Sports franchise ownership represents one of the most significant investments a family can make, both financially and emotionally. Unlike standard business assets, a professional sports team carries public legacy, community identity, and often decades of family tradition. To preserve these assets across generations, many of the wealthiest ownership groups deploy sophisticated legal structures, particularly family trusts and thorough succession planning. These tools protect the team from estate taxes, creditor claims, and intra-family disputes while ensuring the franchise remains competitive and stable long after the founding owner steps away.

What Are Family Trusts and How Do They Work in Sports Ownership?

A family trust is a fiduciary arrangement in which a trustee holds and manages assets for the benefit of designated beneficiaries, typically family members. In sports ownership, a trust often holds the equity interest (shares or membership units) in the entity that owns the team. This structure provides legal separation between the beneficial owners (the family) and the legal title, creating important protections and operational flexibility.

For example, the Kansas City Chiefs, owned by the Hunt family, have long operated under a trust structure that centralizes voting control and prevents any single branch of the family from selling their stake without the others. Similarly, the New York Yankees are controlled by trusts established for the heirs of George Steinbrenner, ensuring the family retains majority control even as individual family members come and go from the boardroom.

Irrevocable vs. Revocable Trusts

The choice between irrevocable and revocable trusts has profound implications for tax liability, asset protection, and flexibility. A revocable trust, also called a living trust, allows the grantor to modify or dissolve the trust during their lifetime. While this offers flexibility, it does not shield assets from estate taxes or creditors because the grantor retains control. Many wealthy sports owners use revocable trusts primarily for estate planning efficiency—to avoid probate and provide continuity of management upon incapacity or death.

On the other hand, an irrevocable trust cannot be changed after creation. Once assets are transferred into an irrevocable trust, the grantor relinquishes control. This sacrifice provides significant benefits: the trust assets are generally protected from the grantor’s creditors, and they are removed from the grantor’s taxable estate. For sports franchises, which often appreciate rapidly, an irrevocable trust can freeze the value of the team for estate tax purposes at the time of transfer, while allowing future appreciation to pass to beneficiaries free of estate taxes. Many of the most successful sports families use a combination of both: a revocable trust for lifetime management and an irrevocable trust for tax-efficient wealth transfer.

Dynasty Trusts and Perpetual Ownership

A dynasty trust is an irrevocable trust designed to last for multiple generations—sometimes hundreds of years, depending on state law. Several states, including South Dakota, Delaware, and Alaska, have abolished the rule against perpetuities, allowing trusts to exist indefinitely. For a sports franchise that a family intends to keep for generations, a dynasty trust can be the ideal vehicle. It allows the team to be held in a trust that pays income to successive generations of family members while protecting the principal from divorce, lawsuits, and estate taxes at each generational transition.

For instance, if the founder places team shares into a dynasty trust, those shares are never owned outright by any individual heir. Instead, each generation receives income and perhaps limited voting rights, but never the power to sell the team unilaterally. This structure prevents a single family member from liquidating the family legacy for short-term gain. The trust becomes the permanent owner of the franchise, with the family as perpetual beneficiaries. The Pittsburgh Steelers’ Rooney family has long employed a variation of this, using a combination of voting trusts and family LLCs to centralize control across multiple branches of the family, ensuring the team remains in Rooney hands despite changing ownership percentages over the decades.

The Role of Succession Planning in Franchise Stability

Succession planning is the deliberate process of identifying, developing, and transitioning leadership and ownership from one generation to the next. In sports, this is not merely a financial exercise; it involves league approval, fan confidence, and long-term competitive strategy. A poorly handled succession can result in a forced sale, internal family litigation, or a destabilized front office.

Major professional leagues—the NFL, NBA, MLB, and NHL—all have strict approval processes for any change in control. An effective succession plan anticipates these requirements and ensures that the designated successor meets the league’s character and financial standards. The plan must also address how voting rights are allocated among family members, especially when equal economic interests are distributed but control is concentrated.

Selecting and Preparing the Next Generation

One of the most critical elements is early identification of potential successors. Many sports families rotate younger members through internships, front office rotations, and board observation roles long before they take on ownership responsibilities. For example, Jeanie Buss, controlling owner of the Los Angeles Lakers, was groomed for decades by her father Dr. Jerry Buss. Similarly, the Jerry Jones family has gradually integrated son Stephen Jones and daughter Charlotte Jones Anderson into leadership roles with the Dallas Cowboys, ensuring that when Jerry steps away, the ownership transition is seamless.

