The Donald messed w/ The Old Ball Game. Is there any American traditio he will not overturn or destroy?
3
Tempest in a teapot. All trades are equal value. Salary is largely irrelevant, because it's a liability, not an asset. Said another way, you're lucky if your player turns out to be worth it -- worth more is purely an abstraction. There is no way to attribute, say, a percentage of the ticket sales to the presence of a particular player. So, cross this off the list of things to worry about.
3
This is just another example of the unintended consequences of a poorly designed tax plan that was rushed through to disguise its blatant inequities. However, professional sports teams receive so many governmental subsidies that there having to pay back a small portion is not disturbing. In fact, sports teams owned by billionaires and corporations are still feeding way too much at the public trough.
5
Millionaires and billionaires complaining about paying a few dollars more in taxes, while in the middle class we lost our double taxation protection with the repeal of state and local tax deductions, as well as home equity interest. Cry me a river...
1
Republicans refused to have open debate and committee hearings on this tax bill that is a reverse Robin Hood taking from Americans not in the millionaire or billionaire class and passing the money and funding from essential social services to the richest 1%.
Now we find many “mistakes” in the law including authorization of spending and the ability for professional sports team to trade players.
No wonder- had their been open public debate we would have all seen the lack of consideration of consequences of passing this bill to pay back the richest political donors like the MERCERS and further enrich billionaires like them by the Republican Congress!
3
There is no consumer mandate to pay to watch people work. We are free to choose as Milt would say.
Some additional concepts to throw into the mix here.
1. In a totally free market, we usually find that an employee is paid fmv when they sign a contract, and therefore those contracts have little value. In sports there are rules concerning salaries, and "underpaid" player contracts (compared to fair market value) do have value. Free agent contracts, however, may have little value when first signed since they are presumed to be at a fair market price.
2. Player contracts go up and down in value. For example, is there a doubt that ARod's contract had negative value at the end of his career? The Yankees would have paid another team millions to take the contract without receiving anything back. So while this rule will generate gains, it will also generate (ordinary)losses.
3. And no, you don't get a loss when a player breaks his leg, only when you dispose of his contract.
So this rule may result in tax increases for some teams, but may reduce tax for others.
1
Bummer I hope this won't eat into their enormous profits. I guess they can just up the ticket prices. Hopefully that can make up the difference. I just don't want these franchises to be victimized by the new tax law. BTW who really cares if they have to pay more ?
2
another day, another way the rushed #TaxScam errors create unintended consequences. what will be the straw that breaks the back of this terrible legislation, so we can #RollItBack?!
The value of anything is what some person or entity is williing to pay for it. The value of a baseball player is what the team is paying that player. Sorry but it is that simple. So if a traded player is earning $28 million and the players he is traded for earn $500,000 the difference in salaries is $27.5 million the basis for the tax.
Question now becomes can the team that traded the $28 million player now take that difference as a tax loss.
1
The overwhelming majority of regular pro sports fans will continue to hand over their money, no matter what costs are passed along to them.
This tax law complication and its costs to fans should trigger a national study that goes beyond what ticket bearers pay.
A comprehensive study would show that nearly everyone of us, even those who never go to a game, end up paying a hidden "sports tax" via products and services that fork over their endorsement cash to pro sports.
Massive tax breaks ( or extortion to keep a franchise in a city) cost all of us.
Pro sports owners, players and players agents are essentially shaking all of us down for the sake of an absurd sense of civic pride in our teams that are, in reality, a traveling circuit of athletic mercenaries.
2
Gives pro teams another excuse to gouge the fans who will go to fewer games. Ad revenues will drop. Cable sports rates will be affected negatively as fans leave. Player and executive salaries will go down to more realistic levels compared to what the average Joe earns (really?). There it is. Some good comes out of it.
1
The Republican tax plan is a rushed and poorly conceived scam for the rich and for corporations but not obviously for sport franchises and blue states like NY and California. It is a long term disaster for both.
2
Finally one positive thing out of this shameful tax bill.
Billionaire owners who spend their time fleecing taxpayers to build stadiums and tax laws that reward self important outrageously paid athletes now have to pay taxes, oh my, what's the world coming to?
4
MLB is the only industry allowed to depreciate the value its key employees, the players. For all other industries, all employee salaries and benefits are expensed each year. This valuable congressional concession allows MLB to treat players as capital investments such as a factory or truck. The only other institution that similarly treated people as human capital was slavery.
6
Well $275M for 10 years as a player does sound like slavery.
Maybe, it the GOPs in Congress & the Pres had been willing to spend a little more time reviewing this bill and, in the best of all possible worlds, actually conferred with the Dems, traps like this might have been avoided.
8
don't worry. accountants know how to value contracts.
2
“But by adding a single word to the newly written tax code — “real” — the law now only allows real estate swaps to qualify for that special treatment.”
Huh. I wonder who might benefit from that.
11
The Donor Relief Act will hit many of the people who contributed to the rise of this farce of an administration and Congress. They all get what they deserve.
