Gov Pritzker: Bears new stadium is “non-starter” for state

[knoxville7]

I have you just don't understand.


I addressed this point. To ensure limited liability the Bears would likely set up an SPV that has the stadium as collateral and thus in the event of default the only assets the bank can draw on to satisfy their money owed to them would be the stadium.

Thus having millions and millions of revenues from running the team is nice but the bank has no legal recourse to compel the McCaskey's to use the money they get from the NFL to pay off the stadium loan.

The other point is that stadiums in and of themselves are not huge money makers because you have to pay for upkeep 364 days but they only make you money for like 20-30 days. This is precisely why most teams chose not to own the stadium so the government can be on the hook.

So it is funny that Bears fans think the McCaskeys are smart enough to succeed at a model that the vast majority of actually smart NFL owners chose not to adopt.

Thanks again for arguing things I never claimed in the first place 🫡

 

[remydat]

Thanks again for arguing things I never claimed in the first place 🫡

I wish you were my banker where I can show you millions and millions of revenue that I will ensure you legally arent entitled to collect from me to get a massive loan.

Bank trying to get non-Stadium revenues

 

[roadwarrior_joe]

Investment group incoming. 20%?

 

[zabavka]

Rams naming rights which I believe are the highest is 30 million a year. Cowboys is 19 million or so. That ain't enough to build a stadium bro.

Maybe Georgie can buy some cheaper cookies and switch to skim milk

 

[RacerX]

I do due dilligence on M&A and real state acquisitions all the time. The math I am aware of just doesnt work. The McCaskey's only real asset is the time and it has a valuation of about 6 billion. That valuation is inclusive future projected cash flows from the team.

If the Chicago stadium costs 5 billion then AH with the additional commercial, retail and residential add ons is like around 7 billion.

Let's assume McCaskey's can put up 2 billion which is what they are proposing for the Chicago stadium. And again bear in mind they have a 40% estate tax bill on that 6 billion when Virginia dies so that is another 2.4 billion. So that is 4.4 billion on there end they will owe between the stadium and their estate tax bill. This again is without any other meangingful assets beyond the team.

So that still leaves them 5 billion short on AH. Lets say the NFL kicks in 1 billion and PSLs are at the high of 500m. That still leaves them 3.5 billion sort. At a 6 billion valuation they would need to sell 60% of the team to get the other 3.5 billion.

They only own 80% of the Bears and someone has to own at least 30% so they cant sell 60% by themselves unless they selling to someone that will be majority owner.

So unless someone is willing to overpay at say a valuation of like 7-8 billion, they cant really sell enough equity to fund AH ubless they are willing yo lose a majority stake.

And I dont any competent investor is going to loan the McCaskeys 3.5 billion and trust them to build a stadium when they jave zero experience in this space.

Now hey maybe I am wrong but maybe a guy like @RacerX who is in financing can correct me if some of my assumptions here are wrong.

I haven’t followed this story at all and have not digested any of the numbers and the less I know and hear about the McCaskeys the better. That said, idk what their balance sheet looks like but there is a lot of debt capital on the sidelines and if the McC clan has enough cross-collateralization, and with a Vig-level coupon rate with a convertible kicker that deal gets funded all day every day.

 

[remydat]

I haven’t followed this story at all and have not digested any of the numbers and the less I know and hear about the McCaskeys the better. That said, idk what their balance sheet looks like but there is a lot of debt capital on the sidelines and if the McC clan has enough cross-collateralization, and with a Vig-level coupon rate with a convertible kicker that deal gets funded all day every day.

Thanks for the input. Yeah not sure they have a lot to cross capitalize outside of AH itself assuming team would be off limits due to NFL rules.

They seem to be resisting at the moment government overtures for a 10% equity stake as part of the downtown deal so wonder if they would go for a convertible kicker.

In any event a bit of a moot point as after my question to you realized they were limited to borowing only 600 million anyways so they likely would need to sell a decent equity stake anyways to privately fund an AH deal.

 

[Calabis]

Chicago is going to f around and be looking at the UTAH Bears

 

[knoxville7]

I wish you were my banker where I can show you millions and millions of revenue that I will ensure you legally arent entitled to collect from me to get a massive loan.

Bank trying to get non-Stadium revenues

Thanks for still not getting it!

 

[nc0gnet0]

The problem is your still need money upfront to build a stadium. There is a reason the Bears are only willing to commit 2 billion and want the city for Chicago throw in like 3 billion.

So even if you start with just the stadium in AH, you now need to fund the other 3 billon or so without public funding because the whole premise with AH is to have it privately financed. If the Bears could privately finance a 5 billion stadium they wouldn't be looking to Chicago in the first place.

