Oakland Raiders owner and former head coach Al Davis is famous for a lot of things, including his quote, "We don't take what the defense gives us; we take whatever the hell we want." Mr. Davis has gone on to his eternal rewards, leaving his family to face an adversary that is more intimidating than the Raiders in their glory years.
Forbes Magazine recently reported this:
The estate of Al Davis could potentially face big inheritance taxes on the Oakland Raiders.
Al Davis, who died today, bought a 10% interest in the Oakland Raiders for $18,500 in 1966 and increased his stake to 67% over the years before selling 20% of the NFL team for $150 million in 2007. The Raiders are currently worth $761 million by our count. Thus the late owner’s wife, Carol and his son, Mark, who has been involved in some business aspects of the football team but is not listed in the team’s media guide, could be facing hundreds of millions of dollars of taxes based on the price appreciation of the Raiders.
Estate tax law can get complicated and you can buy insurance for estate taxes. The basics are that for 2011 and 2012, the federal estate tax exemption is $5 million and the estate tax rate for estates valued over this amount is 35% (the estate tax is unified with federal gift and generation-skipping transfer taxes such that the lifetime gift tax exemption and generation-skipping transfer tax exemption is $5 million each and the rate for both of these taxes is 35%).
This could make keeping the Raiders in the Davis family very difficult as it is not believed the family has that type of money. The rapid price appreciation of NFL teams has been a factor in forcing families to sell teams to deal with the tax liabilities. In the mid-1990s the Robbie family sold the Miami Dolphins to cover tax liabilities after Joe Robbie died. And last year minority St. Louis Rams owner Stan Kroenke bought the controlling interest in the team from the children of majority Rams owner Georgia Frontiere after she died in 2008 to cover the family’s estate taxes.
The bet here is that the Raiders will be sold within the next 12 months. I hear Eddie DeBartolo, the former owner of the San Francisco 49ers, has been sniffing around.
You can access the article on the Forbes website by clicking here.
Most of us don't have to worry about protecting hundreds of millions worth of assets from the IRS and opportunistic business rivals, but the good news is that there are strategies available to all of us to minimize taxes and maximize the benefits we can pass on to our loved ones. If you are willing to do what it takes, estate taxes are completely optional. Even when you are up against the IRS, there are ways to, in Mr. Davis' immortal words, "Just win, Baby!"