Poison pill in Trump's budget bill could spoil sale of Minnesota Twins, other teams
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The U.S. Senate is still working on changes to the Trump administration's budget bill sent over by the House last month. Buried deep in that bill is a poison pill that could sidetrack the sale of sports teams like the Minnesota Twins.
Peter Labuza, a writer with Twins Daily and a scholar of media and entertainment law, joined MPR News host Cathy Wurzer on Morning Edition to explain how.
The following has been lightly edited for clarity. Listen to the conversation by clicking the player button above.
A clause in the bill reduces the adjusted basis of team assets from 100 percent to 50 percent. What kind of assets?
This goes back to a tax law passed under George W. Bush in the early 2000s that allowed sports owners, when they bought a team, to essentially write off certain tangible assets. So that would be player contracts, media rights deals, broadcast deals — certain elements of the team that you usually think about increasing value over time — that owners can write off under this type of tax law. But if this bill passes, it will reduce the amount that owners can write off their taxes.
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Why would Republicans push for this change?
The White House claimed that this was in response to rising ticket prices. It seems difficult [to understand] how or why making the owners’ tax bills larger would lead to lower ticket prices. Some believe it’s because President Trump has wanted to buy a National Football League team for decades upon decades. So this might be a little bit of punishment for them. We know that the president is somewhat vindictive in his choices, but [Republicans have] been very coy about exactly why they're pushing for this specific aspect within the tax code.
Would this affect all team owners?
This only affects new team owners when a team is sold. Basically what happens when you buy a team is you list all the assets, and you can take off certain intangible and tangible assets like the stadium over 15 years. In Minnesota, we have two major issues with that. The Pohlads have been attempting to sell the Minnesota Twins since October, and then Alex Rodriguez and Glen Taylor are still in the process of buying the Minnesota Timberwolves, which still will take a few months. And if this bill passes before those sales are complete, the new owners will be set with that new tax burden.
Would this scare off potential buyers?
There had been rumors of a sale [of the Minnesota Twins] to Justin Ishbia, his brother owns the Phoenix Suns. He ended up purchasing a stake in the White Sox, and there have been other potential owners who have toured the stadium who are interested. And this could be a small snag. It's not clear how much taxes we're talking about here. When you're buying a property that's $1.5, $1.6 billion maybe $10 million, $15 million, $20 million might not be the issue that scares you off, but it's certainly something that I'm sure any potential owners are looking at and hope does not pass in the Senate.
You wrote that if this passes, it could be ‘poetic justice.’
So in the 1980s when the Minnesota Twins were up for sale, a real estate and business owner named Donald Trump attempted to buy the team. His purchase price was $50 million — which was higher than the price that Carl Pohlad bought the team for. The Pohlads have always supported Democrats in office, so Donald Trump could get to the Pohlads in a very, very roundabout way.
The Pohlads have owned the team longer than any other owner, except for the Steinbrenners in New York with the New York Yankees. I don't know if a new owner is going to increase the market size and the payroll of the team by an extraordinary amount, but it could certainly help kind of push the team in a new direction. So I think it's time for new leadership in the Minnesota Twins.
