Tbone
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Posts posted by Tbone
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http://sportsillustrated.cnn.com/vault/article/magazine/MAG1138367/6/index.htm
http://forums.twobillsdrive.com/topic/117087-sale-of-30-interest-in-an-nfl-team-to-launch-in-910/
http://video.cnbc.com/gallery/?video=1564983737
After digging around and number crunching I conclude Ralph sold a 30% minority share of Bills in the Fall of 2010. Due to the Federal Estate Tax sunsetting at the end of 2010, Ralph needed to hedge against his heirs having to take on debt to retain or sell the Bills. This is taking into consideration Ralph's estimated estate value, cash on hand, and the value of the Bills franchise, and what M&A guru Sal Galatioto said on CNBC in August 2010.
Let's analyze the facts and the numbers that support what is going on:
In September 1993 Sports Illustrated reported Ralph's Net Worth was $150 million, at a conservative 6.5% annual rate of return Ralph would be worth roughly $481 million in cash today. Presently the Bills Team value is $700 million. With an estate valued at $1.181 billion Ralph's heirs would have been forced to pay a 35% estate tax or $413 million. With only $313 million after tax cash on hand, Ralph's heirs would have been forced to pay $100 million out-of-pocket to cover the cost of the cost of retaining the franchise. Purchasers would have gotten the franchise at a bargain basement price as suitors would have known what a cash-strapped position they were in.
NOW, let's assume Ralph did sell 30% of the franchise via private equity deal through Sal Galatioto in Sept 2010. That would be $210 million more cash to his estate. Now Ralph's estate has $691 million cash-on-hand & $490 million in the non-liquid Bills franchise, same total but better allocated to making a deal or holding on to the team. In this scenario Ralph's heirs would have $36 million cash on hand after paying the Estate tax on the cash and franchise. And they'd also own 70% of a $700 million dollar franchise.
I am not a conspiracy theorist but I am confident the 30% equity sale Sal Galatioto was referring to on CNBC involved the Bills. The question has been raised why would one purchase something when they wouldn't have total control? I answer with 2 points, #1 Ralph is 92 fast approaching 93 the team will be available soon, #2 By having buy-in now acquiring the additional 21% becomes much easier when the time comes. Additionally owning 30% means you are entitled to 30% of the profit. In this situation, both parties in this transaction are left satisfied. A devil's advocate would say Ralph has no loyalty and a group from Toronto or LA has already acquired 30% of the franchise, I don't think if this deal involved our team Ralph would have sold to outside interests. A likely scenario is Ralph sold this to Jim Kelly & Co. I assume their group to be 24 individual owners. Doing so would prevent a joint ownership group from buying out the remaining 70%. The NFL caps total franchise ownership at 25 owners where a controlling owner must have a 30% minimum share.
Hopefully Ralph publicly comes out with a succession plan, but I understand the economic reasoning not to do so, which is to maximize his profit. If this deal has happened regardless of franchise I am surprised this hasn't leaked out to the press.
Stop it already! No- Ralph didnt sell 30% of the team in 2010- why because doing so would suject the sale to a double tax- once with capital gains, and again at death. Ralph's plan is simple- if he sells ANY of the team prior to death he will be subject to capital gains tax, and the amount that he realizes will be taxed again through his estate- so his estate will sell the team after his death thereby subjecting the sum to taxation once. The thing to remember is were are talking about 10's of millions of dollars- EACH time the value of the team is taxed.
For some reason people are resistant to listening what Ralph has said- he has an estate plan- it is to sell the team at death to the highest bidder. Sorry but it makes NO sense to sell ANY part of the team before death.
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I am going on my honeymoon and am in search of a place to watch a game... anybody know of one? I couldn't find one on the Billsbackers page.
Thanks in advance.
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Does anyone know why WGR has Paul Hamilton sitting on the sidelines during training camp? Is he going to be covering the Bills this season? I appreciate Joe Buscaglia's tweets but his on air insights dont hold a candle to Hamilton's.
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Bills were picked to go 2-14 this season by Bill Simmons and 3-13 by Gregg Easterbrook.
