The heir apparent O's owner

[spiritof66]

11 minutes ago, TonySoprano said:

Billionaire owner, runs a prestigious law firm, it would be galactically stupid of him not to have his affairs in order.  Speculate all one will, but I’d say it’s more than “highly likely.”

 

One small wrinkle. It's become increasingly common for those who want to maintain secrecy about their assets, and where those assets go when they die, to bequeath assets through a living trust instead of a will. The trust accomplishes essentially the same things as a will. A key advantage is that when the maker of a will dies, a will is filed in probate court and is available to the public, while a trust document is not publicly available. Sounds like something that might appeal to Peter Angelos.

It appears from a quick internet search that such trusts work, and are used, in Maryland. But I don't know that. https://www.legalzoom.com/articles/create-a-living-trust-in-maryland

 

[wildcard]

14 minutes ago, spiritof66 said:

You're right that by leaving his interest in the team (including his indirect interest in MASN) to Mrs. Angelos, Peter Angelos would defer the estate taxes on that asset until her death. You're also right that virtually all the discussion about the future of the Orioles has looked to Peter either leaving the team to his sons or selling it -- the only mentions I've seen about a possible transfer to Mrs. Angelos have been in Hangout threads. In thinking about this issue over the past few years, I've made internet searches on Mrs. Angelos and have come up just about empty.

An inheritance plan in which the surviving spouse inherits most of the deceased spouse's assets, after specified amounts to relatives, charities, etc., is very common, and it's pretty straightforward when the assets are stocks, bonds and other passive investments. The situation gets more complicated with bequeathing an asset like majority ownership of the Orioles -- a complex business that is intimately identified with one spouse and not the other, especially where the asset is extremely valuable but faces time-sensitive challenges and decisions at the time of the first spouse's death. Here there's the added factor that the transfer can't be effective without the approval of a majority of MLB's owners.

Not knowing anything about Mrs. Angelos or her relationship with her husband and sons (I'm assuming that this is Peter's only marriage), I can speculate about a bunch of reasons why Peter Angelos's will might not leave his interest in the Orioles to her: she may not want to own the Orioles, or he may not trust her judgment in  running the team or hiring people to run it, or he may not be willing to rely on her leaving John and Lou in place as the decision-makers, or he may believe she would sell the team right away, or her relationship with John or Lou or both may not be good, or she may have her own health issues, or he may want to see John and Lou installed as owners right away, without potentially waiting another 15 or 20 years, when they'll be in their 60s. (It appears Mrs. Angelos is about 28 years older than John.) Who knows? Not me.

One thing I am pretty clear on is that a transfer of a controlling interest to Mrs. Angelos is far from certain to obtain the required approval of 15 other MLB owners. Aside from the deep enmity that MLB has for Peter Angelos, which his widow might have a problem distancing herself from, it appears that Mrs. Angelos has had no role in running the Orioles and, so far as I can tell, has no business or financial experience of any kind. It also appears she would have no significant source of future revenue outside of the Orioles (and MASN) to devote to the team should there be a need to do so. Apart from asking to become the only woman in the owners' club, Mrs. Angelos would differ from, I believe, every other owner in that all have had substantial business and/or finance backgrounds, and all have other business interests and income.

A vaguely related point. Much of the discussion about post-Peter Angelos ownership of the Orioles has been in terms of his leaving the team to his two sons. If Peter leaves half his interest in the team to each, neither will own a controlling interest in the team. MLB will not -- and I'm pretty certain of this -- approve a transfer that leaves the sons sharing control of the Orioles, raising the prospect of disputes, uncertainty and even deadlock over the team's future. One of the sons, presumably John, would have to be given control of the team, either through majority ownership or a contract between them.

