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By Giulia Carbonaro
Senior Reporter
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Owning a professional sports team in the U.S. could become more expensive if the domestic policy bill that House Republicans narrowly passed last week advances through the Senate unchanged.
Under the One Big Beautiful Bill Act, which a razor-thin majority of House Republicans passed on Thursday after weeks of internal backlash, future sports team owners would no longer be able to write off the entire value of their team's "intangible assets," only half of it.
Why It Matters
During his 2024 campaign, President Donald Trump promised various tax cuts, including no tax on tips for workers in the service industry and no tax on overtime. Tax cuts are at the heart of the "big, beautiful bill," which would also extend the president's 2017 Tax Cuts and Jobs Act.
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Critics, including Republicans, have expressed concerns over the cost of the bill, saying it would increase the federal deficit by trillions of dollars and lead to millions of Americans losing access to health care and other key services.
The bill also includes what is effectively a reduction in the tax break that sports team owners have benefited from for two decades, allowing them to shelter billions of dollars. While the tax break has raised harsh criticism in the past, some are now concerned that the change could discourage new investment in the field.
What To Know
The tax break available to sports team owners was originally passed as part of a sweeping tax legislation in 2004 under President George W. Bush.
It allows sports team owners to write off millions of dollars in "goodwill," what is essentially the intangible assets of the business—which include brand recognition, intellectual and media rights, fan loyalty, and sponsorships—over 15 years after purchasing the team. These are often profitable assets, especially for legacy teams.
"The provision at issue allows pro sports teams to depreciate the value of intangible assets over time—a huge tax benefit," Helen Drew, a University of Buffalo law professor specializing in sports, told Newsweek.
"The benefits to the sports world, I suppose, is that it makes owning a pro sports team more attractive, although that is typically not the primary motivation for buying a team," Drew continued. "People invest because: a) these properties provide a substantial year-over-year appreciation; b) because they want to be part of an exclusive club; and c) because it's fun."
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While popular among sports team purchasers and owners, the tax break has come under scrutiny in recent years.
"Although the goodwill amortization provision is generally sound from a policy perspective, the argument here is that because there are finite professional sports franchises available, and they are all being purchased for exorbitant amounts by the wealthiest individuals, the federal government should not subsidize these specific purchases," Andrew Appleby, a tax and business law professor at Stetson University, told Newsweek.
After a 2021 investigation by ProPublica found that the tax break effectively allowed sports team owners to pay lower taxes than their players, the legislation came under fire but remained in place—becoming even more beneficial to sports team owners over time.
"Sports franchises have appreciated at a rate far better than most financial markets even through COVID-19 and recessions," Robert Boland, a sports law professor at Seton Hall University, told Newsweek.
"Some of this is based on the overall exclusivity of professional franchises. Some of this is the fact that pro sports remain in high demand as both live events and as live viewed events via broadcast and streaming," he added.
Most aspects of a sports team grow over time, Steven Bank, a professor of business law at UCLA, told Newsweek.
"They are worth more after 15 years rather than less. So, the deduction, which is supposed to reflect a loss in the value of an asset over time, throws off 'artificial' losses that the sports owners can use to offset income from other businesses," he said.
"The deduction means that owning a sports team in a popular pro sports league is effectively a tax shelter for the owners by throwing off artificial losses it can use to avoid paying taxes on its outside income," Bank continued.
Mark Weinstein, a partner at Hogan Lovells, said the Trump administration initially sought to end the tax break for sports team owners entirely, Fortune reported, but House Republicans decided on a 50 percent reduction instead. If the existing tax break reduces the acquisition costs of a sports team by 13-15 percent, the proposed amendment would change that to 6-7 percent.
If the bill passes the Senate with the reduction in the tax break included, the change will apply only to owners who buy a team after the legislation comes into effect. Current owners, on the other hand, would keep their existing tax break.
Could a Tax Break Reduction Discourage Investment in Sports Teams?
The tax deduction has helped to attract capital to the sports world, Bank said: "Owning a sports team used to be just a play toy for very rich people who wanted entry into an exclusive club. The tax benefits help to turn it into an investment asset, and that has attracted private equity funds and others looking to provide positive returns to their investors."
