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Covington’s sports tax practice is unparalleled, as we serve as the lead outside tax counsel to the NFL, Major League Baseball, the NHL, the NBA, the United States Tennis Association, Major League Soccer, and various teams, including the Boston Red Sox.
Covington’s tax lawyers are intimately familiar with every aspect of the sports industry, from sponsorship and broadcast agreements to player signing bonuses to franchise acquisitions. We combine our deep and broad knowledge of the business of sports with our technical expertise in tax law. Our clients include leagues and teams; corporations, partnerships, and individuals; and domestic and foreign entities.
A substantial part of our work involves assisting clients in structuring their major transactions and daily operations in the most tax-efficient manner. Examples of such planning projects have included:
- Drafting the purchase agreement for an expansion franchise;
- Designing cross-border licensing arrangements;
- Advising on the terms of stadium financing programs, including the use of personal seat licenses and tax-exempt bonds;
- Establishing multi-entity, multi-jurisdictional organizational structures; and
- Developing compensation arrangements for both executives and athletes.
Equally important, we devote a significant part of our practice to representing leagues, teams, and their owners throughout the IRS audit and Appeals processes, in front of state taxing authorities, and in litigation – arenas in which we have had particular success. We serve as the lead industry representative in dealings with the IRS National Office as well as the IRS Technical Advisors for the Sports Industry.
Representative matters in the controversy area include:
- Representation of a professional sports club in a $275 million dispute with the IRS regarding stadium financing, player contracts, and broadcast agreements.
- Structuring John Henry’s sale of the Florida Marlins and simultaneous acquisition (as lead investor) of the Boston Red Sox, Fenway Park, and NESN as a tax-free transaction.
- Creation of the NHL Network and the related structuring of various cross-border licensing and broadcast relationships.
- Establishment of the U.S. Open Series, a series of tournaments leading up to the U.S. Open.
- Buffalo Bills v. United States – Obtained a tax refund for the Buffalo Bills relating to employment taxes on player salary, bonus, and severance payments.
- Frequent lobbying of state and local taxing authorities to secure the elimination or reduction of tax imposed on visiting clubs and players.
In all of these matters, we work in concert with our colleagues in the corporate, litigation, and IP practices to ensure a multi-faceted and fully integrated approach to our sports clients’ tax issues.
Accolades
- Senior of counsel Andy Friedman is recognized by both Chambers USA: America’s Leading Lawyers for Business and Best Lawyers in America as one of the nation’s leading sports lawyers.
- Partner Jeremy Spector and senior of counsel Andy Friedman are recognized as leading tax experts by The Legal 500.
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