Proposition 40 Targets In-State Sports Owners

Los Angeles, California. Proposition 40 on the November ballot would impose a one-time wealth tax on high-net-worth individuals. The measure would directly impact the ownership structures of the 15 professional sports teams currently based in the state.

Six of these 15 teams have controlling or plurality owners who live outside California. The tax applies only to the value of teams owned by residents. It does not reach the value of in-state franchises controlled by nonresidents. This distinction creates a financial advantage for out-of-state ownership groups.

Stan Kroenke, a Texas resident, owns the Los Angeles Rams and the SoFi Stadium in Inglewood. His ownership structure would be shielded from the tax, unlike that of a local owner. Other out-of-state owners control teams in the state, further widening the gap between resident and nonresident stakeholders.

Forbes estimates indicate that operating income for major league franchises is a small fraction of total franchise value. For the Los Angeles Chargers, annual operating income is approximately 0.7 percent of franchise value. The San Francisco 49ers report this figure at 1.2 percent, and the Los Angeles Rams at 2.5 percent.

A 1 percent annual wealth tax would consume most or all of the operating income shares for California-based owners of the Chargers and 49ers. The tax burden is heavier for teams that privately finance their stadiums. SoFi Stadium, Intuit Dome, and Chase Center were privately financed, making them taxable wealth.

Publicly owned venues such as Levi’s Stadium, Golden 1 Center, and Petco Park are not subject to the same valuation. Economists note that a wealth tax makes private stadium financing more expensive. This dynamic encourages teams to seek public ownership, a model that already faces criticism for relying on subsidies.

The tax could alter future sales of California franchises. Out-of-state bidders could pay higher prices because their wealth is not subject to the state tax. Existing local owners might face incentives to sell or relocate. These shifts could tighten operating margins for locally owned teams and reduce their ability to invest in competitive advantages.