As the value of NFL franchises continues to mushroom, changes need to be made to the manner in which equity is owned by the people who own the franchises.
Per multiple reports (TheAthletic.com and Sports Business Journal), the NFL has tweaked the rules to make it easier for families who have owned teams to continue to do so.
For teams that have been under the same ownership for at least 10 years, the controlling owner must personally own one percent of the team. The previous minimum was five percent. The family still must collectively own at least 30 percent of the team.
The goal is to streamline estate planning, given the impact of estate taxes. If the controlling owner holds only one percent of the team, the the passing of that owner results in a much lower estate-tax bill.
For example, if a team is worth $5 billion and the controlling owner holds only one percent, the estate tax applicable to the share upon passing would become 40 percent of $50 million -- or $20 million.
New owners still must personally acquire 30 percent of the team when the team is purchased. Thereafter, pieces of the team can be distributed to family members with, eventually, the controlling owner personally owning as little as one percent of the team. As long as his or her family collectively owns another 29 percent.