One approach that I think would make sense in terms of how it would fly with the other owners, in light of my very limited knowledge about the situation, would be for Peter to leave to John (a) enough of his interest in the Orioles to give John 51 percent ownership and control of the team and (b) some portion of his other assets for future investment of the team, and to leave the rest to Mrs. Angelos, deferring a big hunk of his estate taxes. That would allow John to make his pitch to MLB and the owners about how he would try to get along with them and with the Commissioner in a way that would differ from the pattern of the past 25 years. 

I think Peter owns at least 51% of the Orioles so the minority owners don't have much say.   MASN is probably a separate entity.  His law firm is also a different entity.   His investment are probably separate.   He is worth 2.1B according to Wikipedia.  Don't know how accurate that is.

I think Peter could leave controlling interest to his wife to avoid estate taxes but stipulate that that sons run different entities of  the businesses.    That is compete speculation on my part.

Getting MLB to approve the transfer under the terms in Peter's will may be dicey.   But his law firm could be in the middle of that approval.

[Frobby]

29 minutes ago, spiritof66 said:

If Peter leaves half his interest in the team to each, neither will own a controlling interest in the team. MLB will not -- and I'm pretty certain of this -- approve a transfer that leaves the sons sharing control of the Orioles, raising the prospect of disputes, uncertainty and even deadlock over the team's future. One of the sons, presumably John, would have to be given control of the team, either through majority ownership or a contract between them.

MLB definitely has a rule that says that decision making control has to be fully vested in one person per team.    I don’t think that necessarily means that person has to be the majority owner.    For example, Ted Lerner recently turned over operational control of the Nats to his son Mark, even though Ted is still alive and, so far as I know, is still the majority owner.  https://www.google.com/amp/s/www.washingtonpost.com/amphtml/sports/nationals/nationals-owner-ted-lerner-92-to-cede-control-of-club-to-son-mark/2018/06/14/3902cb24-6f80-11e8-afd5-778aca903bbe_story.html

[99ct]

51 minutes ago, TonySoprano said:

Billionaire owner, runs a prestigious law firm, it would be galactically stupid of him not to have his affairs in order.  Speculate all one will, but I’d say it’s more than “highly likely.”

 

And yet, the cobbler's kids have no shoes often enough to make it a figure of speech

[spiritof66]

31 minutes ago, wildcard said:

I think Peter owns at least 51% of the Orioles so the minority owners don't have much say.   MASN is probably a separate entity.  His law firm is also a different entity.   His investment are probably separate.   He is worth 2.1B according to Wikipedia.  Don't know how accurate that is.

I think Peter could leave controlling interest to his wife to avoid estate taxes but stipulate that that sons run different entities of  the businesses.    That is compete speculation on my part.

Getting MLB to approve the transfer under the terms in Peter's will may be dicey.   But his law firm could be in the middle of that approval.

When I tried, I was unable to figure out how much of the Orioles Angelos owns. He started at 60 percent and has bought out other investors. I think I estimated that he owns somewhere between 75 and 80 percent.

The Orioles and the Nats own MASN. The Orioles own about 78 percent of MASN, and that decreases by 1 percent each year until it hits 67 percent. The Nats own the rest.

I think the $2.1 billion comes from Forbes, the only source of these estimates I know of. It seems pretty reasonable even though I'm sure there's a lot of guesswork involved, in addition to the uncertainties about MASN.

There would be at least a potential problem with a will or trust provision giving John and Lou control of the team. If he gives Mrs. Angelos less than the full benefits of ownership of that asset, he runs the risk that the IRS will say he hasn't "really" given the asset to his spouse, and the transfer might be deemed to be, in part, to his sons and not to his spouse, triggering an obligation to pay estate taxes. How all that works is well beyond me. 

I'm not sure what the reference to Angelos law firm is intended to mean. Several posters have asserted that the Angeloses would have a legal claim against MLB or its owners if they didn't approve the transfer, but none has said what that claim would be. They can sue, but I can't imagine they would win: every owner bought the team knowing it was subject to the MLB Constitution, which requires consent to a transfer without any of the conventional limitations on the withholding of consent. 

[wildcard]

Maybe the Detroit Tigers are a good model for the transfer of the team to a trust.

