In 1958, Bobby Layne was traded from the Detroit Lions to the Steelers. He didn’t want to go, and his parting shot was a curse: ‘If you trade me, you won’t win for 50 years.’ Well, 50 years has come and gone, but the Lions are still suffering from the aftermath of the curse. Recently part the whole front office was let go. A question floating around Motown is “why won’t the Ford Family sell the team?”
For the record, here in Motown, we take our car folk personally. People don’t work for ‘Ford’, they work for ‘Fords’ as in the family. So we view the Lions as an extension of the family, kind of like unwanted relatives on Thanksgiving (although a Lion’s game on Thanksgiving is a great treat: we have a 6-legged turkey). The Ford family bought the Lions on November 22, 1963, a date we remember a lot more for another event in Dallas. The price was $6 million, a princely sum by 1963 standards, and a bargain today.
That’s because today, the team is worth between $1 and $1.4 billion (yes, billion). So, if we’re firing the management and cleaning house, why not just sell the team? Cue the scary music: TAXES!
Here’s how it works: If William Clay Ford’s widow, Martha Firestone Ford, sells the team for $1,006,000,000.00 (that’s fun to write), she would have a $1billion capital gain. Since she’s held the team over one year (like 52 years), that would be a long-term capital gain. Let’s presume she has some other income, maybe social security and few dividends from owning some car company. She’d owe $238,000,000 of capital gains taxes (we think Mrs. Ford is a Florida resident, so say no state income taxes). Her estate would net $768 million. If she then passed away, the estate would pay an additional estate tax of about $307.2 million. The heirs would get $460.8 million, or less than half the value.
If she keeps the Lions; when she passes, the basis of the team ‘steps-up’ to $1.006 billion. The estate pays tax on the full value, or $402.4 million. The heirs get $603.6 million. We can see Thanksgiving dinner at the Ford household:
Mom: “Those darn Lions, I’m going to sell the team and buy a nice condo.”
Kids: “Mom, please don’t sell the Lions.”
Mom: “You like the Lions?”
Kids: “We love the Lions! We have about 143 million reasons to love the Lions! Plus a few million bucks from the annual cash flow”
Don’t you wish we had these kind of problems? I’m now going to watch football teams that can win, Like Michigan or Michigan State. Go Blue, Go Green!