Is it bad that half of me hopes the teams does poorly? I really think this team needs to hit rock bottom before it can start moving up again... if you look at most of the "elite" teams in the league the did so before the got better and then got really good (See, Indianapolis, The Giants, Atlanta, Dallas, New Orleans).
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Go the route of the Packers when they upgraded Lambeau Field. Take the existing stadium, and make it a place where people visit in the offseason. Make it a theme park / museum of sorts. A statue of Curly Lambeau and Vince Lombardi stand outside the stadium like ghosts as visitors frequent the stadium year round. The stadium tours, Packers team gear stores, restaurants, and bars in the new Field House attached to the stadium make it a place you can bring your family for a day of fun. This would increase the revenue the stadium brings in by a big number. If you want the Bills to stay in Buffalo, this may be one of the only options. And a much cheaper option than building a whole new stadium. This is what a "Lambeau Stadium Redo" might look like in Buffalo:
While I love the passion my personal dream differs (but is based on the same premise)... a stadium build out of Buffalo Central Terminal...
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I think the interesting question to ask is do you think Brees would have made it here... he had a mediocre (at best) 3 seasons before he broke out in his fourth season...
I have to think we would have given up on him after his third no so hot season... maybe that is the lesson to be learned from the Brees experience?
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We are obviously waiting fro somebody. Hope the Bears aren't going after the same guy as us.
I think its highly likely we are waiting for somebody... in the college ranks.
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Vitt as a possible Defensive Coordinator?
Bills_rams_2008_006_tiny by dabillsr1 on Feb 1, 2010 4:29 PM EST Comment 9 comments
Joe Vitt has ties to KC where he coached in 2000 - 2003 and is a native of Syracuse, NY. hmmmmm
He was a real stand-up guy in St. Louis where he was the Interim HC back in 2005. A lot of the media types wanted him to be retained because he was so charismatic with the players, fans and media.
Could he be coming to Buffalo soon?
Link to Joe Vitt's NO Saints Coaching Bio
Joe Vitt
Assistant Head Coach/Linebackers
Tutoring a unit that since 2006 has annually ranked among the Saints’ most productive position groups, assistant head coach/linebackers Joe Vitt enters his fourth season in New Orleans.
In 2008, three of the club’s top four tacklers on defense came from the linebacker corps, including newcomer Jonathan Vilma, who had a club-high 151 stops. Vilma and fellow starters Scott Shanle and Scott Fujita combined for 400 tackles, four forced fumbles, three interceptions and three fumble recoveries. Under Vitt’s tutelage, Vilma made a seamless transition in his first season in New Orleans and immediately became an impact player at middle linebacker.
Vitt came to the Saints after serving as interim head coach for the final 11 games in St. Louis in 2005. He held the Rams together during a difficult period after previously holding the title of assistant head coach/linebackers. It was part of a two-year stint with the Rams where he also turned a handful of young defenders into a unit that paced the team in tackles each season.
He joined St. Louis after working as linebackers coach in Kansas City from 2000-03. It was with the Chiefs where he first worked with Fujita, a fifth-round pick who developed into one of Kansas City’s top defenders and led the club in tackles for two seasons.
Vitt took over the linebacker corps in Kansas City after tutoring the defensive backs for Green Bay in 1999, molding a legion of rookies and young players into a formidable unit that doubled the Packers’ previous-year total by picking off 26 passes.
From 1995-98, Vitt was linebackers coach for Philadelphia. In 1998, his group helped the Eagles lead the NFL in pass defense, allowing 170 yards per game. Vitt was assistant head coach and defensive backs coach with the Rams under Chuck Knox from 1992-94 for the franchise’s final three seasons in Los Angeles.
Vitt spent 10 seasons with the Seattle Seahawks (1982-91), holding several titles during that stretch. In 1982 he was defensive quality control coach/assistant strength & conditioning coach. From 1983-87 Vitt was quality control/assistant linebackers coach, and from 1988-91 he tutored the safeties.
Born in Syracuse, N.Y., Vitt grew up in Blackwood, N.J., and played four years at linebacker for Towson State, where he was part of a squad that went undefeated in 1974. Vitt was later inducted into the Towson State Hall of Fame. He entered the NFL coaching ranks with the Baltimore Colts as assistant strength/quality control coach from 1979-81.
