{"id":49880,"date":"2025-04-22T00:37:49","date_gmt":"2025-04-22T00:37:49","guid":{"rendered":"https:\/\/sportnews.azontree.com\/?p=49880"},"modified":"2025-04-22T00:37:49","modified_gmt":"2025-04-22T00:37:49","slug":"report-news-atlanta-braves-face-19-million-tax-hike-battle-over-player-pay","status":"publish","type":"post","link":"https:\/\/sportnews.azontree.com\/?p=49880","title":{"rendered":"REPORT NEWS: Atlanta Braves Face $19 Million Tax-Hike Battle Over Player Pay"},"content":{"rendered":"
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    Atlanta Braves Face $19 Million Tax-Hike Battle Over Player Pay<\/h2>\n<\/div>\n<\/div>\n<\/div>\n
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    (Bloomberg) — The Atlanta Braves, the country\u2019s only publicly traded Major League Baseball team, is facing off against the US tax code in a lonely battle that threatens to cost the franchise millions.<\/p>\n

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    A little-known tax rule soon to go into effect will restrict public corporations from deducting the salaries paid to their highest compensated employees. For Atlanta Braves Holdings Inc., those employees are players \u2014 including first baseman Matt Olson, third baseman Austin Riley and former National League Most Valuable Player Ronald Acu\u00f1a Jr.<\/p>\n

    Privately held teams like the New York Mets, owned by Point72 Asset Management founder Steve Cohen, and billionaire John Middleton\u2019s Philadelphia Phillies, won\u2019t get hit by the tax. The Mets, for example, can deduct every dime paid to outfielder Juan Soto, a free agent lured from the New York Yankees with a record-setting $765 million, 15-year contract.<\/p>\n

    The team\u2019s five most generously compensated players are set to collectively earn $96 million in 2027 \u2014 the year the new rule limiting salary deduction for all but $1 million of each of the top five most highly compensated players\u2019 pay.<\/p>\n

    That amounts to a potential $19.1 million tax hike on the Braves, assuming a 21% corporate tax rate. The team paid $4.2 million in federal income taxes in 2024, according to a regulatory filing.<\/p>\n

    The company had pre-tax loss in 2024 of about $36 million, when revenue was $662 million. Representatives for the Braves declined to comment.<\/p>\n

    The Braves will be at a significant disadvantage under the tax code, according to Douglas Schwartz, a Nossaman LLP partner who specializes in tax matters. The team would be particularly harmed when pursuing free agents because they\u2019d have to factor in the additional tax burden, in addition to the contract amount when competing for top talent, he said.<\/p>\n

    Sign up for Bloomberg\u2019s Business of Sports newsletter for the context you need on the collision of power, money and sports, from the latest deals to the newest stakeholders.<\/p>\n

    The only other major league team owned by a publicly traded company is the Toronto Blue Jays. Rogers Communications, a Canadian entertainment conglomerate with nearly $20.6 billion in annual revenue, doesn\u2019t expect any meaningful impact from the US tax provision, according to company spokesman Zac Carriero.<\/p>\n

    That leaves the Braves without any MLB allies in this fight, which requires congressional intervention before 2027 tax returns are due if they hope to dodge the new tax. The team hired a pair of lobbyists in February to bend lawmakers\u2019 ear about the rule, according to federal filings.<\/p>\n

    There is, however, one other professional sports entity affected by the 2027 tax hike: Madison Square Garden Sports Corp., which owns the the National Basketball Association\u2019s New York Knicks and the National Hockey League\u2019s New York Rangers.<\/p>\n

    That may not give the Braves the most politically sympathetic bedfellow. The company, run by billionaire James Dolan, has been criticized for a state tax deal cut in the 1980s that has exempted them from $1 billion in property taxes. A spokeswoman declined to comment.<\/p>\n

    The Braves\u2019 lobbyists may not find a receptive audience in Congress, according to a person familiar with the talks in Washington. Republicans like the tax because it raises much-needed revenue from a relatively unpopular source: big companies whose top employees earn millions. Democrats like it for the same reason, said the person, who asked not to be identified to discuss confidential conversations.<\/p>\n

    The tax code generally allows companies to write off employee compensation as a business expense. But efforts to curb those write-offs for multi-million-dollar salaries date back to former President Bill Clinton\u2019s first term, after he\u2019d campaigned on reining in corporate greed at a time when middle-class voters were reeling from jobs being moved offshore.<\/p>\n

    The rule initially only applied to executive pay \u2014 not employee compensation \u2014 but it was broadened to include the five highest worker salaries as part of former President Joe Biden\u2019s pandemic relief bill, with a delayed effective date until 2027.<\/p>\n

    Companies can lessen the blow by employing sophisticated tax techniques, including timing other losses to offset the higher tax bills, according to Deb Lifshey, a managing director at Pearl Meyer, an executive compensation and leadership consulting firm. Another option is to go private, which reduces oversight and regulation.<\/p>\n

    \u201cWe always have companies that struggle with the question, is it worth it to be public?\u201d Lifshey said.<\/em><\/p>\n

    For the Braves, finding a buyer willing to take the team private might be difficult. The team was spun off by Liberty Media Corp. in 2023 at a time when the sales tags for sports franchises were spiking \u2014 and the Braves were riding a high coming off a 2021 World Series win and had top stars locked into multi-year contracts.<\/p>\n

    While teams in other leagues \u2014 including the National Football League\u2019s Washington Commanders and the NBA\u2019s Boston Celtics \u2014 have broken sports franchise sale prices records in recent years, the market for baseball teams hasn\u2019t been quite as lucrative.<\/p>\n

    Private equity titans David Rubenstein and Michael Arougheti bought the Baltimore Orioles in 2024 for $1.7 billion, $700 million less than Cohen paid for the Mets four years prior. Mark Lerner and his family put the Washington Nationals up for sale in 2022, and took them off the market two years later after failing to find a buyer who\u2019d meet their purchase price.<\/p>\n

    Absent going private or a winning a lobbying effort, the Braves may end up saddled \u2014 at least temporarily \u2014 with a tax bill no other team in the league faces.<\/p>\n

    \u201cI just don\u2019t think Congress ever thought about this when it enacted the rule,\u201d Schwartz said.<\/p>\n

    (Rubenstein is the host of The David Rubenstein Show: Peer to Peer Conversations on Bloomberg. The Orioles ownership group also includes Michael R. Bloomberg, the founder of Bloomberg LP, parent of Bloomberg News).<\/p>\n<\/div>\n

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