Good article:

http://www.crainsdetroit.com/article/20170218/NEWS/170219847/who-owns-the-tigers-family-plan-is-a-matter-of-trust

[TonySoprano]

3 hours ago, spiritof66 said:

Not knowing anything about Mrs. Angelos or her relationship with her husband and sons (I'm assuming that this is Peter's only marriage), I can speculate about a bunch of reasons why Peter Angelos's will might not leave his interest in the Orioles to her: she may not want to own the Orioles, or he may not trust her judgment in  running the team or hiring people to run it, or he may not be willing to rely on her leaving John and Lou in place as the decision-makers, or he may believe she would sell the team right away, or her relationship with John or Lou or both may not be good, or she may have her own health issues, or he may want to see John and Lou installed as owners right away, without potentially waiting another 15 or 20 years, when they'll be in their 60s. (It appears Mrs. Angelos is about 28 years older than John.) Who knows? Not me.

Peter Angelos tried to buy Rosecroft raceway under his wife's name in 2005.  In 2011, he tried to buy a racetrack in PG County.  My assumption is he didn't do that because of her expertise in horse racing, but because ...

Quote

Angelos, a top Baltimore lawyer and avid owner of thoroughbred horses, is prohibited from having a direct ownership stake in a gambling enterprise under Major League Baseball rules. The ownership and management structure under Angelos at Rosecroft was unclear in court documents.

http://www.baltimoresun.com/business/bs-bz-ocean-downs-grand-opening-20110104-story.html

So leaving the Orioles in his wife's name is one thing; expecting that she'll actually run it, as opposed to her sons, is another.   John P. Angelos, Team President.   *disclaimer, NO I have no idea about the inner workings of his will etc., just common sense.

[spiritof66]

4 minutes ago, TonySoprano said:

Peter Angelos tried to buy Rosecroft raceway under his wife's name in 2005.  In 2011, he tried to buy a racetrack in PG County.  My assumption is he didn't do that because of her expertise in horse racing, but because ...

http://www.baltimoresun.com/business/bs-bz-ocean-downs-grand-opening-20110104-story.html

So leaving the Orioles in his wife's name is one thing; expecting that she'll actually run it, as opposed to her sons, is another.   John P. Angelos, Team President.   *disclaimer, NO I have no idea about the inner workings of his will etc., just common sense.

That makes sense, but it creates problems, too. If Peter Angelos leaves his interest in the Orioles to his widow with an understanding and expectation that she'll allow her sons to run the team, but she retains some power to change that (for example, she gets to fire them for cause or replace them if they quit or die), that will present the other owners with the prospect that she might someday be in charge. If Peter Angelos leaves her his interest in the Orioles and MASN, but grants to his sons the power to run it without her involvement or interference, I think that will give rise to estate tax problems. 

As the proposed arrangement for the post-Peter Angelos Orioles gets more complex, the easier it will be for the other owners to just say "No." There are structures like trusts that work if you're trying to solve a problem with ownership rules, even if the result is a little weird or complicated. It's a different type of problem to come up with a structure that will work for estate tax purposes, be practical for running the team, and optimize the chances of getting approval from the other owners. 

 

[wildcard]

11 minutes ago, spiritof66 said:

That makes sense, but it creates problems, too. If Peter Angelos leaves his interest in the Orioles to his widow with an understanding and expectation that she'll allow her sons to run the team, but she retains some power to change that (for example, she gets to fire them for cause or replace them if they quit or die), that will present the other owners with the prospect that she might someday be in charge. If Peter Angelos leaves her his interest in the Orioles and MASN, but grants to his sons the power to run it without her involvement or interference, I think that will give rise to estate tax problems. 

As the proposed arrangement for the post-Peter Angelos Orioles gets more complex, the easier it will be for the other owners to just say "No." There are structures like trusts that work if you're trying to solve a problem with ownership rules, even if the result is a little weird or complicated. It's a different type of problem to come up with a structure that will work for estate tax purposes, be practical for running the team, and optimize the chances of getting approval from the other owners. 