"The more money flowing into sports rather than other industries, the more it has allowed the sports industry to grow and thrive. This also creates incentives to pour money into other aspects of the industry, such as facilities like stadiums and arenas and related developments," he added.
The reduction contained in the "One Big Beautiful Bill," Bank said, would most likely reduce the attractiveness of owning a sports team for private equity funds and minority investors.
Boland said the tax break had been a nice reward for team purchasers over the past two decades, but he didn't believe that cutting it by half would be that consequential for owners—though he suspected it might further shrink the already-small sports team ownership circle.
"The recent ability of team owners to sell minority shares of their franchises to private equity and other similar forms of institutional investment will likely offset any negative consequence," he said.
"Although I could see some impact on the number of buying groups interested in sports outside the big four pro leagues where there has also been extraordinary interest in new franchises as compared to the big four, where profitability and appreciation are baked in," Boland continued.
Appleby agreed. "Regarding the sports world more broadly, I do not anticipate this deduction cap significantly impacting the market for professional sports franchises," he said.
He added, "The purchase prices may be reduced slightly to account for the lost tax benefit, but because there are so few marquee professional sports franchises available for sale, and because of the cache associated with owning one of them, the market for these teams should not be impacted substantially."
Though owners wouldn't be happy, Drew didn't believe the tax break reduction would "have a significant impact upon the interest in purchasing ownership stakes." These days, she added, "if you are relying upon the tax benefits, you probably don't have the resources at hand to operate the team."
Weinstein said sports team buyers would find a way around the reduction. "The way the rule is written, you're going to have smart tax lawyers being able to find ways around the chain. So it's not going to be a total loss to sports team ownership," he told Newsweek.
"Between clever lawyers, accountants, advisors, valuation experts, planning around the rule, the limitation won't be burdensome to potential owners," he added. "I think they would still want to join the special club [of sports team owners], and they're going to pay a premium for the club, regardless of the tax relief."
What Happens Next
Bank said the proposed tax break reduction could "effectively raise the after-tax cost of buying a sports team, which will reduce the value of the team in a current owner's hands."
That doesn't mean that a sports team value would be cut in half, he said, as sports owners and prospective buyers are likely to attempt "to allocate more of the purchase price to the tangible assets to avoid this limitation."
"They will argue that more of the rise in value from the original cost is attributable to an increase in value in the stadiums, arenas, training facilities and other assets. The depreciation deduction associated with those facilities is not as attractive because the recovery of expenses is spread out for a longer period than 15 years, but it is better than no deduction at all or waiting until a subsequent sale to claim actual losses, if any," Bank added.
One team executive who spoke on condition of anonymity told The New York Times that the reduction "felt punitive." Harrison Fields, a White House spokesperson, said it was about eliminating an advantage for owners at a time when sports events were becoming more expensive for audience members.
"The president is committed to ensuring that sports teams overcharging ticket holders do not receive favorable tax treatment," Fields said in a statement. "His focus is on fairness for fans, not team ownership."
The Congressional Joint Committee on Taxation has estimated that reducing the tax break for sports team owners by 50 percent would raise $991 million in revenue over 10 years.
"Since this provision is presumably being scored as a revenue raiser, I think that the senators most likely to oppose the bill because of concerns about its effect on the deficit or on public benefits won't be focused on it," Bank said. "It's possible, however, that some NFL owners who are particularly close to certain senators or the administration may convince them to remove it or pare it back in a technical way that won't be obvious."
Most experts who spoke with Newsweek agreed on this point. "Each of the four major sports leagues has a heavy lobbying presence in D.C. I think we will see some pressure on the Hill," Drew said.
"A lot of folks are talking to their senators to see, and they have influence, you know? A lot of investors who are potential buyers or sellers—because it affects sellers as well as buyers—are talking to the senators," Weinstein said.
He added, "I would not be surprised if there's some push by some senators that could knock this provision out."
Update, 5/28/2025 7:10 a.m. ET: This article was updated with comments from several experts.
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