Owning the Lakers would provide billionaire investor Joshua Kushner with an iconic sports franchise — and a ‘powerful tax shield’

Billionaire investor Joshua Kushner and former Disney CEO Bob Iger recently made waves in the sports industry by purchasing the Los Angeles Lakers for a staggering $12.5 billion. This record-breaking acquisition grants ownership of an NBA franchise with 17 championships and connections to iconic players such as Magic Johnson, Kareem Abdul-Jabbar, Kobe Bryant, Shaquille O'Neal, and LeBron James.

However, the Lakers' purchase offers more than just a prestigious sports asset - it also provides significant tax benefits. Sports teams have long been seen as excellent tax shelters for wealthy individuals, with Ram Ahluwalia, founder of Lumida Wealth Management, asserting that Kushner's acquisition of the Lakers is primarily driven by tax considerations.

Ahluwalia suggests that Kushner is likely using the deal as a "powerful tax shield" to offset large gains from his investments in SpaceX, OpenAI, and Stripe. Ahluwalia also points out that tax deductions for team ownership are more advantageous than those for real estate investments. Comparing successful team owners, Ahluwalia highlights how Warren Buffett leveraged depreciating goodwill expenses from high-quality brands owned by Berkshire Hathaway and Mark Cuban's strategic approach to increasing equity value while lowering tax bills.

Team owners can lower their tax bills by amortizing key assets like media rights, treating other assets as depreciable, such as contracts and the stadium, and shifting income to units with better tax rates. The Lakers' purchase allows Kushner to capitalize on these tax benefits while enjoying the unique status of being part of an exclusive club of team owners.