The Red Sox' owner is poised to buy Liverpool F.C.


Liverpool FC of the English Premier League has agreed to be purchased by New England Sports Ventures, better known as the parent company of the Boston Red Sox. I’m going to refer to this as the Red Sox buying into the EPL, however, because it’s simpler and makes the story more interesting to me even if it’s arguably misleading. You want accurate news? Listen to NPR.

Anyway, you may recall that Liverpool is the club owned by former Rangers owner Tom Hicks. You may also recall that Hicks’ ventures into EPL ownership have been an utter disaster. It’s been claimed that Hicks’ adventures in English soccer had nothing to do with his problems with the Rangers, but even if you believe that, such adventures were evidence of some serious mission creep on Hicks’ part.  You’d think that, based on his experiences, any other American baseball mogul/soccer novice would stay the hell away from the EPL.

But based on the linked story anyway, it may not be a bad move for the Red Sox. Seems that if the deal goes through they’d be getting the club for the price of the outstanding debt. Which, while still a lot of money, is way, way less than other EPL teams have gone for, and what Hicks reportedly wants for the team.

Which is also what may sink the deal. Hicks, the majority shareholder, is reportedly unhappy with the cut rate price to which the board has agreed.  I know even less about English corporate governance than I do about soccer, but I’m not exactly sure how a board of directors can force a majority shareholder to give up his stake and, if he’s not doing so, how can one purchase a controlling interest in the team?

Oh well, that’s what lawyers are for. Or solicitors. Gosh, I hope this becomes a big story with baseball implications, because I’d love an excuse to start spelling things wrong (“Hicks won’t honour the agreement . . .”) and using phrases that my Anglophile friends use like “full stop” and “bloody.”

New tax law could affect MLB trades

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Jim Tankersley of the New York Times notes that a tax law passed by Republicans could affect trades in Major League Baseball. The law added the word “real” to a certain line of tax code that now only allows real estate trades to qualify for tax immunity. Previously, certain assets like trucks and machinery could have been traded tax-free.

A perhaps unintended consequence of that change could mean baseball teams could have to pay capital gains taxes when they trade away and acquire players. MLB’s chief legal officer Dan Halem said, “There is no fair market value of a baseball player. There isn’t. I don’t really know what our clubs are going to do to address the issue. We haven’t fully figured it out yet. This is a change we hope was inadvertent, and we’re going to lobby hard to get it corrected.”

Tankersley wonders how players would be valued for the purposes of this tax law:

Mr. Verlander, for example, was clearly a more immediately valuable asset to the Astros than the three prospects they traded to get him. He gave up only four runs in his five regular-season starts for the team, then won four straight starts to begin the playoffs. In very simple terms, he brought value to the Astros in a trade, and had the new law been in place last year, the team would have owed taxes on that added value.

But what, exactly, was that value? Was it the size of his contract? Mr. Verlander earned $28 million last year, while the players traded for him drew minor-league salaries. Was it the additional wins he brought to the team? Statisticians estimate Mr. Verlander gave the Astros nearly two more wins last season, a value that, depending on the statistician, could reach $20 million. Or was it some calculation of the total future value Mr. Verlander will bring to the team, minus the total future value it gave up in the prospects it traded away — and possibly adjusted for the amount the team will have to pay Mr. Verlander?

Complicating matters further is that teams value players differently, and one player might help a certain team far more than another team. A struggling club with a surplus of starting pitchers might trade one to a playoff contender in desperate need of one, in exchange for position players who could improve a struggling lineup. In that case, both teams could, reasonably, be considered to have gained value in the trade, and thus would owe taxes on it.

Republicans said they weren’t trying to hamstring sports teams, but that’s exactly what they might have done here. It seems likely that the law will eventually be amended to exempt sports teams, given that leagues like the MLB and NBA are enormous and worth so much money. Whether that will be done in a reasonable amount of time is another question entirely.