The “One Big Beautiful Bill Act” and Its Impact on Sports Team Ownership
The House of Representatives recently passed the “One Big Beautiful Bill Act,” aimed at reforming taxation related to sports team ownership. This new legislation could significantly affect team owners’ prized ability to write off most of a sports team’s purchase price.
A Closer Look: H.R. 1 and Team Valuations
The bill, known as H.R. 1, encompasses various spending priorities, including defense and taxation. Notably, it targets amortization—a depreciation method for non-tangible assets, commonly referred to as goodwill. Because 90% or more of a team’s purchase price typically falls under goodwill, this part of the bill could greatly impact sports team’s valuations.
Interestingly, amortization has traditionally been an under-the-radar tax perk. It plays a big part in decisions to purchase U.S. sports franchises and contributes to the skyrocketing prices for such enterprises.
Changes in Tax Deductions
Previously, team owners could deduct 100% of the purchase price over 15 years. If this bill becomes law, they will only be able to claim 50% over the same period. As Robert Raiola from PKF O’Connor Davies accounting firm points out, this change would diminish the tax deduction from $100 million to $20 million annually for an owner who paid $1.6 billion for a team, representing a considerable financial shift.
Historical Context and Public Perception
It’s worth noting that the 1973 sale of the New York Yankees to George Steinbrenner is thought to be the last time a significant sports franchise traded hands at a loss. Amortization usually accounts for depreciating values, but in the world of sports, values rarely decline.
Kevin Thorne from Thorne Law Group highlights that this shift might not garner public sympathy, but it poses a substantial impact on team owners. As the bill moves to the Senate, amendments are expected.
Broader Implications and Senate Prospects
Apart from targeting sports team taxes, H.R. 1 also proposes taxing the licensing revenue of college athletic departments. Traditionally, profits from selling college logos have been exempt, resulting in substantial income for institutions. For example, Ohio State University’s athletic department made a remarkable $34.1 million from licensing in a recent year. The new law would subject this income to a 21% corporate tax rate.
Additionally, the legislation includes benefits for health savings accounts, such as allowances for gym memberships. This could positively affect businesses like Planet Fitness and Life Time Group Holdings.
Legislative Process and Future Amendments
Having passed the House by a narrow margin, H.R. 1 now heads to the Senate. It is expected to undergo changes despite the Republican majority. Senate Majority Leader John Thune has planned for a July 4 target to move forward with this colossal 1,100-page bill. The finance and budget committees will likely propose amendments, seeking a reconciled final version to be approved before it is presented to President Trump for signing.
This bill represents a significant legislative effort that intertwines taxation, sports, and education, with impacts reaching multiple facets of American life. As discussions continue, further developments are anticipated in the Senate.
With assistance from Michael McCann.
