Following a May 2014 NBA investigation of the conduct of then Los Angeles Clippers owner, Donald Sterling, NBA Commissioner Adam Silver banned Sterling from the NBA for life and fined him $2.5 million, the maximum fine allowed under the NBA Constitution.
Sterling is far from the only team owner to be fined substantially for inappropriate behavior. Eddie DeBartolo, former owner of the San Francisco 49ers for instance, was fined $1 million by the NFL after pleading guilty in a gambling fraud scheme. While these are two of the most egregious fines levied against California sports team owners, they are far from the only fines in the collective history of professional sports franchises within California.
Under current law, taxpayers are allowed to deduct ordinary and necessary business expenses incurred in carrying on a trade or business. Before AB 877, sports team owners could benefit from this deduction by writing off fines imposed by their respective leagues as business expenses.
“It is simply inappropriate to provide tax write offs to those who choose to misbehave. This money can be better spent on educating our kids, improving our roads and increasing economic opportunities across the state,” said Assemblymember Jones-Sawyer.
Tax breaks for these fines undermine the very purpose of the tax deduction for business expenses – rewarding and incentivizing good behavior. Fines imposed upon sports team owners for their bad behavior should not be viewed as an ordinary and inconsequential necessity for “the cost of doing business.” As such, the ability of owners’ to evade these fines is unjust, inappropriate and should be disallowed.
Assemblymember Reginald Byron Jones-Sawyer Sr. is a Democrat representing areas of Los Angeles and the communities of Huntington Park, Walnut Park and Florence- Firestone.
For more information contact: Joey Hill (916) 319-2059