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Leagues and Governing Bodies

NFL lowers minimum equity threshold to help family-owned teams

By Ben Fischer

In a bid to help families that have owned NFL teams for generations keep the clubs family-owned, the league yesterday voted to lower the minimum equity threshold required for controlling individuals in those families from 5% to 1%, sources said. The rules only apply to teams under the same ownership for at least 10 years. At least 30% of the club still must be held by the family collectively. (Rules requiring new owners to have at least 30% when buying into the league for the first time are unchanged.) As franchise values have soared, the NFL has been calibrating its balance between wanting owners to have “skin in the game” and a desire to minimize the estate planning difficulties that could force stalwarts like the Bears’ McCaskey family to sell if not addressed. By allowing the lead owner in those situations to hold as little as 1%, the league can minimize the estate tax hit at the time of inheritance. Also, lowering the threshold could allow large families to better manage equity stakes, sources said. Club valuations increased 14% in just one year in '21 to $3.48B on average, according to Forbes -- a figure 3.5 times larger than it was just 11 years earlier -- greatly complicating estate planning. The looming sale of the Broncos will likely cause those enterprise valuations to surge again. The changes were first reported by The Athletic.

 

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