that Andlauer owns 10% of the Canadiens, which he will have to sell because the league forbids a controlling owner of an NHL team to own a stake in another NHL team.
“Assuming that Michael Andlauer would offer his LP stake in the Canadiens on the open market, the timing would be propitious,” says Drew Dorweiler, managing director and valuation practice leader at IJW & Co. Ltd.
Typically, the NHL would give someone like Andlauer a grace period of several months to sell his LP stake in the Canadiens. But a piece of the Canadiens would find no shortage of potential buyers. Although they have not won the Stanley Cup since 1993, the Canadiens have captured 23 championships, ten more than the runner-up Toronto Maple Leafs, and are the most iconic NHL team. Bankers believe a 10% stake could fetch $140 million or so.
But he’d have to pay capital gains taxes because even if he gave the sellers his stake in the Canadiens as partial payment for their interest in the Senators, that “use” of the Canadiens stake would be tantamount to a sale of the stake and would give rise to a capital gain—and whether he has capital losses that can offset the capital gain does not make the capital gain any less taxable. Importantly, in Canada, capital gains are taxed at a 50% inclusion rate .
To his advantage, Andlauer will be selling a stake in a relatively high-value team for one in a relatively low-value team. Andlauer, who will own about 60% of the Senators, will need roughly $400 million of equity, of which selling his stake in the Canadiens would net him almost one-third.
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