And again Bear in mind that 2 billion is really 4.4 billion because at any point during the building of this stadium Virgina could die and the Bears would potentially owe 2.4 billion ie 40% on a 6 billion valuation.

You don't need ALL the money "upfront". Construction does not work like that.

I am not sure where you have come up with this capital gains tax bill due immediately, not if the team remains in the family. If it was sold outright, then yeah. But the Lions have recently gone from William Clay Ford to Martha Ford, to Sheila Hamp as principal owner, and not once has this tax been levied.


" Unlike most of the rest of us who are plowing through the IRS code and crunching our own tax numbers right now, today's franchise owners can afford to make themselves privy to the most sophisticated techniques in existence that might lighten the tax burden for the next generation in their families.

Take the Chicago Bears as an example. George Halas bought the team in 1920 for $100; and when he died in 1983, he transferred ownership to Virginia McCaskey, his daughter. McCaskey, who is now in her 80's, reportedly has a controlling interest with an 80 percent share in the club. But technically, those shares were at some point gifted to her 11 children; so that when she passes away, there will be a minimal transference and therefore few estate taxes related to the club. Bears spokesman Roger Hacker said the percentage owned by each of the children is not public information and would not be released, but it appears that we can expect the McCaskeys to own the Bears for a while longer, at least."

Taxing day for NFL owners

You think you've got it tough on tax day? Try being an NFL owner who wants to pass his team on to his children, writes Darren Rovell.

www.espn.com

 

[remydat]

You don't need ALL the money "upfront". Construction does not work like that.

I am not sure where you have come up with this capital gains tax bill due immediately, not if the team remains in the family. If it was sold outright, then yeah. But the Lions have recently gone from William Clay Ford to Martha Ford, to Sheila Hamp as principal owner, and not once has this tax been levied.


" Unlike most of the rest of us who are plowing through the IRS code and crunching our own tax numbers right now, today's franchise owners can afford to make themselves privy to the most sophisticated techniques in existence that might lighten the tax burden for the next generation in their families.

Take the Chicago Bears as an example. George Halas bought the team in 1920 for $100; and when he died in 1983, he transferred ownership to Virginia McCaskey, his daughter. McCaskey, who is now in her 80's, reportedly has a controlling interest with an 80 percent share in the club. But technically, those shares were at some point gifted to her 11 children; so that when she passes away, there will be a minimal transference and therefore few estate taxes related to the club. Bears spokesman Roger Hacker said the percentage owned by each of the children is not public information and would not be released, but it appears that we can expect the McCaskeys to own the Bears for a while longer, at least."

Taxing day for NFL owners

You think you've got it tough on tax day? Try being an NFL owner who wants to pass his team on to his children, writes Darren Rovell.

www.espn.com

Upfront as in as the work is being done not all of it on day one. The point is you need the money to build the stadium as you are building it.

You are confusing estate taxes and capital gains taxes. I have read that story and actually quoted it a few times over the years but it misses a few things and is outdated.

Transfers between husband and wife arent taxed because they are considered joint owners but transfer to children or grandchildren are taxed if they exceed the gift tax exclusion which is around 13.6 million now but was around 5 million or so back when the McCaskey transfer were supposedly made.

Some family members are keen to sell, according to people familiar with the matter. The family are considering options including offloading a minority stake to cover taxes or selling the team entirely, the people said.

The NFL's succession problem: Tax liabilities are so bad for billionaire families they're considering a private equity hail mary

In September, the NFL formed a special committee of five owners to consider ending the block on private-equity funds.

fortune.com

Note this is from 2024 and not 2006. It references the Bears selling a minority stake to cover taxes. Not wanting to get overly complicated but the relevant IRS law is below.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Estate tax | Internal Revenue Service

Get information on how the estate tax may apply to your taxable estate at your death.

www.irs.gov

Simply put the gift and estate tax is unified. Once you die any lifetime gifts over the exemption gets added back to your estate and then taxed along with your estate. For most people that will help them but the 5 or 13m exemption for shares in a team collectively worth 6 billion, is a drop in the bucket.

Now I havent done US taxes since I left the US in 2017 so could be missing something that came out more recently but once Virginia dies her 20% stake and any other stake in the Bears she gifted over her lifetime (less the gift exclusion) gets taxed at 40%.

 

[nc0gnet0]

Upfront as in as the work is being done not all of it on day one. The point is you need the money to build the stadium as you are building it.

You are confusing estate taxes and capital gains taxes. I have read that story and actually quoted it a few times over the years but it misses a few things and is outdated.