Vitt is married to Linda, with two children: Joe, Jr. and daughter, Jennifer.
Why is it relevant that Vitt has ties to KC when Gailey wasn't there?
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Call me crazy but I think I would take Kolb.
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From a source deep within the organization Russ Grimm is the #1 target for being the next Bills Head Coach.
Grimm was the finalist to Mike Tomlin in Pittsburgh and many feel Pittsburgh took the wrong guy.
Welcome to Buffalo - Russ
What kind of car does your source "deep within" drive?
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I would argue they screwed it up.
The firing of the entire team using that strange language like 'You are free to pursue other opportunities" was more of a way to show the fans that the Bills were cleaning house than it was a practical decision. It was also out of fairness to the coaches, who it was assumed would be out of jobs.
Essentially, its the problem with the plan of action the Bills developed. Aka, taking a LONG time to find a coach. I can't imagine many coaches would have wanted Alex Van Pelt as OC, and Fewell was going to be out regardless (unless he was hired as HC). But, Kugler and April are very strong. I imagine the new HC would at least give each of them a fair look.
April had the contractual option to leave. The bills could not have made him stay and wait for the new HC.
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Here is a far out there thought. If the ownership of the team is to be transfered at some point to JK and TT and a group of investors...They might have set the "new corporation" up in the Grand Cayman's for various reasons???
Anyone with experience in this field have any thoughts?
yeah, my thought is you're a moron
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From sources deep within One Bills Drive.... Brandon and Nix have just arrived back in Buffalo after another "stealth" meeting has taken place in North Carolina. A contract was presented for review to Cowher. The contract would make Cowher the highest paid coach ever in the NFL.
Two issues which have been delaying the signing are:
1.) length of contract and 2.) player budget.
Expect a formal announcement at the beginning of next week if not sooner.
More to follow.
I think everyone is being hard on soprano... it could be credible, all we need to know is what kind of car his source deep withing OBD drives... if its something fancy, it is a credible report.
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I wish the threads title was "John Fox interested in Bills HC Job"
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The estate tax and the capital gains tax are not the same. The latter is lower. I say that she ould not be on the hook for the former in 2010.
I am simply mentioning the only way his beneficiary can avoid the death tax. What's so crazy about that?
A legal trust, as opposed to an illegal one (as the previous poster was suggesting)--as a way to limit the hier(s)'s tax liability.
Stop begging.....and stop taking yourself and this site so seriously. Such drama.
WEO... dont be sore that I am calling you on the BS that you continue to put out there. I dont take me self too seriously, but what drives me nuts is when someone makes statements of "fact" that couldnt be farther from the truth.
FYI, under your suggestion Wilson's estate still gets double taxed... once for capital gains, and once as a gift. The gift tax is higher than the estate tax. Your plan would cause a greater de-valuation of the estate then if Wilson sold it now and then was taxed again at his death.
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Actually, I was pointing out that estate taxes are not levied until after the individual has, in fact, died.
Thanks for clearing that up. Fastest turnaround ever.
I certainly wasn't claiming "no escape". Some time ago I suggested there is a very simple way to avoid any taxes upon Ralph's passing---and it's free and legal: leave it all to the missus. She doesn't have to "run the team", she can just count the money. When she sells it (to "Jim Kelly's Group", if you like), she will get half of its value after taxes. Not a bad haul for nothing, don't you think? She can then set up a legal trust to dole out her booty upon her joining Ralph in the after life.
WEO- you are not a lawyer either... you DO NOT UNDERSTAND TAX LAW. The last time we had this conversation you didnt realize Wilson's wife would have to pay a capital gains tax on the team... I am glad to see at least you now realize that is the case. But, you still should not be making up "ideas" and spreading them as fact when you dont have the knowledge to back them up. Do you realize that setting up a "legal trust" (what ever that is), to dole out her "booty" she would trigger another layer of tax?
I am begging all of those who want to comment about legal matters they dont understand to refrain from doing so- all you are accomplishing is spreading mis-information that makes a serious conversation on the topic impossible.
:lol: :wallbash: -
I am not saying at all that he did or should do this. I only offer this up as an opposite extreme example of what one can do that parallels the other extreme statement that there is nothing whatsoever that Mr. Ralph can do to escape the dreaded death tax.
