The idea of moving the Sonics to Oklahoma is idiotic

[Parrot Head]

Originally Posted by TripletDaddy

How do you depreciate a sports team? Are you talking about amortizing the associated goodwill? What is the useful life of a sports team?

You can deduct certain aspects of transactions costs associated with the deal (while capitlizing others). Is this what you mean? transaction cost recovery?

It's an IRS loophole known in the industry as the Veeck Convention. (Bill Veeck, the guy who gave us Disco Demolition Night with the White Sox.) It allowed for 50% "roster depreciation" over five years, but it has actually improved lately and now allows 100% depreciation over 15 years, so there's a little more incentive to keep the team longer.

So, FM Coug is making bank of $5 MM a year from his options trading and he doesn't want to pay the enormous taxes on those gains. He buys a n MLS franchise for $150 MM and he can now write off the entire amount at 10MM/year over 15 years. At the same time, he's bringing in money from other sources, plus paying himself as CEO or whatever of the FC, but he never pays a penny in taxes unless he goes over that 10MM mark.

There are several key ways to never make a taxable profit in sports, but that's a huge one.

[TripletDaddy]

Originally Posted by Parrot Head

It's an IRS loophole known in the industry as the Veeck Convention. (Bill Veeck, the guy who gave us Disco Demolition Night with the White Sox.) It allowed for 50% "roster depreciation" over five years, but it has actually improved lately and now allows 100% depreciation over 15 years, so there's a little more incentive to keep the team longer.

So, FM Coug is making bank of $5 MM a year from his options trading and he doesn't want to pay the enormous taxes on those gains. He buys a n MLS franchise for $150 MM and he can now write off the entire amount at 10MM/year over 15 years. At the same time, he's bringing in money from other sources, plus paying himself as CEO or whatever of the FC, but he never pays a penny in taxes unless he goes over that 10MM mark.

There are several key ways to never make a taxable profit in sports, but that's a huge one.

OK, I now know what you are talking about. If I am not mistaken, you are overgenaralizing a bit. You are not allowed to depreciate the purchase price of the team, but rather you can expense the value of the player contracts...which is different. From a TCRS perspective, you can also deduct or capitalize a portion of the purchase price, as well, but you are not "depreciating" the franchise itself, no? What code section are you referring to?

I am kind of into tax so feel free to discuss.

[Parrot Head]

You can pretty much depreciate the entire purchase price through the roster, media contracts, suite revenues, lots of things. Previously, it was just the player salaries approximated to 50% of the purchase price over 5 years. Now it's almost everything, over 15 years.

I'm not an IRS hound so I can't provide the code number, but it was a change instituted in 04 or 05.