Forbes Article on Twins/IRS

[Twins Daily Admin]

I think I've been as critical of recent payroll cutting as anyone. But I'll disagree with what, I think, are some of the premises of the disgust being expressed in this thread. I suspect that leaves some middle ground, but maybe not.

 

1) People can go to great lengths, prior to their death, to shield assets from inheritance tax. I don't think that makes them a bad person. Indeed, it might make them that much more responsible.

 

2) I also have no problem with running a MLB team like a self-supporting business. I also don't have a problem with an owner throwing extra liquid cash into a team to boost it beyond its means. But I won't criticize them for not doing that, partly because I recognize that the extra liquid cash could also be used to fund AIDS research or feed kids or something like that too. (BTW, my understanding is that the Pohlads are also a HUGE contributor to local non-profits.)

 

These points are not to say I apologize for the Pohlads. I was extremely vocal about how despicable the whole contraction fiasco was. I've been vocal about payroll cuts. But to me, waving at a dispute about proper accounting standards between the Pohlads and the IRS, and claiming it is a symbol of something larger, is pretty thin gruel.

 

(By the was, this is John. I'm under the wrong darn ID when I wrote this. Sorry.)

[TheLeviathan]

But to me, waving at a dispute about proper accounting standards between the Pohlads and the IRS, and claiming it is a symbol of something larger, is pretty thin gruel.

 

I would argue we're not talking about "proper accounting standards" but "deliberate manipulation of a bad system for profit"

 

Which, in light of publicly funded stadiums and use of team revenues, I see a connection. But everything else you say is perfectly reasonable.

[nicksaviking]

That's not what happened at all. But I'm not interested enough to argue about it. I come here to talk baseball and this isn't baseball.

 

If we are wasting your time with the negative words regarding Carl Pohlad, please feel free to waste ours in support of him. No sarcasm involved, I really am curious to hear an argument from someone who sides with the Pohlads on the contraction issue.

[Riverbrian]

The moderators have received a couple requests for moderation on this thread.

 

Other moderators may have different opinions... Personally... I think it's been an interesting and respectful discussion to this point. Yes... Opinions can be characterized in this thread as negative but the discussion has been balanced and intelligently discussed.

 

The only violation was of rule 6 (which I copied below)and I'm just hoping we all move past it and keep the conversation above board.

 

6. Comments about how you're sick of this topic or it's not newsworthy or it doesn't belong in this thread or it isn't polite or you think this is trolling or things are too negative. We appreciate your intention to help police a thread, but it often derails a thread. Please, just notify a moderator using the the small icon shaped like a triangle with an exclamation point in it. If you take matters into your own hands, just like any other comment on this list, your comment can be deleted and lead to a ban, despite your good intentions.

[Riverbrian]

As for my opinion... I tend to agree with Drjim. This is how the big fish swim through the pond and nothing in the article surprises me and I'm not sure that I can directly connect the baseball team spending practices to the context of the article. At least in my opinion.

 

However... The article was very interesting to me and it is about our owners and therefore germain and worth discussion.

[johnnydakota]

If JIm and the rest of the boys believe the team is such a low value why are tickets and tv fees so high?

[glunn]

If only Mr. Pohlad has survived until 2010, the federal estate tax would have been $0.

 

George Steinbrenner died in 2010 -- zero federal estate taxes.

 

As for the valuation issue, the Internal Revenue Code bases gift taxes and estate taxes on fair market value. Fractional interests are worth less in the real world and for tax purposes. A house may be worth $1 million, but a 1/3 interest in the same house might be worth less than $250,000, because a hypothetical buyer would not pay more than that for such interest. With few exceptions, buyers want 100%, or at least a controlling interest.

 

Based on what is described in the article, this looks like legitimate estate planning, and generally these cases settle on terms that are favorable to the estate. I would also note that the Pohlads have lawyered up with John Porter, who many people (including me) believe is the best litigator in the country for cases like this.

[Ozziedavisfan]

Look it boils down to this. If I really wanted to get in to the in's and outs of estate, and tax law. I would just do my job. Look is really news that the pohlads don't like to spend their money on the team? Is it news that they are cheap?

[jay]

I would argue we're not talking about "proper accounting standards" but "deliberate manipulation of a bad system for profit"

 

The system is indeed terrible, but that's not Carl's fault. I think you'd be hard pressed to find a single example of a billionaire who passed without using extensive estate planning. To me, that makes it a bit harder to draw connections to anything else from this.

 

That such a terrible man was allowed to walk the earth as long as he did proves there is no such thing as Karma.

 

It's really too bad that ol' Carl didn't decide to leave a different legacy. Other teams have been able to privately fund a stadium and Pohlad Field could have been a gift to the people that would have gone a long ways toward changing some perceptions. Then again, given how he got to where he did... we really can't be surprised.

[IdahoPilgrim]

It is a common saying that the only things sure in life are death and taxes.