 

The Detroit Tigers are owned by a trust that is the name of the Ilitch Family.   The wife gets a steady income and the Tigers are run by the CEO and President  which in  the son.

[spiritof66]

1 minute ago, wildcard said:

The Detroit Tigers are owned by a trust that is the name of the Ilitch Family.   The wife gets a steady income and the Tigers are run by the CEO and President  which in  the son.

It appears the trust was created to avoid ownership by Mike Ilitch's widow. I would think that means the spousal exclusion from estate taxes doesn't apply and MIke's estate had to pay those taxes, but that may be wrong.

Without knowing the details, I can see where MLB and other MLB owners would be perfectly happy with the Ilitches' arrangement. I assume they liked and trusted Mike Ilitch, want to keep the family's billions invested in MLB, and view this as an appropriate way to effect a transition to ownership by the next generation.

The Angelos family is not in that position. 

[weams]

5 hours ago, esmd said:

I thought in MD when a spouse dies, all assets of the deceased automatically go to the spouse with no taxes to be paid, unless there is legal documentation specifying other arrangements?  It's how Georgia Frontiere got the Colts when Carroll Rosenbloom died and traded them to Irsay for the Rams.

Pretty sure If PGA passes before Mrs. Angelos, the team goes to her, and then when she passes, their respective or joint wills come into play, along with the estate tax.  Most likely she'll be the owner on paper, with the sons running day to day operations.

I think Carroll traded teams before he died. 

[wildcard]

6 minutes ago, spiritof66 said:

It appears the trust was created to avoid ownership by Mike Ilitch's widow. I would think that means the spousal exclusion from estate taxes doesn't apply and MIke's estate had to pay those taxes, but that may be wrong.

Without knowing the details, I can see where MLB and other MLB owners would be perfectly happy with the Ilitches' arrangement. I assume they liked and trusted Mike Ilitch, want to keep the family's billions invested in MLB, and view this as an appropriate way to effect a transition to ownership by the next generation.

The Angelos family is not in that position. 

But does it set a precedent?

[spiritof66]

2 minutes ago, wildcard said:

But does it set a precedent?

When there's a request to transfer control of a franchise, each owner can do whatever he wants. They are not bound to follow rules or precedents, or to be consistent, unless they want to be. I am pretty sure many owners follow the recommendation of the Commissioner, and that's why I think the Angeloses will be turned down no matter how their proposal is presented. 

Nonetheless it might be wise for Peter Angelos to do whatever Mike Ilitch did. The terms of Ilitch's trust are not public. Angelos may have gotten the trust documents, though.  

[TonySoprano]

27 minutes ago, spiritof66 said:

It appears the trust was created to avoid ownership by Mike Ilitch's widow. I would think that means the spousal exclusion from estate taxes doesn't apply and MIke's estate had to pay those taxes, but that may be wrong.

Without knowing the details, I can see where MLB and other MLB owners would be perfectly happy with the Ilitches' arrangement. I assume they liked and trusted Mike Ilitch, want to keep the family's billions invested in MLB, and view this as an appropriate way to effect a transition to ownership by the next generation.

The Angelos family is not in that position. 

O.K. IF in the event that Angelos has an identical arrangement as that of Illitch, and MLB tries to force the boys out, do they have grounds for a lawsuit?

[esmd]

1 hour ago, weams said:

I think Carroll traded teams before he died. 

Good catch.  The estate point remains, Frontiere just inherited ownership of the Rams once Rosenbloom's death.  I seem to recall she was viewed as a catalyst in the deal because she wanted to be in LA.  Ironic that she moved them to St Louis only to see them go back to LA under Kronke, lol.

I found an old article if anyone is interested:

https://www.nytimes.com/1972/07/14/archives/colts-franchise-traded-for-rams-players-remain-irsay-gets-baltimore.html