No, you can't donate to charity. Oh, and Merry Christmas.

You're a mean one ...

Bobcats owner blocks shares donation to charity

CHARLOTTE, N.C. (AP) -- A minority owner of the Charlotte Bobcats wants to donate his share of the basketball team to a charity, but is being blocked by team managing partner Bob Johnson, The Charlotte Observer reported Sunday.

Felix Sabates wants to give his Bobcats stock, which he values at about $1.34 million, to the foundation that supports Carolinas HealthCare System. The Cuban-born Sabates, also a prominent NASCAR team owner, is a member of the system's board.

"I was surprised Bob wouldn't approve this, considering it's a donation," Sabates told the newspaper in an interview Friday.

Sabates received a letter from Johnson's attorney, Van Sinclair, on Nov. 29 denying his request to transfer the shares, saying the NBA does not allow not-for-profit or charitable entities to own an interest in its franchises.

A subsequent letter from Sabates to the health care system quoted Johnson as saying the NBA had nothing to do with the decision, which was made because Johnson "does not wish to have any charitable organization in partnership with the Charlotte Bobcats."

"I am really surprised at his decision. I thought this would be a great opportunity for the Bobcats to become a real part of this community," Sabates wrote.

The newspaper obtained copies of the letters and other documents.

Johnson and Sinclair both refused to comment to the Observer.

NBA spokesman Tim Frank said Friday that nothing in the NBA's constitution specifically bars a not-for-profit or charitable organization from owning stock in a team.

But, he noted, the league's Board of Governors must approve any ownership change.

In a letter to Sinclair, Sabates said his proposed donation came as a result of discussions with his financial advisers over his estate planning, and was not meant as a reflection on the Bobcats organization.

Sabates' share of the Bobcats is less than 1 percent of the original $300 million franchise fee.

 

Merry Christmas, Bob Johnson -- you prick...
May you be visited by the three ghosts of SportsJournalists.com Christmas -- Dyepack, Columbo and petty Tom Petty...

 

You know, it's easy to call Johnson a prick here, but the notion of a charitable organization, particularly one in the health care sector, owning a pro sports franchise seems a little weird. I mean, do we want Carolinas Health Care put in a position of deciding between buying a new MRI machine or signing a top-notch power foward? Just looks like one would sort of be at cross purposes with the other, and if that's so, Johnson's absolutely right to step in. Donating Microsoft stock would be one thing, but stock in a sports franchise doesn't look like much of a positive for either side. Sabates could sell the stock and donate the proceeds and probably accomplish the same thing.

 

Since the amount of input would be less than one percent of the overall picture, my original assessment stands upon reassessment... Johnson's a prick.

 

Is there some conflict in whether the system is the official healthcare provider of the Bobcats, etc.? I would say they're not the Bobcats' healthcare provider, which could be one issue.

Also, what is the ownership of the health system like? Is it attached to some religious entity? I'm guessing no, since a quick search of their Web site didn't indicate such.

I agree, in general, with Slappy's comment, but n_w also has some valid points.

 

Exactly. It's just a way of charitable giving. The tax deduction in the current value of the gift and no gain needs to be recognized between the original investment and the increased value of the present gift, which the charity can realize.
Bob Johnson is a prick.

 

If he was allowed to donate his shares in the team to the healthcare system/charity, would the other owners have a say in who the healthcare system sold them to for a profit? For instance, lets say its 10,000 shares of Bearcats stock valued at $134 each. If the healthcare system wanted to sell the shares as a fundraiser to lets say 100 people at $13,500 each (or more), would the majority shareholders or the league be able to have a say in who can buy those minority holdings in the team?

 

that depends on what type of corporation it is and what type of shares they are. it's not a publicly traded corporation, so standard SEC rules don't apply. the people who created the company control what happens to the shares.

fwiw, i think it's absolutely fucking despicable that johnson won't allow this -- he loses nothing by having one percent controlled by a charity. it'd be just like me controlling one percent of his franchise. no matter what i want or say or feel, i only own one percent so i am powerless, except to make a profit (or lose it all).

 

No good deed goes unpunished.

 

Not sure what the laws are like in Carolina, but I believe most states (if not all) allow non-profit corporations to receive corporate stock as donations.

The only time the non-profit would see any monetary reward is if the corporation (in this thread's example, the team) was sold. I'm not sure the non-profit can sell the stock on its own.

Of course private companies can decide who they want to have as owners, so it is the majority stakeholder's perogative on this one. Unfortunate as it may be.

 

Donating equity shares to a charity allows the donor an immediate tax deduction without worry about the tax consequence, but with the tax rate on capital appreciation only 15%, it is unlikely to be a major issue.

The charity would have some difficulty divesting itself of private stock, though it could leverage the ownership into significant publicity. A donation like this would likely be treated like that of a real estate donation. It is well appreciated but makes extra work for the staff.