A look into why NFL (Love's) contract negotiations take SO LONG.

[Patler]

Apparently, Caleb Williams' financial and negotiating teams tried some novel approaches for their client, to minimize taxes and maximize his income. These, of course, required league review against the CBA requirements and restrictions, as well as opinions on policy implications. A couple things proposed:

- Incorporating Williams to provide services to the Bears through an LLC, with the Bears paying the LLC, not Williams directly.
- Williams receiving part of his payment as a loan to be forgiven in the future, thus delaying his payment of taxes until the loan was actually forgiven. In essence, giving him use of the total amount for a number of years, before having to meet his tax obligations.

Ultimately, the league did not approve either of these approaches. But apparently each required extensive legal review before determinations were made.

This was a "simple" contract worth only 10s of millions. I can only imagine what is involved in Love's contract worth hundreds of millions.

[MadtownPacker]

Shit doesn’t sound legal at all.

[MadScientist]

Shit doesn’t sound legal at all.

I doubt those proposals were created in a vacuum. Those are CEO style tax dodges, but it isn't legal to pay a football player like that under the CBO.

[ThunderDan]

Players are W-2 employees. They have to pay state tax in the states they play that week’s game in on top of federal taxes.

The Trump tax cut got rid of the unreimbursed business expense deduction for employees (except military). That cost my client over $40k in tax losing $175,000 plus in deductions.

Williams by being an LLC would be a business and he could deduct all of those expenses again.

I understand why he would try to push for that.

[red]

Shit doesn’t sound legal at all.

his father also said before the draft that he wanted to be made part owner of whatever team drafted his kid

that ain't legal either

elevator doesn't seem to go to the top floor with this family. thats why i think he's going to be more of a headache for the bears, then a positive

[MadtownPacker]

Going to be? He is already a headache. Hasn’t done shit and wants special treatment says it all. I’m happy to see how it is developing.

[MadtownPacker]

I doubt those proposals were created in a vacuum. Those are CEO style tax dodges, but it isn't legal to pay a football player like that under the CBO.

That’s what is surprising. The bears can’t really be this stupid to give the keys to the kingdom to this prick. Right? All this espn talk of them becoming a quality organization. This sure ass hell isn’t it.

[NewsBruin]

Players are W-2 employees. They have to pay state tax in the states they play that week’s game in on top of federal taxes.

The Trump tax cut got rid of the unreimbursed business expense deduction for employees (except military). That cost my client over $40k in tax losing $175,000 plus in deductions.

Williams by being an LLC would be a business and he could deduct all of those expenses again.

I understand why he would try to push for that.

Yeah, that's just the 2017 pass-through thingy that's on the books until 2025, right?

[Patler]

The Trump tax cut got rid of the unreimbursed business expense deduction for employees (except military). That cost my client over $40k in tax losing $175,000 plus in deductions.

Williams by being an LLC would be a business and he could deduct all of those expenses again.

I understand why he would try to push for that.

What types of expenses had pro athletes claimed previously? Was it mostly their off-season activities, like trainers, coaches, etc. and living expenses away from their homes for those activities? Their team-sponsored activity expenses in the off-season and most in-season expenses are either paid by the teams or covered under per diem reimbursements, aren't they?

[Patler]

I cannot criticize Williams' "team" for making such proposals. I can't fault them for trying to find ways to minimize his tax obligations or maximize his opportunities from the use of money by delaying his tax obligations. That's what he pays them for.

[MadScientist]

And once the proposals were made, they couldn't just dismiss them out of hand, their lawyers had to check all the relevant laws and interpretations before saying nope, and that took time. I can't really fault the Bears for not having all the information on hand for a proposal that was out of left field.

[Patler]

Things I find interesting in this story include:

- The CBA actually defines "Player Affiliate" to be any person or entity owned or controlled by, affiliated with, or related to a player.

- "Salary" is defined to include any compensation that a Player or Player Affiliate is entitled to under a Player Contract.

- "Salary" is defined to also include the amounts of loans made under a Player Contract.

It would seem that the CBA contemplates the concepts of making payments not just to a player but also to an entity (such as an LLC) owned or controlled by a player and loans made to a player; both to be included as salary under salary cap calculations.

[ThunderDan]

What types of expenses had pro athletes claimed previously? Was it mostly their off-season activities, like trainers, coaches, etc. and living expenses away from their homes for those activities? Their team-sponsored activity expenses in the off-season and most in-season expenses are either paid by the teams or covered under per diem reimbursements, aren't they?

Training, Dietitian, Supplements, Travel (any out of pocket expenses plus travel during the offseason), Membership, Meals, Agent Fees and Union Dues. That is a pretty good list to start with.

[ThunderDan]

Yeah, that's just the 2017 pass-through thingy that's on the books until 2025, right?

It isn't a pass-through thing. It is an itemized deduction thing.

It is on the books until 12/31/2025. Then it sunsets and we go back to the old laws.

[Patler]

Training, Dietitian, Supplements, Travel (any out of pocket expenses plus travel during the offseason), Membership, Meals, Agent Fees and Union Dues. That is a pretty good list to start with.

This is quite interesting. I had not previously considered how those changes affected professional athletes. The one that really jumps out to me is agent fees. After looking into it just a tiny bit, I understand that agents' fees for negotiating endorsement contracts are deductible but fees for negotiating playing contracts are not deductible. I don't see any reasonable basis for distinguishing between the two.

Agent fees. - Thats an awful lot of money that a player never sees that he has to pay taxes on.