Transfers between husband and wife arent taxed because they are considered joint owners but transfer to children or grandchildren are taxed if they exceed the gift tax exclusion which is around 13.6 million now but was around 5 million or so back when the McCaskey transfer were supposedly made.

Some family members are keen to sell, according to people familiar with the matter. The family are considering options including offloading a minority stake to cover taxes or selling the team entirely, the people said.

The NFL's succession problem: Tax liabilities are so bad for billionaire families they're considering a private equity hail mary

In September, the NFL formed a special committee of five owners to consider ending the block on private-equity funds.

fortune.com

Note this is from 2024 and not 2006. It references the Bears selling a minority stake to cover taxes. Not wanting to get overly complicated but the relevant IRS law is below.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Estate tax | Internal Revenue Service

Get information on how the estate tax may apply to your taxable estate at your death.

www.irs.gov

Simply put the gift and estate tax is unified. Once you die any lifetime gifts over the exemption gets added back to your estate and then taxed along with your estate. For most people that will help them but the 5 or 13m exemption for shares in a team collectively worth 6 billion, is a drop in the bucket.

Now I havent done US taxes since I left the US in 2017 so could be missing something that came out more recently but once Virginia dies her 20% stake and any other stake in the Bears she gifted over her lifetime (less the gift exclusion) gets taxed at 40%.

the gift taxes would be taxed at the value when the gift was transferred, not at the current valuation of the Bears now. She has already transferred the majority of her stake to 11 family members, long ago. Your pulling your numbers from the current valuation of the Bears, which would only apply to the 20% Virginia owns, not the full amount, which you have been using for your estimate. Now, depending on how these transfers were made (you can do x amount a year tax free) the tax bill would be considerably less than you are stating.

As I said before, and you failed to address, the Lions already went through this.

Long story short, your inclusion of this ghost tax that you have improperly calculated is a non factor in the building of a new stadium, so please stop bringing it up, like it is a major factor, which it is not.

 

[remydat]

the gift taxes would be taxed at the value when the gift was transferred, not at the current valuation of the Bears now. She has already transferred the majority of her stake to 11 family members, long ago. Your pulling your numbers from the current valuation of the Bears, which would only apply to the 20% Virginia owns, not the full amount, which you have been using for your estimate. Now, depending on how these transfers were made (you can do x amount a year tax free) the tax bill would be considerably less than you are stating.

As I said before, and you failed to address, the Lions already went through this.

Long story short, your inclusion of this ghost tax that you have improperly calculated is a non factor in the building of a new stadium, so please stop bringing it up, like it is a major factor, which it is not.

Your statement about the Ford Family referenced capital gains taxes which I never mentioned or was talking about. I was talking about estate taxes which are different. You claimed they didn't pay any taxes and I am saying that would have been true for the wife when she was gifted from her husband but any gift she gave to her children she as the donor would have paid tax on that gift if it exceeded the exemption which it obviously did.

As for the Bears, let's deal with the 20% first. On a 6 billion valuation that is 1.2 billion which is still 480 million tax that it sounds like we both agree would be due. So yes an additional 480 million is a factor as that is real money that may be owed as a stadium is being built.

2nd I quoted the lifetime exclusion which as I said would have been 5 million back then or 13.61 million now so the annual transfers are capped at 13.61 million over the individual's life. The annual allowance is only 18k so no point in doing a series of transfer as it would take forever to hit the lifetime allowance. Anything over the lifetime exclusion is taxable.

Now as for the 80%, 20% is held by others so let's exclude that. 80% of 6 billion is 4.8 billion. At the time of the gift the donor would pay tax based on the fair market value at the time and the receiver's new tax basis would be the fair value at the time. So for example if the Bears were worth 100m back in 1990 when a transfer was made the donor would pay tax on the 100 million. This is what you are referring to and I agree with.

I do believe though that when the donor dies you look at their lifetime gifts that exceed the exemption and pay taxes on the value at death. What the gift tax did is allow the donor to prepay estate tax to lessen the bill on death.

Bear in mind if tax was already paid by the donor when gifted and the fair market value did not change on death then the IRS clause I sent would make no sense. It says to add lifetime gifts to the estate and calculate the tax. If I were adding just the 100 million in my example above then I would be getting taxed again on the same 100 million since the donor already paid the tax on the 100 million as part of gift tax. So think the intent here is to add the current value of the gift less whatever value it was gifted at so you pay taxes just on the difference.

Again maybe something has changed or I am misrembering as haven't done one of these in over a decade.