The simple fact of the matter as it seems to be is that there is an entire world of possibilities out there in terms of what Ralph can do. The extreme I propose could easily result in illegal activity which one would be a risky fool (not normally what a businessman would do unless he headed up Goldman Sachs or Bear Stearns and you figured the guvmint would be there to bail you out so you do go ahead and do stupid things) to do.
However, as ridiculous as this risky behavior would be, the line trotted out there by folks who claim there is no escape from the estate tax is at least just as silly a position to take.
With a running start to prepare for the reality that you will die, and with the flexibility that you do not have a direct descendant who wants to run the team, but you want to transfer some significant assets to your heirs, it is quite doable to figure out some mechanisms where one can essentially avoid the estate tax.
No one knows what Mr. Ralph is gonna do.
However, as he has ample cash to buy smart lawyers and there is no apparent long-haired snot nose kid running around the Bills camp pretending to be an athlete (like Larry Quinn used to do when he insultingly skated with the players and old-timers sometimes) things look pretty set for the estate tax to need a lot of management work but to quite likely be pretty much a non-issue as far as determining the future of the Bills.
My point is that you dont understand what you are talking about. It is not easy to avoid the estate tax AND pass significant assets to heirs that are not your spouse, the fact that you think it is shows that you have absolutely NO knowledge about estates, gifts and trusts. If it were as easy as you suggest there would be no estate tax, and certainly the government wouldnt be making hundreds of billions each year from the estate tax (and remember, the people that pay the estate tax are usually pretty sophisticated businessmen, because an estate has to be worth more than 3.5 million to have tax imposed).
That is not to say that planning cant be done to minimize estate tax exposure, but I should also note that in the instances where you can avoid the estate tax many times other taxes apply (for example the gift tax). Estate planning is not simple, much of it deals with structuring transfers due to the needs of heirs, most of the time a secondary concern is the tax that will be applied.
There is a world of possibilities with regard to the disposition of Mr. Wilson's assets, but they are not of the range that you think.
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The entire very which trusts and estates legal profession would likely beg to differ with you.
You really have to be a total idiot who does not take advantage of easily accessible legal advice to leave yourself in a position to have your heirs tagged flat out with an estate tax that confiscates all or even a majority of this gift of an estate that the individual did nothing to earn.
Definitely different approaches would mean some costs (for example if you left your entire estate in an irrevocable trust to an IRS code 501c3 not for profit, all estate taxes on the asset can be escaped- to do this Ralph's heirs would lose traditional ownership rights to the Bills. However, it would be a relatively straifgtforward matter to set up a 501c3 which was essentially operated by Mr. Ralph's designated heirs and even assign them a salary generated by the team which would be quite lucrative.
The whole "death tax" idea is a political construct which does what it is designed to do in terms of rallying segments of the public behind this GOP perspective, but it can reasonanbly avoided with simple due diligence as shown by the actions of moguls like Bill Gates and Warren Buffett.
Both are already hiding billions of dollars in plain site to do actions they are determining now while they are still alive and can be carried out by their designees with rich financial reward to their designees without the feds getting a hold of the vast and utter vast majority of this wealth.
Buffett in fact flat out says that a huge fiscal gift to his offspring that they did nothing to earn except having one of Buffetts sperm cells win a race to an egg would be counter-productive to society if he could simply will them a gift of billions.
Unless your a lawyer you shouldn't be making such comments. You clearly have no understanding of what goes into the creation of a 501c3 and the prohibitions associated with the operation of one. You seem to imply that Wilson should partake in a fraud of sorts by creating a 501c3 to presumably run a FOR PROFIT football operation and then dumping assets to his heirs to avoid the estate tax.
"Ralph has already made sure of this. I know the guys who did the transfer but i cant tell what kind of car i drive.
Does anyone really think a business man like ralph is dumb enough to not have thought of the tax implications a long time ago?"
I highly doubt this is the case, in the even that Wilson has transferred the team into an irrevocable trust and somehow a media outlet hasnt caught wind of it, it would be questionable as to whether he could avoid the estate tax with it given the amount of control over the organization he has.
