Nasty multi-million dollar divorces make for some great financial insights, especially when they wind up in court.
Today’s lesson: How profitable it can be to own a professional sports franchise, and how the tax code’s preferential rates for capital gains benefit the super-wealthy.
Frank McCourt owned the Los Angeles Dodgers. When he and his wife Jamie divorced, Jamie got $131 million as a settlement.
They were back in court this week. The reason: Shortly after the divorce, Frank sold the Los Angeles Dodgers for $2.15 billion. Jamie’s lawyers say the settlement should be thrown out because she was misled about the value of the team. (Isn’t it entertaining when people fight over hundreds of millions of dollars?)
The tax angle: Court documents show that Frank made $1.278 billion on the sale. His lawyers say he has paid more than $460 million in state and federal taxes on the sale.
If you’re keeping score at home, that’s a combined federal-and-state tax rate of about 36%, or roughly the same percentage that a single person in California would have to pay on ordinary taxable income of more than $90,000.