By Christy Strawser
DETROIT (CBS Detroit) A meme making the rounds on social media has a photo of Martha Ford and her son Bill Ford Jr. watching what’s presumably another losing Lions game with the caption “fire the Fords.”
It’s a popular sentiment.
But it’s one that well-known local financial expert says isn’t going to happen anytime soon — not because the family is so invested in the team, but because of what a sale would do to their investments.
Leon LaBrecque, CEO of LJPR Financial Advisors in Troy, says the family will not sell the team while Martha Ford is alive because if they did it would cost them hundreds of millions of dollars in capital gains taxes.
LaBrecque’s firm includes Ford Motor Co. among its clients, but he says the account has nothing to do with the Ford family or the Lions. He hasn’t discussed this with anyone close to the family or the organization, but here’s how he lays it out. Other local financial experts agreed with his assessment.
“Mrs. Ford shouldn’t sell the Lions for one big, scary reason: TAXES. She and her children would lose hundreds of millions to Uncle Sam. The massive capital gains she would bring in from the sale – potentially $1 billion – would be slaughtered by the capital gains tax,” he writes.
“When she passes, that money would be reduced again by estate tax, leaving her heirs to split less than HALF the value of the team. If she keeps the Lions, upon her passing, her heirs would receive far more.
Breaking it down into real numbers, LaBrecque says this:
“If William Clay Ford’s widow, Martha Firestone Ford, sells the team for $1,006,000,000.00 (that’s fun to write), she would have a $1billion capital gain. Since she’s held the team over one year (like 52 years), that would be a long-term capital gain. Let’s presume she has some other income, maybe social security and few dividends from owning some car company. She’d owe $238,000,000 of capital gains taxes (we think Mrs. Ford is a Florida resident, so say no state income taxes). Her estate would net $768 million. If she then passed away, the estate would pay an additional estate tax of about $307.2 million. The heirs would get $460.8 million, or less than half the value.
If she keeps the Lions; when she passes, the basis of the team ‘steps-up’ to $1.006 billion. The estate pays tax on the full value, or $402.4 million.”
In a nutshell, their best bet is to hang out until Mrs. Ford passes, for purely financial reasons.
If they had a time machine, their absolute best bet would have been to gift the team to the kids shortly after it was purchased, he added, and this situation could have been avoided all together.
“The kids could (then) sell the Lions then without paying gains,” LaBrecque explained.
A history lesson: William Clay Ford, Henry’s grandson, bought the Lions for $6 million in 1963. When William Clay Ford died at 88, the team’s ownership fell to his wife Martha, now 90.
Their children are Bill Ford Jr., Martha Parke Morse, Sheila Firestone Hamp, and Elizabeth Ford Kontulis. It remains to be seen whether any members of the next generation are interested in taking over in the event of Martha Ford’s death. None have spoken publicly on it.
Forbes lists the Lions current value at $1.4 billion. Capital gains tax rates depends on income, but generally ranges from 0 to 23.8 percent.
And the family’s taxable income has to be stupendous. According to Forbes magazine, the Ford family owns $1.1 billion worth of stock in the company founded by Henry Ford and retains 40 percent of the company’s voting rights through a special stock.
The number of zeroes in the finances of any scenario related to the Fords and the Lions is hard to wrap your head around, but LaBrecque says it’s easy to understand if you think about personal family finances.
“On a much smaller basis, if a client has a cottage up north and mom and dad got it back in the 1960s, hang on to it until mom passes and sell it without any gains taxes,” he says.
That doesn’t change if the cottage is an NFL team, and that NFL team seems to be in a shame spiral of loss and recrimination.
The number of fans calling for the family to sell the team is so large, the movement has its own Twitter hashtag. #Firethefords has hundreds of contributions.
There are also two separate go fund me accounts set up by fans trying to buy the team themselves.
Others are hopeful that billionaire Detroit native and real estate mogul Dan Gilbert will swoop in and write one of those oversized checks to buy the team that he grew up with.
But if Gilbert, or anyone else, is truly interested in buying the team, they’ll have to cool their heels before any financial adviser would tell the Fords it makes sense to give it up, LaBrecque says.