The legislation cuts in half a tax write-off potentially worth hundreds of millions to some professional sports team owners.
Tucked in the domestic policy bill advanced by House Republicans last week is a change to the tax code that could potentially cool the current frenzy among the very wealthy to own professional sports teams.
For decades, owners of teams in the N.F.L., N.B.A. and other major leagues have been able to write off the entire value of their team’s “intangible assets,” which include player contracts, media rights and sponsorships, over 15 years.
Under the House plan, team owners would be able to deduct from their taxes only half the value of those intangible assets over that period.
The tax break, introduced two decades ago, can amount to hundreds of millions of dollars. Intangible assets make up the bulk of a team’s worth, and because team values have been steadily rising, the tax breaks have as well. The tax break has turned teams into a kind of tax shelter and has helped fuel the lofty prices that investment firms and billionaires have paid for teams in recent years.
While the provision in the House bill would not affect current owners, only future ones, it threatens to have a chilling effect across sports ownership.
If demand for teams cools, current owners could be hurt because the value of their investments might not grow as quickly. The congressional Joint Committee on Taxation estimates that cutting the write-offs in half would raise $991 million in revenue over 10 years.
