Owning the Lakers is a massive tax dodge for billionaires

The potential acquisition of the Los Angeles Lakers by Joshua Kushner's Thrive Capital highlights a long-standing financial strategy among the ultra-wealthy: using professional sports franchises as sophisticated tax shelters. The core mechanism involves treating various team assets in ways that generate significant paper losses, which can then be used to offset an owner's substantial taxable income from other ventures. For instance, a team's roster of players is classified as an intangible asset that depreciates over time. This depreciation creates a non-cash expense on the books, a "paper loss" that directly reduces the owner's reported income, thereby lowering their tax bill. This is not a loophole but a deliberate feature of asset depreciation rules applied to a unique asset class.

Beyond player contracts, the tax-shielding strategy extends to other major assets. Depreciation on stadium infrastructure, including the arena itself and its improvements, provides another layer of deductions. Furthermore, the lucrative long-term media rights deals that guarantee teams billions in revenue can be amortized. The structure of regional broadcast deals can also be optimized to shift income to corporate units located in jurisdictions with more favorable tax rates. This multi-pronged approach transforms a sports team into what one expert described as a "powerful tax shield," far more effective in some respects than traditional real estate investments. The commentary specifically suggested that Joshua Kushner might be preparing to use the Lakers to offset a "boatload of carried interest income," a form of compensation common in private equity that is typically taxed at high ordinary income rates.

The financial engineering doesn't stop at tax avoidance; it also facilitates wealth accumulation. The example of Mark Cuban's ownership of the Dallas Mavericks was cited as a "trifecta" of financial success. Cuban not only utilized the team's tax advantages to convert high-tax income into lower-taxed capital gains but also significantly grew the franchise's equity value during his tenure. This dual benefit—immediate tax shielding and long-term capital appreciation—makes sports teams exceptionally attractive assets. The blockbuster nature of recent sales underscores this value, with the Boston Celtics selling for a record $6.1 billion in 2025, a record quickly shattered when Mark Walter acquired the Lakers for $10 billion later that same year. These soaring valuations are fueled by the steady, guaranteed revenue streams from long-term media contracts, which have made team income far more predictable and stable than in the past.

The appeal of team ownership, however, transcends pure financial calculus. As noted, it grants entry into "a very elite and exclusive club of owners that control those franchises." The Lakers, with their 17 championships and legacy of icons like Magic Johnson, Kareem Abdul-Jabbar, Kobe Bryant, Shaquille O'Neal, and LeBron James, represent the pinnacle of this exclusivity. The combination of immense cultural cachet, a global brand, and a powerful legal tax-shielding apparatus makes a franchise like the Lakers the ultimate trophy asset. The acquisition is not merely a purchase of a basketball team; it is the acquisition of a financial instrument capable of legally minimizing tax liabilities on a massive scale while simultaneously serving as a store of appreciating value and a symbol of ultimate status.