So yes it is a consideration. Not as high as the 2.4 billion as I included the 20% that was owned by others but definitely Virginia's 20% would result in estate taxes and I do belive the other 60% of the kids would be subject to it although again the donor would have in effect prepaid some of it via the gift tax.

Further complications are Virginia still votes the shares and there are rules around scenarios where the donor still in some way controls the property supposedly gifted especially when we aren't talking underage children. There is also the Generation Skipping Tax to deal with situations like this but never dealt with that so unsure the mechanics.

This also doesn't even get into Biden and Harris' plan to try and tax unrealized gains which would guarantee a huge tax bill for NFL owners.

So taxes are a factor one way or the other. That is real money they will have to pay in the near term given Virginia's age and even worse for them if Harris gets elected and she pushes for an unrealized gains tax. The exact amount is unknown and my intent was just to give a rough example to make the point.

 

[BigTom]

Have the feeling the family is just kicking the can down the road on this stadium waiting for Virginia to die. Why tie up billions of dollars now if they are going to sell and not see the return on the initial investment.

 

[dbldrew]

I wish you were my banker where I can show you millions and millions of revenue that I will ensure you legally arent entitled to collect from me to get a massive loan.

Bank trying to get non-Stadium revenues

There is currently 1.6 Trillion in car loan debt in the US right now and those loans are given out based on your income (revenue). Bears have a guaranteed revenue so I'm sure they could get the loans if needed

 

[nc0gnet0]

Your statement about the Ford Family referenced capital gains taxes which I never mentioned or was talking about. I was talking about estate taxes which are different. You claimed they didn't pay any taxes and I am saying that would have been true for the wife when she was gifted from her husband but any gift she gave to her children she as the donor would have paid tax on that gift if it exceeded the exemption which it obviously did.

As for the Bears, let's deal with the 20% first. On a 6 billion valuation that is 1.2 billion which is still 480 million tax that it sounds like we both agree would be due. So yes an additional 480 million is a factor as that is real money that may be owed as a stadium is being built.

And if the Bears take on the Liability of some sort of financing to build a stadium, the net worth of the Bears is decreased, thus lowering the amount of taxes due. Total Value - total liabilities = net worth.

2nd I quoted the lifetime exclusion which as I said would have been 5 million back then or 13.61 million now so the annual transfers are capped at 13.61 million over the individual's life. The annual allowance is only 18k so no point in doing a series of transfer as it would take forever to hit the lifetime allowance. Anything over the lifetime exclusion is taxable.

What assets may offer tax advantages if you’re gifting​

When choosing which assets to gift or place in a trust, you may want to favor ones you expect will keep growing. When you gift assets using your lifetime gift tax exemption, the assets are transferred at today’s value, and there’s no tax to the beneficiaries. You can gift these assets using your lifetime gift tax exemption amount. “They are not only getting the benefits of the value of the asset today, but also all the appreciation it may experience in future years,” Hindman says.

He adds, “That’s true whether that’s an interest in a business that may be sold or go public, a high-growth portfolio or another kind of appreciating asset. In some cases, the future value might be considerably more than it’s worth today.” In addition, the IRS may allow you to discount the current value of an illiquid share in a business or a fractional interest in real estate, enabling you to gift an even larger amount.

Taxes are paid at the time the gift is given, Any appreciation of the assets given is not taxed again upon the donors death. End that argument.
So, we are back to only Virginia's share of the team being subject to this tax, not the entire value of the Bears. Period.

Now as for the 80%, 20% is held by others so let's exclude that. 80% of 6 billion is 4.8 billion. At the time of the gift the donor would pay tax based on the fair market value at the time and the receiver's new tax basis would be the fair value at the time. So for example if the Bears were worth 100m back in 1990 when a transfer was made the donor would pay tax on the 100 million. This is what you are referring to and I agree with.

I do believe though that when the donor dies you look at their lifetime gifts that exceed the exemption and pay taxes on the value at death. What the gift tax did is allow the donor to prepay estate tax to lessen the bill on death.

You are wrong, the taxes are paid at the time of the transfer, not when the donor dies. Any shares that the Bears family members currently own have already been taxed (above the exemption amount), they are not subject to an additional tax upon Virginia's death.

Bear in mind if tax was already paid by the donor when gifted and the fair market value did not change on death then the IRS clause I sent would make no sense. It says to add lifetime gifts to the estate and calculate the tax. If I were adding just the 100 million in my example above then I would be getting taxed again on the same 100 million since the donor already paid the tax on the 100 million as part of gift tax. So think the intent here is to add the current value of the gift less whatever value it was gifted at so you pay taxes just on the difference.

No.

