Rich Teams May Benefit from Buy-Outs
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05-17-2013, 06:28 PM
I in the Eye
Drop a ball it falls
Join Date: Dec 2002
Originally Posted by
Even rich teams care about money. I don't think any team would line up to pay DiPietro $24M this summer even if they get a prospect out of it. Paying for their own mistakes is easier to swallow.
The thing is though, the NHL is an
tax shelter... I remember reading somewhere, sometime, that a NHL team qualifies as a "tax-exempt organization"... So, if you are a super rich owner, and are trying to reduce your taxable income - the NHL is a
place to do it... The money you put into it, if I recall correctly, is tax exempt (if it wasn't completely exempt, it was a significant tax advantage)... and yet, you can still make money off of the team year-to-year (nice-to-have)... You own the franchise, so at worst, you are investing into the long-term franchise value (an asset of yours)... Better pay that $24m to yourself, into something you own that should appreciate over time, then the government... You could put $24m of tax exempt (or tax favourable) income into Dipietro (whatever his buyout is), and it is a
expense... into an investment that you own (the NHL team)...
In short, you're right... Rich owners care about money... Rich owners also
paying taxes, and would rather keep that money for themselves... so I think the ones who are trying to lower their taxable income by $24m (or more) would be lining up to get Dipietro... Heck, maybe Wang would like to do it himself... and another team compensates Wang more for the
to buy Dipietro out instead... Compliance Buyout... Must have been an owner-suggested CBA stipulation...
Edit: just did a quick Google search about NHL and tax shelter (in case anyone is interested)... Haven't read through the articles myself yet (but skimming them, looks like government doesn't like the NHL or NFL being tax exempt):
Edit2: Looks like the entire league (i.e. NHL) is the tax exempt organization (obviously), and (of course) not the specific teams, who are members of this organization (brain freeze)... but I think the point stands... A NHL team is an excellent tax shelter... To reduce taxable income, Dipietro is a justifiable expense into a long-term investment...
Last edited by I in the Eye: 05-17-2013 at
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