Succession planning also involves communication. Families that hold regular family meetings, create family constitutions, and establish clear policies for share transfer, employment, and dividend distribution have higher success rates in multi-generational ownership. These documents often include provisions for buy-sell agreements—contracts that specify how shares can be sold, to whom, and at what price, protecting the family from outside investors or hostile family members.

Beyond trusts, several legal instruments work together to support succession. A buy-sell agreement is a contract among owners or family members that triggers a mandatory purchase of shares upon certain events: death, disability, divorce, or bankruptcy. It prevents outside parties from acquiring an interest in the team against the family’s wishes. Funding the buyout is often accomplished with life insurance policies held in trust, providing liquidity at the moment of death without requiring a distressed sale of team assets.

Voting trusts are another common tool. In a voting trust, shareholders transfer their voting rights to a trustee (often a senior family member or a committee), while retaining their economic rights. This centralizes control and prevents a minority faction from blocking major decisions. For example, the Green Bay Packers are a public nonprofit corporation with no single controlling owner, but among family-owned franchises, voting trusts are nearly universal.

Limited liability company (LLC) operating agreements offer additional flexibility. An LLC that holds team ownership can have customized governance provisions: different classes of membership units with voting and non-voting rights, transfer restrictions, and “liquidation events” that specify when and how the franchise can be sold. Many sports families use an LLC as the top-tier holding entity, with family trusts as members of the LLC, giving them both asset protection and control over admission of new members.

Tax and Estate Planning Considerations

Transferring a sports franchise from one generation to the next can trigger massive estate and gift tax liabilities. The federal estate tax rate (as of 2025) is 40% on amounts exceeding the lifetime exemption (over $13 million per individual, but this is scheduled to drop significantly in 2026 unless Congress acts). With a franchise valued at $1 billion or more, that could mean hundreds of millions in taxes if not planned properly.

Family trusts help mitigate this. By transferring team shares to an irrevocable grantor trust, the grantor can remove the future appreciation from their estate while paying the income tax on the trust’s earnings (since it’s a grantor trust), effectively making a tax-free gift to the trust. Over time, this can shift enormous value to heirs without using up much of the estate tax exemption.

Valuation discounts also play a role. Because a minority interest in a closely held entity is not readily marketable, the IRS allows a discount on the value of those shares for gift and estate tax purposes. Family trusts that hold non-controlling interests can be funded with shares valued at a 20-35% discount, reducing taxable transfers. However, the IRS scrutinizes these discounts closely, especially after the 2016 Powell case, so careful documentation is essential.

From a state tax perspective, some states like Florida and Texas have no state estate tax, making them attractive for team ownership families. However, the team’s location and the family’s residence must both be considered. Generation-skipping transfer (GST) tax is another concern when passing wealth directly to grandchildren or trusts that skip a generation. The GST tax is imposed at the highest estate tax rate (40%) on top of any estate or gift tax, so careful planning with dynasty trusts can avoid or defer this tax.

Real-World Case Studies in Family Trusts and Succession

The Hunt Family: A Model of Trust-Based Ownership

The Hunt family of Kansas City has held the Chiefs since 1960, originally owned by Lamar Hunt. Upon his death in 2006, his ownership stake passed into a combination of trusts and family entities. Today, the team is controlled by the Hunt family through a trust structure where no single family member owns a majority, but voting power is centralized. This arrangement has allowed the Chiefs to remain in family hands despite the NFL’s rapid value appreciation. The trust also ensures that any family member wanting to sell must first offer their shares to other family members or the trust itself, preventing outside investors from fracturing control.

The Steinbrenner Heirs and the Yankees

George Steinbrenner’s death in 2010 triggered a carefully orchestrated succession plan for the New York Yankees. His four children—Hal, Hank, Jessica, and Jennifer—were named as beneficiaries of trusts that hold the team. Hal Steinbrenner emerged as managing general partner, but the trust structure ensures that no single child can sell their interest without the others. The family also used a combination of life insurance trusts and valuation discounts to minimize estate taxes. The Yankees remain the most valuable franchise in MLB, with the family retaining full control.

