Britt, Warnock Seek Tax Fix for Pro Sports Teams
Bipartisan bill would shield players and coaches from a 2027 deduction limit while keeping executive pay rules intact
TL;DR: Britt and Warnock want to exempt athletic personnel at publicly traded pro sports teams from a salary deduction limit set to expand in 2027. The bill would keep existing executive pay limits in place.
U.S. Senators Katie Britt and Raphael Warnock have introduced a bipartisan bill to change how publicly traded pro sports teams deduct pay for players, coaches and team managers.
The Alabama Republican and Georgia Democrat say the measure would prevent teams such as the Atlanta Braves from facing a tax disadvantage because their shares trade on the stock market.
The issue stems from the American Rescue Plan Act of 2021. As the IRS explains, Section 162(m) generally limits a public company’s tax deduction for each covered employee’s pay to $1 million a year. Starting in 2027, that rule expands to cover five of its highest-paid employees beyond the executives already covered.
For a pro sports team, that could pull high-paid players and other athletic staff into a rule aimed at executive pay. Losing those deductions could increase a team’s taxable income even though its payroll remains the same.
The bill would exclude athletic personnel from that added five-employee category. Existing limits on executive pay deductions would remain in place.
“Beginning next year, a tax law signed in 2021 will expand to include a public company’s five highest-paid employees beyond its senior executives. For publicly traded professional sports organizations like the Atlanta Braves, this means players and other on-field personnel will be swept into a tax rule designed around executive compensation,” said Britt. “Our bipartisan bill makes a targeted correction by excluding athletic personnel from that additional five-employee category while leaving the existing executive-compensation rules in place. I appreciate Senator Warnock’s partnership on this commonsense fix to ensure the Atlanta Braves are not unfairly penalized for being a public company.”
In his Sept. 30 release, Warnock said the bill would give publicly traded teams fair treatment alongside privately owned clubs.
“The Atlanta Braves are a historic franchise that has showcased Atlanta and Georgia to the world,” Warnock said. “I am proud to have worked across the aisle to help the Atlanta Braves and other publicly owned teams continue to thrive and win on the playing field. This legislation will ensure fair tax treatment between professional sports teams.”
A companion House bill is being led by Republicans Nicole Malliotakis of New York and Brian Jack of Georgia, along with Democrats Tom Suozzi of New York and Lucy McBath of Georgia.
“We applaud the bipartisan work of Senators Warnock and Britt and Representatives Malliotakis, Suozzi, Jack, and McBath to correct an unintended competitive disadvantage harming publicly traded professional sports teams,” the Atlanta Braves said in a statement. “Unlike C-suite executives, professional athletes work within league rules and do not receive equity or make business decisions for their teams. Yet, the tax code does not recognize the distinction. These members agree that this was an unintended consequence, and we appreciate their willingness to clarify the original intent of the law.”
