These Guys Definitely Not Value Investors!

[Parsad]

The NBA Golden State Warriors have sold for $450M!  The purchasers...the managing partner at Kleiner Perkins and the chairman of Mandalay Entertainment.  Sure higher than the $6M Steinbrenner paid for the Yankees in the 70's!  Now that was a steal.  Cheers!

 

http://www.cnbc.com/id/38262946

[ERICOPOLY]

He bought the Yankees 37 years ago for $10m, then sold the 2 parking lots included in the deal for $1.2m.  So his adjusted cost is $8.8m.

 

He made 13% annually compounded capital gains if it's worth $800m today.  Any guess on how much the Yankees are worth?

 

[UhuruPeak]

He made 13% annually compounded capital gains if it's worth $800m today.  Any guess on how much the Yankees are worth?

 

I heard $1.6B just yesterday (most likely WSJ or espn.com since these 2 are where I waste my time when not on this website)

[T-bone1]

I haven't seen any mention of dividends or similar payments. I assume he was taking money out of the business over this time, which could dramatically change the IRR

[Parsad]

The Yankees are worth at least what Manchester United would be, so about $1.5B.  Over 37 years, that's a 14.9% annualized yield, not including all the capital they've taken out and put into other businesses or their salaries.  Cheers!

[netnet]

Over 37 years, that's a 14.9% annualized yield, not including all the capital they've taken out and put into other businesses or their salaries.

 

 

14.9% compounded, not to mention the psychological dividends!

[Parsad]

14.9% compounded, not to mention the psychological dividends!

 

Yup...7 Titles, 11 Pennants!  No team in sports has been more dominant globally during those 37 years...comparable to the Russell Boston Celtics or Jordan Chicago Bulls.  Cheers!

[wiessman]

FWIW

 

I read in an old Sports Illustrated article that his actual out of pocket equity investment in the original transaction was $170k for a little over half interest.  Presumably the balance was financed.  In addition, because he died this year, any tax liability associated with his death has been eliminated.  The IRR on the deal is thru the roof.  That's why the limited partners have always been relatively quiet and you never hear about them.  While they have cringed over the years over all the bombast, they knew they were making a ton of money.

 

If you go to SI Vault you can read the old articles on the man.  While not always pleasant to work for, his philanthropy (mostly anonymous) was significant as was his work ethic.  A very interesting man who accomplished a lot in his life.

[ERICOPOLY]

In addition, because he died this year, any tax liability associated with his death has been eliminated.  

 

That's not right as I understand it.

 

There is a capital gains tax (no step up in basis) this year in lieu of the estate tax.  The capital gains tax will hit your estate no matter how small it is.  

 

Link:

http://tinyurl.com/yctyeq7

 

[Guest ValueCarl]

What's right are the "net savings" in aggregate taxes owed by George's heirs while taking into effect the sunset clause LOTTO TICKET tied to estate taxes that remains in force for the rest of this year.

 

As I understand it, that's estimated to be $300-400M in "tax savings" for those heirs to celebrate with, and the US taxpayer pool to lose, at a time when losing taxes from the wealthy is more devastating to a system in desperate need of revenues.     

[gaf63]

According to the site you posted Ericopoly, there will be an increase in cost basis of $1.3 mil

 

For purposes of this subsection -

        (A) In general

          The basis increase under this subsection for any property is

        the portion of the aggregate basis increase which is allocated

        to the property pursuant to this section.

        (B) Aggregate basis increase

          In the case of any estate, the aggregate basis increase under

        this subsection is $1,300,000.

[twacowfca]

Reason to Rally a Retroactive Estate Tax?

 

With the potential loss of an estimated $500 million in taxes on the estate of George Steinbrenner, the New York Yankees baseball owner who died on July 13, the Senate may be wishing it had worked a little harder to pass a bill last year that would have extended the 2009 rates rather than letting the tax expire in 2010.

 

In fact, two days after Steinbrenner's death, two senators introduced a proposal to permanently set the estate tax rate at 35 percent, with a $5 million exemption indexed for inflation and phased in over 10 years. The bill would also provide a "stepped-up basis" for inherited assets, meaning capital gains on future sales would be taxed on the value of the assets at the time of the owner's death not the original value when the owner purchased them.

 

If Congress takes no action, the federal estate tax in 2011 will be 55 percent and a $1 million exemption. The 2009 rate was 45 percent with a per-person exemption of $3.5 million. Applying 2009 rates to Steinbrenner's $1.1 billion estate (as estimated by Forbes magazine), his heirs may have forfeited almost $500 million in taxes. Even without a current estate tax, Steinbrenner's heirs must pay capital gains tax when they sell their inherited assets. Using the current top capital gains rate of 15 percent, if his heirs sold the assets immediately, they would pay about $165 million (depending on how much the assets have appreciated since Steinbrenner bought them).

 

That's a difference in tax of about $328 million - or, as the Associated Press put it, about 10 times Alex Rodriguez's salary of $32 million