Again maybe something has changed or I am misrembering as haven't done one of these in over a decade.

So yes it is a consideration. Not as high as the 2.4 billion as I included the 20% that was owned by others but definitely Virginia's 20% would result in estate taxes and I do belive the other 60% of the kids would be subject to it although again the donor would have in effect prepaid some of it via the gift tax.

Yes, but there are other option to deal with the 22% Virginia owns, such as establishing a trust.

Further complications are Virginia still votes the shares and there are rules around scenarios where the donor still in some way controls the property supposedly gifted especially when we aren't talking underage children. There is also the Generation Skipping Tax to deal with situations like this but never dealt with that so unsure the mechanics.

This also doesn't even get into Biden and Harris' plan to try and tax unrealized gains which would guarantee a huge tax bill for NFL owners.

So taxes are a factor one way or the other. That is real money they will have to pay in the near term given Virginia's age and even worse for them if Harris gets elected and she pushes for an unrealized gains tax. The exact amount is unknown and my intent was just to give a rough example to make the point.

I can not comment on things that MIGHT happen in the future with the tax code.

 

[Toast88]

Bears keep playing well, they’ll have the city, county and state by the balls.

 

[remydat]

And if the Bears take on the Liability of some sort of financing to build a stadium, the net worth of the Bears is decreased, thus lowering the amount of taxes due. Total Value - total liabilities = net worth.

What assets may offer tax advantages if you’re gifting​

When choosing which assets to gift or place in a trust, you may want to favor ones you expect will keep growing. When you gift assets using your lifetime gift tax exemption, the assets are transferred at today’s value, and there’s no tax to the beneficiaries. You can gift these assets using your lifetime gift tax exemption amount. “They are not only getting the benefits of the value of the asset today, but also all the appreciation it may experience in future years,” Hindman says.

He adds, “That’s true whether that’s an interest in a business that may be sold or go public, a high-growth portfolio or another kind of appreciating asset. In some cases, the future value might be considerably more than it’s worth today.” In addition, the IRS may allow you to discount the current value of an illiquid share in a business or a fractional interest in real estate, enabling you to gift an even larger amount.

Taxes are paid at the time the gift is given, Any appreciation of the assets given is not taxed again upon the donors death. End that argument.
So, we are back to only Virginia's share of the team being subject to this tax, not the entire value of the Bears. Period.

You are wrong, the taxes are paid at the time of the transfer, not when the donor dies. Any shares that the Bears family members currently own have already been taxed (above the exemption amount), they are not subject to an additional tax upon Virginia's death.


No.


Yes, but there are other option to deal with the 22% Virginia owns, such as establishing a trust.


I can not comment on things that MIGHT happen in the future with the tax code.

1. They are capped at 600 million of debt by the NFL. Doesnt really move the needle on a 6 billion valuation. Further you dont borrow 600 million to build AH unless your valuation increases by more than 600 billion otherwise it is a stupid investment. The whole point of building AH would be to increase the value net of any borrowings.

2. Yes they are taxed at the time of the gift but your lifetime gifts are still added to your estate when you die as per the IRS clause I sent. In any event let's say I concede that argument.

3. Establishing a trust now means you will be paying taxes now whether it is gift tax or generation skipping tax.

4. Your statement was that no taxes are paid so even if it is just Virginia's share it is still hundreds of millions of dollars so thus still a factor. So saying taxes arent a factor as you did is incorrect.

5. If they could fund AH easily they would. Again there is a reason most teams dont own their stadium or exclusively private finance. Especially teams whose main revenue stream is the team. If it was so easy then why do the majority of teams not own their team and seek public funds?

 

[Rise]

I’m still holding out hope this gets denied and they go back to Arlington. I don’t even like the design they showed, it’s just the raiders stadium in a different color. Hyper generic.

 

[Toast88]

I’m still holding out hope this gets denied and they go back to Arlington. I don’t even like the design they showed, it’s just the raiders stadium in a different color. Hyper generic.

The Bears having their own land on which to essentially build a Bearsville entertainment area would be a money-making machine. But it would also be costly to set us. Easier to just bow to the city and get a different stadium on the same deal as the one they’ve been working under, in Kevin Warren’s eyes. Shame.

 

[Rise]

The Bears having their own land on which to essentially build a Bearsville entertainment area would be a money-making machine. But it would also be costly to set us. Easier to just bow to the city and get a different stadium on the same deal as the one they’ve been working under, in Kevin Warren’s eyes. Shame.

It is a shame, small time thinking. You don’t have to build everything at once. Build the stadium and parking lot. Get investors to help build all of the business around it.