What Richie Incognito and Joe Robbie Have in Common Other Than the Dolphins
By: Barry E. Haimo, Esq.
February 22, 2014
By now, everyone is tired of hearing about the Miami Dolphins. The commentary usually criticizes poor coaching, management and performance. These days, the story keeps on getting better and better though. The Dolphins have a glimpse of hope that they may make the playoffs. Then, suddenly, a 300+ pound lean, mean fighting machine, a professional athlete in perfect physical condition — Jonathan Martin — abandons his team at the most inopportune time because he was somehow able to allegedly be bullied by his teammate, another 300+ super human athlete; all while under the national media scrutiny, the antagonist, a man whose legal name is actually “Incognito”. You have to appreciate both the irony and the absurdity. I can only assume this fiasco has ruined both players’ careers. I think it’s safe to call it a blunder. So what does this have to do with Joe Robbie? Well first, there’s the obvious connection to the Miami Dolphins organization. Second, Joe Robbie’s failure to properly plan his estate is also characterized as a blunder, and here’s why.
Joe Robbie, an attorney, was the initial owner of the Miami Dolphins franchise. His estate also owned the stadium as well. Consequently, following his death in 1990, due to inadequate liquidity, his estate was forced to sell the Dolphins and the stadium to pay the estate tax. The tax rate was 55% of aggregate estate assets above $600,000. As a result, his estate was forced to sell both the team and the stadium in order to settle his estate tax debt, which was said to have exceeded $47 million. It is possible that both assets in today’s market place could, collectively, be worth nearly $1 billion. Seemingly unbeknownst to the Robbie family, the carpet was pulled out from under their feet.
“But arrangements to pay the taxes, including an insurance fund set up by Joe Robbie are in place and it is unlikely the Robbies will lose control of the team, said Robert Shevin, who represents Tim, Dan and Janet Robbie. “We think that under any circumstances control would be maintained, “Shevin said. “Because the bottom line is we’d like to sell none.”
Citing: 1992 article in the Sun Sentinel – http://articles.sun-sentinel.com/1992-01-10/news/9201020475_1_janet-robbie-estate-taxes-tim-robbie
In addition to Joe Robbie, Alwin Ernst of Ernst and Young, Frederick Vanderbilt and William Boeing all shared more than half of their wealth with government tax collectors. Perhaps that is how they wanted to leave their legacy behind, but I suspect their families would have preferred to have received the assets rather than the federal government.
What could Robbie have been done to avoid losing the team?
With a little planning, such a devastating loss could have been avoided cost effectively. For example, properly forming an irrevocable life insurance trust to obtain and own a life insurance policy insuring the life of Joe Robbie would have produced sufficient cash to pay the taxes. The cost would have been inexpensively leveraged relative to the taxes that would inevitably become due. The Robbie family could have retained ownership of the team for the foreseeable future with a little planning. Maybe then the Dolphins would be an exceptionally performing franchise and the Martin / Incognito blunder would not have occurred. Who knows.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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