of 37%. State taxes add more gains.
