Peter Angelos, who purchased the Baltimore Orioles for $173 million in 1993 for $173 million, died yesterday.
In January, the Angelos family agreed to sell the baseball team to private equity billionaires David Rubenstein and Mike Arougheti for $1.725 billion. The deal was structured such that the incoming ownership group would initially own 40% percent stake of the team and buy the Angelos’ remaining interest following the death of Peter Angelos.
Now that Angelos has passed away, the option to acquire his stake in the Orioles can be exercised (it was only exercisable upon his demise) and the option holders, the buying group, can thus succeed to majority ownership of the team. For tax purposes, it was critical that the option only be exercisable upon his death. This restriction allowed the basis of Angelos’ stake to be stepped-up to its date of death value. Accordingly, there will be no gain recognized upon the sale of his stake by his estate (or his heirs) since the selling price thereof and its basis will have been brought into equilibrium.
Says tax expert Robert Willens: “His (Angelos’) advisors structured the deal with precision and their handiwork allows the family to sidestep what probably would have been over $250 million in federal and local taxes.”
The sale to Rubenstein and Agougheti was approved by the Maryland Stadium Authority last week. The Stadium Authority owns Camden Yards, home of the Orioles, and recently approved to use $400 million in public money for ballpark improvements. The sale, which included the team’s stake in its regional sports network, MASN, still needs to be approved by at least 23 of MLB’s 30 owners.