Dewitt Jr is 83. Ready to sell?

[Cardinals1964]

This thought crossed my mind. It’s not based on any news I heard. Just a thought. Dewitt is 83. Nobody lives forever. Are the Cardinals intentionally cutting payroll to prepare for a sale? With inheritance tax the way they are could his children afford to keep the team?

Will it be like the Rams with Georgia Frontier when she passed away?

I’m just throwing this out there. Can his kids afford to keep the team? It’s easier to sell a team if you don’t have players under multi year multimillion dollar contracts. I’ve seen it before.

[hmoss859]

What happens when he eventually passes? Does BD3 take over?

[Cardinals1964]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

[JuanAgosto]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

[hugeCardfan]

The Cardinals are an LLC. Operating Agreements are useful. For teams structured as LLCs (Limited Liability Companies), a well-defined operating agreement is crucial. This legal document outlines the ownership structure, management, and operational procedures, including provisions for transferring ownership interests upon a member's death, retirement, or departure from the company.

There are life insurance policies which may help offset the inheritance tax if taken out early enough. I would imagine DeWitt has been addressing this problem for many years.

What I would have done is create an ownership with the city of St Louis, along the lines of the trust created for Hershey in Pennsylvania. They, of course, had no heirs so passing management control would be a unique exercise. In an event like that, I would make provisions for my son to be trustee, if he wanted in. This could be done in perpetuity as long as the family maintained heirs....subject to board approval.

[ICCFIM2]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

[JuanAgosto]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

Does it make a difference that there are minority owners? Would the DeWitts still be able to structure the same deal that a sole owner could?

[govman]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

low value?? see below

The St. Louis Cardinals are currently valued at $2.55 billion, according to Forbes. This valuation places them among the top 10 most valuable MLB teams.

[Red7]

If structured correctly, estate taxes can be largely negated. That’s why Lamar Hunt had a plan set up so that control of the Chiefs could pass to Clark and the others without them having the crippling burden of the tax like befell the Rosenblooms.

I believe John Shaw orchestrated that. I also believe he and Kroenke had the return to LA planned from the get go. It was at the heart of lease deal escape and Kroenke’s right to match an offer made on the team to buy the remaining 60%.

Bottom line, the DeWitts are much smarter than Georgia Frontererie (sp). There is a succession plan in place. The idea that BDW3 isn’t interested in baseball is absurd. He has been closely involved in baseball since he pooped his first diaper.

[VegasVinny]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

low value?? see below

The St. Louis Cardinals are currently valued at $2.55 billion, according to Forbes. This valuation places them among the top 10 most valuable MLB teams.

Pretty sure he’s referring to the price the DeWitts paid in the 1990s when they purchased the team ($150 million, which included two parking garages, one of which was flipped immediately for $75 million).

[woofy25]

Businesses large and small get taken over by the next generation all the time. If they sell, then it better be to a hedge fund with unlimited dollars or to an individual who cares about winning over making money. The Dewitts would only sell if they feel like they can’t compete any longer due to market size. That would be a bad sign for cardinals fans, unless the buyer has infinitely deep pockets

[rockondlouie]

This (84 yrs old end of August) is why I DON'T think the rebuild will take years.

Dewitt is a baseball man, loves the team.

Not sure he's ready to sell.

My hope is he gives C. Bloom the payroll he needs next season to acquire vis trade or FA the players Bloom needs to be successful sooner rather than later.

And don't worry "build internally" fans.

Unlike the former POBO (at seasons end) Bloom can walk (build a great farm system) & chew gum (build a strong major league roster) at the same time.

Dewitt doesn't want to leave this world seeing his Cardinals at the bottom of MLB.

Sure hope I'm right.

[Absolut]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

Hold it. The internet is not for reasoned and educated analysis. Please cease and desist

[mike laga]

Shannon mentioned just prior to passing that the dewits were gearing up to sell the team at that time. It could be why the team is scaling down payroll prior to the transaction.
Miss the moon man.

[ICCFIM2]

What happens when he eventually passes? Does BD3 take over?

That’s the question? Can BD3 afford to take over? There are taxes involved. Is this why ownership is sandbagging the team? Easier to sell without big contracts on the books.

I think you have figured it out. Been rumors for years that BDW3 doesn't want the inheritance tax. I think Mike Shannon let the cat out of the bag a few summers ago.

Estate taxes are complex. Whether they sell the team or not, that won't change whether the estate is subject to inheritance tax. Also, BD3 doesn't pay it, the estate does. There are a number of complicated ways to avoid/minimize inheritance taxes. Either the Dewitt's entered into one of these strategies or they didn't. If they did, given the low value of the team as of the date of purchase, the number should be manageable. If they didn't, that is on them. All of these planning ideas are highly personal and individualized. So no one will ever know unless they make it public. But, if BD3 wants/wanted to own the team, they already have this figured out. I am a retired tax professional...

low value?? see below

The St. Louis Cardinals are currently valued at $2.55 billion, according to Forbes. This valuation places them among the top 10 most valuable MLB teams.

Pretty sure he’s referring to the price the DeWitts paid in the 1990s when they purchased the team ($150 million, which included two parking garages, one of which was flipped immediately for $75 million).

That is exactly correct. When they purchased the team, it was worth something less than $100M after taking out the parking garages. What they did either then or as the value rose over time is the key issue on inheritance taxes. Who knows.

To the other comment above, does it matter if they are minority owners or not. No, it does not. The estate tax applies to the value of everything a person owns at the time they pass.

A lot of times what is done is parents will set up a partnership where the value of their ownership position is frozen, but, they receive a fixed rate of return each year or a return that could also increase over time to reflect some business changes. The kids then get the common units which go up or down in value, but have no distribution rights. I have no idea what if anything they have done. But, if you think about the way the Dewitt's have operated this franchise focusing on making a profit and cash flow, it somewhat makes sense that they used a structure like this. These structures force an annual payout to the parents. If it isn't met, it places stress on the entire organization to obtain cash to meet it. Something like that would certainly limit payroll if the profit was imperative/required to meet the structural requirements of the plan. Again, I don't know, I am only trying to match their public behavior to one of the possible planning strategies that could have been used.

This structure is quite common with business owners that want to pass the business to their heirs, not sell it. If this structure was used and BD3 sells, he doesn't get the basis step-up on his units when his father passes and he would owe capital gains tax on the entirety of the sale. So this type of planning is only used to keep the business in the family while minimizing estate taxes. Again, I don't know, but am giving an example of what they could have/might have done. To give an example, if they put this in place immediately after purchasing the team, if the father owned 50% of the net value, lets make it $80M to make it simple, his valuation would be frozen at $40M ($80M * 50% share) The estate tax exemption is $28M for a husband and wife, so the taxable estate assuming he owns nothing else is $12M. At a 40% tax rate, the estate tax is $4.8M. BD3 can afford that. Highly doubtful they would have gotten this all done on day 1. But, those are the mechanics and shows how the number could be quite manageable. Of course if they did nothing, then the estate tax will be $400M+.

[Cardinals1964]

This (84 yrs old end of August) is why I DON'T think the rebuild will take years.

Dewitt is a baseball man, loves the team.

Not sure he's ready to sell.

My hope is he gives C. Bloom the payroll he needs next season to acquire vis trade or FA the players Bloom needs to be successful sooner rather than later.

And don't worry "build internally" fans.

Unlike the former POBO (at seasons end) Bloom can walk (build a great farm system) & chew gum (build a strong major league roster) at the same time.

Dewitt doesn't want to leave this world seeing his Cardinals at the bottom of MLB.

Sure hope I'm right.

I hope you are right, but I think that is wishful thinking.