5
All this means is that ticket prices will increase, beer and hot dog prices will go up and parking in a crowded lot will go up as well.
2
Several commenters think this provision of the tax law will quickly be corrected. I do not think so. First, it was quite intentional to restrict the tax avoidance to real estate. This was a necessary part of the package to allow Republicans to claim the deficits from this tax bill will be "only" $1.5 trillion. On this plane of reality, it looks like the deficits will be higher, but there would be problems if the facade collapsed too quickly. Second, several Republicans would not go along with the change back. Third, I do not expect Democrats, especially in the Senate, to co-operate. I predict no changes until 2019, and possibly none to the provision even then.
4
I didn't think baseball is a business, thus the Supreme Court based antitrust ruling. If it isn't a business then why player depreciation?
1
This is great. This will be a huge crimp on salary increases. ANYTHING that levies taxes on the sports owners is good.
7
To me it stinks of slavery when human being were evaluated for their monetary selling value.
1
This a great development!
5
And how is that I am supposed to be concerned about this. I'm betting that everyone of the owners was all for this tax bill.
12
I bet the law will be rewritten within two months.
Congress pressed so hard to hand Trump, the Tea Party and others, a tax bill to sign, that most members never bothered to read it (even if they were speed readers).
OOPS.
2
How is a person an asset with tax basis? Such trades should have no tax implications, except if they change the compensation that has been already paid.
Can the clubs write down a capital loss if the guy breaks a leg the first night out?
Greg M., I believe virtually all of these players are insured - one more indication they are commoditized, human capital.
3
How is there no 'fair market value' for players who are under contract, with very specific salary and benefit packages that may readily be calculated? And as with many aspects of the tax code, questions like this are usually resolved by way of IRS regulations and guidance documents. Or they are hashed out in court, where guidelines are established as a matter of precedent.
I love baseball. But I also decline to cry crocodile tears for billionaire owners and $20 million dollar a season players/commodities who may now be subject to taxation just as every other working schlub has been since the Federal income tax was first enacted. Same goes for the NBA, NFL and other sports where wealthy owners and big ticket players will be subject to income taxation.
As with any other business transaction, the tax consequences of these big ticket trades will have to be taken into account in working out the terms of the deal.
Life is cruel, ain't it?
7
If the tax disadvantages billionaires (team owners) and millionaires (players) it will be changed.
3
Lets add this to the list of reasons why this tax bill is horrible. I'm all for taxing the MLB and NBA, that make millions of dollars, to bring in revenue for the government to pay for the tax break that the 1% received. The real issue here is how will these professional teams and the IRS quantify the value of a player?
This atrocious tax bill is a clear example of rushed work. Pushing this through without time for feedback and corrections will produce this quality of work and lead to unintended consequences.
8
No reason to be concerned. This affects wealthy owners of sports franchises, so you can be sure it will be corrected swiftly and in their favor.
6
I believe that the new regulations also eliminated the deduction for tickets to sporting events. That could hurt attendance and ticket prices.
Get ready for higher cable bills and pay per view games.
2
This is what happens when you rush a law through without proper hearings.
There is no guarantee that any type of technical corrections bill could make it through the Senate. After years of Republicans blocking any technical corrections to the ACA, I don't see Democrats rushing to help fix mistakes in the tax bill.
I will say that I think some comments are sort of missing the problem here. Teams will still pay taxes on any profits that they make. I hate public financing of stadiums, but that's also not really the issue here. The problem here is that there is no obvious way of defining the capital gain/loss from player trades.
13
For anyone interested in a vastly more complicated explanation of how teams have been taking advantage of depreciation for years, see http://sabr.org/research/roster-depreciation-allowance-how-major-league-...
They have been avoiding taxes for years based on being able to in effect double dip on depreciation of a contract while also deducting the costs of that contract. As the article points out, magically converting what should be profits and gains subject to tax to losses.
What's sauce for the goose is sauce for the gander.
20
So the fix is actually eliminating a tax preference that really should never been allowed. If you trade equipment in the net should be the basis, no problem.
2
Can I deduct my ticket costs when I pay to see the Mariners lose again and again this summer?
It's interesting to note that the exception of the new like-kind swapping rule is now restricted only to real estate swaps, a clear favor to the president and his ilk of donors to the republican coffers.
17
Wow, we might actually tax those who have a lot of money? I feel soooooooooooo bad.
18
Oh, Boo Hoo. Billionaires facing taxes? Well, we can't have that in America!
25
You laugh, but a lot of team owners are big GOP donors. They might actually push the GOP to do something about this.
1
"Sir, we want to remove this section. We need the additional revenue, and no one will complain that much."
"I have a better plan! Just stick the world 'real' in there! You get your revenue, and no one important is affected! SIMPLE!"
*Whistles as he walks away with his hands behind his back*
1
It is Trump getting back at professional sports for his fiasco with his NJ Generals.
Both because of revenge and the fact he is not making money off these team sports (other than golf), he wants to tax them to death just like he did with big liberal states.