 

I guess a third thing to add to the list is that baseball fans will grumble about baseball owners. People have been critical of the Pohlads, sometimes for justifiable reasons and sometimes not. I remember when people were critical of the Griffiths - sometimes for justifiable reasons and sometimes not.

 

The more the world changes, the more it stays the same.

[IdahoPilgrim]

It's a very clear reflection of how our ownership does business. Cheap. We have some people that will defend that notion pretty staunchly, plus it was the source of quite a bit of conversation on sports radio today for that very reason.

 

Payroll is a reflection of the commitment of ownership to on-field product. So it shouldn't be shocking with evidence like this that the commitment is more to frugality and profit than it is to on-field success.

 

I guess I just disagree with the connection here. I think it is a very fair question to discuss payroll and how it correlates with ownership's commitment to putting a quality product on the field (although I personally am sick of the topic). But how the ongoing business that is the Minnesota Twins is conducted and how one man's estate was organized for tax purposes are two entirely different things. I don't think the second topic tells us anything about the first. I own stock in GE. When I die that stock will be a part of my estate. But how my estate is settled will have no bearing or impact on how GE runs its business in the future.

 

Now, if you want to look at how other businesses owned by the Pohlads are run and use that as evidence for a profit mentality, that is a legitimate comparison. But estate planning tells us nothing about how a person or family runs their ongoing businesses.

[TheLeviathan]

Now, if you want to look at how other businesses owned by the Pohlads are run and use that as evidence for a profit mentality, that is a legitimate comparison. But estate planning tells us nothing about how a person or family runs their ongoing businesses.

 

Frankly, I don't think that would be relevant or necessary. As nick pointed out, we know how Carl made his money, this shows the mentality hasn't changed much. (Contraction supports that too)

 

Personally, I think the conversation would happen less if there was less resistance to what seems plainly obvious about our ownership.

[howieramone1406390264]

Frankly, I don't think that would be relevant or necessary. As nick pointed out, we know how Carl made his money, this shows the mentality hasn't changed much. (Contraction supports that too)

 

Personally, I think the conversation would happen less if there was less resistance to what seems plainly obvious about our ownership.

Personally, I think there would still be complaints about ownership if Mother Teresa owned the Twins.

[Nick Nelson]

Personally, I think there would still be complaints about ownership if Mother Teresa owned the Twins.

 

You mean her?

 

[diehardtwinsfan]

I don't think the second topic tells us anything about the first. I own stock in GE. When I die that stock will be a part of my estate. But how my estate is settled will have no bearing or impact on how GE runs its business in the future.

 

 

You might have a point for GE, but in Pohlad's case, it was not that simple, and that's exactly what the article said. Controlling interest is in the hands of his sons, even though held a huge share, and it was well known for years that he was managing the team. His interest in the team was worth far more than the 20some million dollars he said it was worth.

 

Think of it this way, if his share of the Twins was put on the market for that price, would the final sale price be somewhere around it, or would a number of investors think it's a bargain and seize the opportunity to bid it up? I can almost guarantee you that the price would get bid up pretty significantly.

 

Everyone involved in that process knew that, and just because everyone else does it doesn't make it ethical or somehow legal. It's tax evasion, period.

[fishedwithhrbie]

everyone gtting worked up on this topic needs to re-read IdahoPilgrim's osts again..spot on.

 

The pohlads are cheap...Carl made Billions running banks and selling them...Carl foreclosed on a lot of farms during depression...probably a place in hell for him based on that...not the issue here...

 

The Pohlads have been cheap owners. They have typiically never done what the fan base in general has asked them to do. They bilked a stadium out of the public. There is probably a spot in hell for them on that one...Not the issue here

 

This is straight up estate tax. for those that have never dealt with it (and its not just for the rich) it is nasty

 

Any parent and I mean any parent that has anything worth leaving thier children will work thier arses off to make sure the kids get it...

 

I have attached my lighting rod so fire away...but federal and state should not get a large percentage of your estate just because you die. I despise the pohlads...but kudos to them for finding a way to keep the government out of thier stuff

[Boom Boom]

I have attached my lighting rod so fire away...but federal and state should not get a large percentage of your estate just because you die. I despise the pohlads...but kudos to them for finding a way to keep the government out of thier stuff

 

They didn't find a way to keep the government out, because the IRS is on to them. They tried to find a way to skirt their taxes and failed.

 

You can argue the merits of estate tax, but the Pohlads tried to break the law. Billionaires attempting to avoid tax responsibility doesn't draw a lot of sympathy from me.

[fishedwithhrbie]

They didn't find a way to keep the government out, because the IRS is on to them. They tried to find a way to skirt their taxes and failed.

 

You can argue the merits of estate tax, but the Pohlads tried to break the law. Billionaires attempting to avoid tax responsibility doesn't draw a lot of sympathy from me.

 

 

well it will take a while to shake out...I will bet vital parts of my anatomy that the end result favors the estate vs the IRS...and Im not giving sympathy...but thier tax lawyers used every tool available to them put forth by the IRS in the form of FLP and LLC, etc...the end result will determine if laws were broken.