The worth of Carl Pohlad’s share of the Minnesota Twins at the time of his death is the centerpiece of an IRS action demanding $255.8 million in underpayments and penalties.
The issue: exactly how much the Twins franchise was worth as well as Pohlad’s share of it. The Pohlad family and their tax attorneys say the Minnesota Twins were worth just $293 million when Carl Pohlad died in 2009 and his 10 percent share was worth only $24 million. At the time of Pohlad’s passing the most recent MLB sales were in the $450 million range, and with a new ballpark looming (Target Field opened in 2010), the worth of the franchise had taken a definite leap with the anticipation of lots of new revenue streams.
Before Pohlad’s death, he had transferred most of his interest in the Twins to his three sons. The elder Pohlad controlled 10 percent of Twins Sports Inc., which manage the Twins, and 99 percent of MT Sports, which had a non-controlling interest in the Twins. Those two stakes basically gave him a small ownership stake of the team, which was valued at just $293 million. Therefore, the estate’s estimate of the worth of Pohlad’s share at just $24 million.
The IRS countered that this both vastly underestimated the worth of the Twins and Pohlad’s share. First, the most recent MLB franchise sales at the time — the Nationals and the Braves — were around $450 million. In addition, the nonvoting share of the team was worth more as a percentage of the Twins’ value. (Indeed, a valuation of $293 million seems really low: with a new ballpark on the horizon, it’s hard to argue the Pohlads would have received only $293 million if they had sought to sell the team. Forbes estimates the franchise was worth $356 million, and that may have been a little conservative.) So the IRS is seeking $207 million in back taxes and $48 million in penalties.
So the two sides will likely end up in Tax Court, and the experts say the real numbers involving the worth of the team and the ultimate tax payment will likely end up somewhere in the middle. From the Star Tribune:
“We believe strongly in our position and are working with the IRS to resolve the differences following their normal procedures,” said Jim Pohlad, oldest of the three Pohlad sons.
“We are respectful of the IRS and its position,” he said in an interview. “Clearly, we expected this but we just wish the process didn’t take so long. Our position is to resume negotiations as soon as both parties can.”
IRS officials declined to comment on the dispute last week.
RELATED STORIES: In memoriam: Carl Pohlad
—-
Share your news with the baseball community. Send it to us at editors@augustpublications.com.
Are you a subscriber to the weekly Ballpark Digest newsletter? You can sign up for a free subscription at the Newsletter Signup Page.
Join Ballpark Digest on Facebook and on Twitter!
Follow Ballpark Digest on Google + and add us to your circles!