Jerry Richardson’s surprising plan to sell the team at the end of the season, instead of after his death, is likely to spur a whopping tax bill.
“He is going to incur a monstrous capital gains tax,” said New York-based tax expert Bob Willens of Robert Willens LLC. “It’s going to be very costly from a tax point of view.”
That’s because if the team is sold while the 81-year-old Richardson is alive he will be taxed on the capital gains incurred since the team’s founding in the 1990s.
That’s a huge number because Richardson and his original partners put in about $220 million to start the team, including a $140 million NFL franchise fee. Forbes magazine now estimates the worth of the team at around $2.3 billion, meaning a potential gain of more $2 billion for the ownership group in a sale.
Back in 2012 and 2013, when the Panthers were negotiating a taxpayer contribution toward stadium renovations, team representatives told Charlotte officials the Panthers would be sold within two years of Richardson’s passing because of tax implications. That would have been much more advantageous on a tax basis, Willens said, because Richardson’s heirs would pay income taxes only on the appreciation that occurred after Richardson’s death in the event of a sale.
Altogether with federal, state and Medicare taxes, Richardson would pay a tax rate of about 25 to 26 percent on the capital gains he would make on a sale of the team, Willens said.
“Whatever it is, he’s going to incur a multibillion capital gain that he had every reason to think would never be incurred,” Willens said. “That is a real collateral piece of damage from this scandal.”
The Panthers didn’t have an immediate comment and referred the Observer to Richardson’s attorney, who could not be immediately reached.
Richardson announced Sunday evening that “it was time to turn the franchise over to new ownership” just hours after a Sports Illustrated report outlined allegations of sexual and racial misconduct by Richardson toward former Panthers employees. The team first announced its own investigation into the alleged misconduct on Friday evening; the NFL has since taken over the probe.
Richardson isn’t the sole owner of the Panthers. Richardson said in 2009 he and his family owned 48 percent of the team, with the other 52 percent being owned by a group of about a dozen minority partners. Minority owners, however, in the past have told the Observer that Richardson is firmly in charge based on team governance documents.