4
What kind of lobbying occurred to insure the exemption for real estate? Bartering of assets has been previously untaxed as long as those assets were similar in nature. Now, with the exception of *real estate* those transactions are to be taxed. Bartering of real estate is an ideal conduit for laundering untaxed money, legally earned or otherwise. With all the controversy surrounding the possibility of money laundering through real estate transactions, why in the world would real estate - and the developers who trade in real estate - not be bexempted, but given the only exemption?
11
Baseball has plenty of lobbyists. Unlike the average taxpayer, who does not, I’m sure their needs will be met and the rest of us will have to foot the debt.
First order of business in 2019 after the Dems get majorities: repeal and replace this disgusting tax plan wholly designed to take from the poor and give to the rich!
5
... and when the MLB, NFL, NBA, NHL, and MLS owners tell their senators and representatives that there will be no more skybox passes until this is corrected, you can be sure the change will be effected without dissent in either house, and signed the same day.
30
First Citizens United found that corporations were people, now the new tax law finds that people are real estate. Only in America.
1
Actually, people are now less than real estate. With real estate, when you swap holdings, you defer the capital gain.
1
Citizens United did NOT find that corporations are people...the notion of corporate personhood predated that case by over a hundred years. It was merely a new conceptualization of an old idea.
6
And it only means that a corporation is a collection of people which for some purposes has a pass through for some issues. Not to mention say labor unions which were also included. And it appears that politics has not been effected much.
1
The law of unintended consequences in full view--this is what happens when you pass legislation without time for people to think, comment and aid the process, rather than seeking to cram it down everyone's throat for purely political expediency
21
Agree - it's a lot like a law that was passed in a similar way almost 8 years ago (March 23, 2010) by a single party - a law that directly affected 16% of the GDP and has set a new standard for unintended consequences.
Weird how somehow the loophole was preserved for real estate assets.
51
I don't have a problem with sports franchises paying more in taxes. They use taxpayer money to build their stadiums, yes? Professional athletes and owners are already obscenely rich, yes? What's the problem?
26
the NY Knicks are currently profiting around $30mm a year and their owner James Dolan (don't even get me started!) is valued at $1.5bn. So I do not think I will be losing much sleep over his (or any other) pro sports franchise having to pay more in taxes and in the realm of things to fix in the law this one pretty low on my list.
8
Why exempt real estate? Doing so is nothing but a tax subsidy for wealthy developers. The entire like-kind exchange section should be repealed.
14
Think of who is in the White House, a (wealthy) developer. Hence, the exemption.
3
Like the Affordable Care Act our government gave us, the new tax law is another one of those "we'll just have to see what's in it" moments. Problematic legislation which is the unfortunate result of the inability of our elected officials to work together and to talk to each other.
2
"The confusion is only one of many side effects of the new tax law, which sped through the House and Senate in less than two months at the end of last year, resulting in a series of changes that were both intentional and inadvertent."
Let me correct that for you. The correction is in CAPITALS:
"The confusion is only one of many side effects of the new tax law, which sped through the House and Senate WITHOUT ANY INPUT WHATSOEVER FROM EVEN A SINGLE DEMOCRAT AND WITHOUT ANY PUBLIC HEARINGS in less than two months at the end of last year, resulting in a series of changes that were both intentional and inadvertent."
Let the Republicans revel in the new tax law, all of it, and all of its unexpected consequences.
44
Three cheers for passing a billionaire tax cut with zero public hearings and zero preparation in the middle of the night.
Enjoy Republican incompetence, malfeasance and greed at any cost.
62
Aren't team owners billionaires? Won't they pay higher taxes now?
The United States was/is built on a simple premise; Equal representation for fair taxation. What that means essentially, is that if you make more, then you should be paying more tax progressively upwards.
If there is a movement of services, goods or even contracts, then ALL of them need to be taxed accordingly, fairly and progressively.
What we have now is special interests that have carved out loopholes to essentially funnel money upwards to rich. An example for baseball players is they take into account their contracts as to how much tax they will pay. In some instances, players move to teams with states that have less or no taxes at all. ( even if the team is bad )
Imagine the competition if there was an even playing field, and how baseball ( and other sports ) would become much more enjoyable to again watch.
Now let's talk about how to no longer subsidize public sports stadiums ...
9
The Founders consistently condemned income taxes, and the original Constitution states that all taxes must be uniform across the USA. That is certainly NOT reflective of a desire for progressive taxation. It took the 16th Amendment (1913) to allow for federal income tax, and first Hoover and then FDR to dramatically increase the tax rates.
I certainly agree about eliminating loopholes for special interests, and despise public funding for pro stadiums, but please get your history straight.
1
And the Mets will have another reason not to spend money and the Yankees will still come out ahead.
7
Why should anyone be surprised? Laws passed hastily and vindictively by inept, partisan hacks? What could go wrong?
Unless one is a real estate mogul, of course...
69
Or a community organizer who led a rushed process to pass a law, using the reconciliation process, that favored health insurance and pharma companies... plenty of examples on both sides to go around.