The Rooneys and the Steelers: A Voting Trust for Generations

The Pittsburgh Steelers are unique because the franchise is owned by a single family but with shares distributed among multiple branches. The Rooney family has used a voting trust to keep control centralized; the trustee (currently Dan Rooney before his death, now passed to his son Art Rooney II) holds the voting power for all family shares, while economic benefits flow proportionally. This structure has survived internal family disputes, including a lawsuit in 2008, and allowed the team to remain under Rooney leadership for over 80 years.

Modern Succession: The Utah Jazz and the Miller Family

Not all successions go smoothly. When Larry H. Miller died in 2009, his ownership of the Utah Jazz passed to his family through a trust. However, over the next decade, the family struggled with differing visions for the franchise, eventually leading to a sale in 2020 to tech entrepreneur Ryan Smith. This case underscores the importance of not just having a trust, but also having a family governance mechanism that aligns interests. The trust protected the family’s wealth, but it could not prevent disagreements that ultimately led to a sale—a reminder that succession planning is as much about relationships as legal documents.

Challenges and Pitfalls in Family Trust and Succession Planning

League Approval and Ownership Rules

Every major sports league has rules on trust ownership. The NFL, for example, requires that any trust holding team shares must have a “natural person” as the controlling owner. The trust’s trustee is subject to league approval, and the trust agreement must include provisions giving the league oversight over any future transfer. Similarly, the NBA requires that the controlling owner must own at least 5% of the team and be a living individual. Trusts that try to bypass league rules can be rejected, forcing restructuring. Therefore, any family trust must be drafted in coordination with league counsel to ensure compliance.

Family Disputes and Infighting

Even the best-drafted trust cannot eliminate family conflict. Sibling rivalries, unequal treatment (some children active in the business, others not), and differing financial needs can tear a family apart. Trusts that distribute income equally may cause resentment if one family member works in the front office while another does nothing. Family governance mechanisms—such as a family council, a written family constitution, and regular family assemblies—are essential supplements to the trust. They provide a forum for resolving disputes without litigation. Many sports families now include mediation and arbitration clauses in their trust agreements, requiring any dispute to be resolved privately rather than in court.

Changing Tax Laws

Tax policy is unpredictable. The estate tax exemption has fluctuated wildly over the past two decades, and the GST exemption is also subject to change. Trusts must be built with flexibility to adapt: for example, using “decanting” provisions that allow the trustee to move assets to a new trust with different terms if tax laws change. Dynasty trusts in states with no rule against perpetuities can be designed to respond to changes in federal tax law by shifting powers to a trust protector.

The Future: Private Equity, ESOPs, and Institutional Competition

While family trusts remain a dominant structure for legacy sports ownership, alternative models are growing. The NBA and MLB now allow institutional investors, including private equity firms, to acquire minority stakes in teams. This creates pressure on families to professionalize governance and to ensure their trusts are not outmaneuvered by well-capitalized institutional partners. Employee stock ownership plans (ESOPs) are also gaining traction, where the team is owned by a trust for the benefit of employees—an increasingly popular model in the NFL and NBA for teams that want to avoid dynastic control.

However, for families that want to keep the franchise in the bloodline, trusts and succession planning remain non-negotiable. The best practices are evolving: more families are adopting “family office” structures that manage the team alongside other diversified assets, using trusts for the team and separate trusts for liquid assets. The trend toward longer-term dynasty trusts and family constitutions suggests that the most successful sports families are prioritizing continuity over flexibility—locking in the team for generations rather than risking a sale.

Conclusion

Family trusts and succession planning are not optional luxuries for sports team owners; they are essential tools for preserving a legacy that often spans billions of dollars and generations of public scrutiny. By combining irrevocable trusts, voting trusts, buy-sell agreements, and clear family governance, ownership families can protect the franchise from taxes, lawsuits, and internal conflict while ensuring the team remains in the hands of those who understand its history and culture. The most enduring sports dynasties—the Hunts, the Rooneys, the Steinbrenners—all rely on these structures. As the economics of sports ownership become ever more complex, the families that invest in thoughtful, professional succession planning will be the ones that continue to hold the Lombardi Trophies and the Larry O’Briens for decades to come.