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It's not just the estate tax. It is the capital gains tax as well. Remember Wilson only bought the team for 25k- that will result in over 800 million of taxable gains! Wilson will never sell the team because it will result in double taxation 10s of millions of dollars will be lost.
Please no more sale conversations.
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Actually, they sometimes do just that - when they decide to keep 6 running backs (3 RBs & 3 FBs) and only 2 QBs on their active roster/depth chart, as Green Bay does. (The Bills, by contrast, carry only 2 RBs & 1 FB.)
Interesting comment you made on the practice-squad talent thing too - you may have forgotten that the Bills initially cut Jason Peters, then - after he cleared waivers - re-signed him...to their practice squad!!!
Actually I remember it quite well- the difference you are failing to catch is that there are PROSPECTS and there are "#1 pick talent"... prospects who could become very good- often go to the practice squad and often make names for themselves in the NFL... there is no debate in my mind that Brohm is prospect and should be given a shot to develop.
First round talents however are generally players who teams believe will have an instant impact or, at the very least, do not require the investment that prospects do. Granted it doesnt always work out, but rarely (if ever) do first round talents find their way to a practice squad.
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Um, this is his second year, so it isnt "after 2 years in the league" it was after ONE. Secondly, you put the guys on your 53 man roster you feel are ready to step in now. The Packers felt Flynn came along quicker than Brohm but didnt want to lose Brohm so they put him on the PS until he was ready. They even tried to KEEP him when we signed him, but Brohm said no since he knows he will never get a chance to play behind Rodgers.
Why is this so complicated from some people to grasp?
It's so complicated for people to grasp because teams dont put players that are "#1 pick talent" on their practice squad- ever.
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Are you serious? Where do you get off using the topic heading "Fisher lobbying for 2010 Bills?" out of that?
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This thread is so full of misconceptions its not funny. If your not a lawyer or an accountant stop making claims that you understand estate law it is ridiculous!
WEO: She WILL NOT own the team. Ralph's ESTATE will own the team, apparently (as Ralph has said) his orders are to sell the team. It will be sold by the administrator and then she will get her share of the estate.
Thoner: Ralph can keep the team away from his wife, he cannot keep the VALUE OF HIS ESTATE from his wife (depending on any pre-nup that may exist).
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Would be nice to see the old man slip off and sell the team to Jim if he really has the backers for it.
Worked for the Pens and Mario, they now have a Championship and 2 of the best players in hockey....
DREAMS!
How many times do we have to have this discussion? Wilson will not sell the team- it makes no sense, it results in a double taxation of the value of the team (which means his estate will lose tens of millions of dollars).
Why Ralph Sold 30% Of The Bills In 2010...
in The Stadium Wall Archives
Posted · Edited by Tbone
The taxation applied depends on the basis a person holds in the asset (to over simplify what "basis" is, it is what the person paid for the asset). Ralph paid $25,000 for the Bills he will not be taxed on the first $25,000 he gains from the Bills, thus there will be no double taxation with regard to that amount. Other owners, who have higher basis can plan differently. For instance if Jerry paid 500 million for the Cowboys, the first $500 million will no be subject to taxation. So yes, in some instances it can make sense to sell off ownership stakes- it doesnt in Ralph's situation.
I think that people that have no experience with estate planning assume that there are a bunch of loopholes that make escaping tax easy. That is simply wrong. You are correct that an estate tax burden can be minimized by charitable giving. Ralph could do that, however the most likely way that is done is through a complete sale of the Team at death and a distribution of the proceeds to a charitable organization- so you theory is plausible in that regard. Assuming however that the tax plan Ralph has shared with us on numerous occasions is correct- no portion of the team will be sold until death.
As for your irrevocable trust statement- that all depends on what the trust is set up to do... some trust can avoid some types of taxation, but most likely another applies. If the trust benefits an individual or individuals it is a gift thus applying the gift tax- which is presently higher than the estate tax- meaning that the team would most likely be sold to raise the funds to pay the tax.
You simply are making statements you have no knowledge on so you should stop- you comment on Alzheimers makes that clear- if someone executes documents and they are not of sound mind those documents are not legally binding in this case with over a billion at stake that would lead to litigation, charges against his attorneys etc.