Alex Rodriguez just signed up for more of the tax code that treats him best. On August 21, 2026, AFP reported he is increasing his investment in the Minnesota Timberwolves and Lynx and becoming Co-Chairman, Governor of the Lynx, and alternate Governor of the Timberwolves, pending league approval. The deal values the franchise at a reported $4.5 billion, which ESPN calls the fourth-largest franchise sale in NBA history.
He is a buyer here, and that changes the entire tax treatment.
Two Kinds of Money, Two Entirely Different Tax Codes
Rodriguez earned a reported $450 million in MLB contracts the hard way, from a tax standpoint. Employee wages. Ordinary income at the top marginal federal rate in the year paid. Federal withholding pulled before the check cleared. Social Security and Medicare taxes on top. Then state income tax in every road state he suited up in, the so-called jock tax, which allocates a slice of his salary to the day he took the field in Boston, Detroit, or Anaheim.
The one twist worth noting: Rodriguez missed the entire 2014 season under a 162-game suspension upheld by an arbitrator on January 11, 2014, and was not paid that year. The lone season his baseball salary went untaxed was the season he wasn’t paid.
Ownership flips every one of those rules.
Why Owner Gains Sit Untouched Until Sale
Appreciation in an equity stake, whether that’s a public stock, a private business, or a piece of an NBA franchise, is not taxed as it happens. The Internal Revenue Code taxes gain on sale, not gain on paper. If the Timberwolves stake doubles in value over a decade and Rodriguez never sells, the federal income tax owed on that doubling is zero. Not deferred at a lower rate. Not owed later at 20%. Zero, so long as the asset is not sold.
Sports franchises are typically held through pass-through entities, so owners receive a K-1 each year and pay tax on their allocated share of operating income or losses. That is separate from the appreciation of the stake itself. The gain in the value of the equity waits.
How Step-Up in Basis Erases the Rest
If an appreciated asset is held until the owner’s death, heirs inherit it at its fair market value on the date of death. The prior cost basis vanishes. If a stake was bought for a few hundred million and is worth several billion at death, the built-in gain that would have been taxed on a lifetime sale is erased for income tax purposes.
One caveat: step-up erases the income tax on appreciation. It does not erase estate tax, which is a separate federal layer with its own exemption and rate. That bill can still come.
Congress Aimed at the Franchise Break and Left It Standing
Team owners get one more advantage most business buyers do not: they can amortize the purchase price of the franchise and related intangible assets against taxable income for years after the deal closes. The House version of the One Big Beautiful Bill Act, signed July 4, 2025, proposed limiting that amortization for professional sports franchises. The enacted law omitted the limit, according to Proskauer Tax Talks (July 22, 2025). Congress took a swing at the break and missed.
Version You Can Actually Use
The Timberwolves deal runs on the same code that governs the brokerage account and the paid-off house.
- Deferral is a tax rate. An appreciated stock or fund in a taxable account owes nothing until sold. Turnover inside a mutual fund can force gains you didn’t choose; a broad-market ETF in the same account generally won’t.
- Step-up applies to you too. The low-basis shares Grandma bought in 1978 reset to market value at her death. Selling them the week before her death and selling the week after are two entirely different tax outcomes for the family.
- The 0% long-term capital gains bracket exists. Retirees with modest taxable income can realize long-term gains at a federal rate of zero, up to the threshold. That is the small-scale version of the owner’s playbook.
- Location matters. Ordinary-income assets belong in traditional IRAs; appreciating equities belong in taxable accounts, where deferral and step-up can do their work.
The mechanic that decides all of it, for A-Rod and for the reader, is the same single question: whether the asset is ever sold during the owner’s lifetime. Everything else is commentary.
This is the kind of planning worth walking through with a fiduciary advisor or CPA before a sale, a gift, or an estate decision locks the answer in (we put the full checklist, beneficiary forms, titling, and trust basics, into a free estate guide here).
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