If you had invested in a North American sports franchise between 1991- 2022, you would have earned at least a seven-fold return on your investment, bettering the return from the S&P 500 over that period of time by a two-to-one ratio. According to Sportico, in the past year alone, the average value of an NFL franchise has increased by 24 percent. The strong growth in the value of these franchises has proven to be particularly attractive to investors, especially in recent years. For example, the sale of the Denver Broncos in 2022 was for a 22% premium over a third party’s pre-sale valuation. Valuation premiums are not only limited to sales of controlling investments; in 2023, a minority share of the parent company of the Toronto Raptors, Toronto Maple Leafs and Toronto FC was sold for a similar premium over a recent third-party valuation for the franchises. Not surprisingly, franchise owners have been eager to cash in either in whole or in part.Continue Reading How High Can It Go? What Private Equity Needs to Know about How Professional Sports Leagues’ Rules Impact Sports Franchise Valuations
Nayan Karanth is an associate in the Corporate Practice Group in the firm's Century City office.
On July 16, 2021, Governor Newsom signed California Assembly Bill 150 into law, allowing certain owners of passthrough entities to find a way around the current $10,000 federal cap on state and local tax (SALT) deductions for individuals. The new law, applicable to tax years beginning on or after January 1, 2021 and ending before January 1, 2026, allows for many partnerships, limited liability companies taxed as partnerships, and S-Corporations to pay an entity level tax based on electing individual owners’ share of income, and then grants the owners a credit against California personal income tax for the full amount of tax paid at the entity level on their distributive share of California taxable income.
Continue Reading California Passes “Workaround” To Federal Limit on State Tax Deduction For Certain Owners of Pass-Through Entities