Friday, July 11, 2008

More Financial News than You Wanted

With the "official" confirmation that the Rooney family is seeking new partners to invest in the Steelers, the Wall Street Journal is reporting that the value of the team could be enhanced considerably by a change in its tax status (subscription required).

We're barely capable of navigating TurboTax in order to file our returns every year, but according to the WSJ the Steelers currently operate as a "C Corporation" which requires that the team pay taxes on both its income and any dividends that are paid each year. Conversely, a move to an "S Corporation" classification shifts the tax burden from the corporation to the shareholders, and permits for the depreciation of assets. It appears, on the limited information we have, that the Steelers would qualify as an S Corporation, and according to the WSJ such a shift could add as much as $200,000,000 to the value of the franchise.

Finally, according to the WSJ report, if Stanley Druckenmiller makes an offer for the team it "would likely be all cash, buying out all owners except Dan Rooney, who would continue to run the Steelers and retain his 16% stake."

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