Saban scores a win over the IRS
University of Alabama head football coach Nick Saban has added a new type of adversary to his list of victories: the Internal Revenue Service (IRS).
According to The Wall Street Journal, the U.S. Tax Court ruled on Thursday that Saban will get to claim a bad-debt deduction that the federal government tried to deny him.
The deduction reportedly stems from a real-estate investment the coaching legend made in Baton Rouge through a property developer he met when he was head coach at Louisiana State University.
It was reported that Saban loaned the developer, Joseph Spinosa, $2 million in 2006 for the construction of a shopping center and office complex in Lousiana’s capital city.
The project eventually ran into financial trouble, and Saban began asking Spinosa about a plan to repay the sizable loan. The two men then agreed to contribute that debt so Saban could get a 15 percent stake in 2590 Associates, a partnership that owned a different real-estate venture in Baton Rouge.
“Mr. Saban did not want to directly own 2590 Associates because of privacy concerns,” Judge Joseph Goeke wrote in the opinion. “At the time he was the head football coach at the University of Alabama and felt there was negative public sentiment toward him in the Baton Rouge area because of his decision to leave LSU. He wanted to receive his interest through a business entity.”
2590 Associates claimed a worthless debt deduction of $2.9 million for that loan, plus interest, in 2011. The IRS challenged that deduction, arguing in part that Saban’s receipt of the stake in 2590 Associates satisfied the loan.
“While the transaction may not have been typical of a normal business relationship because of Mr. Spinosa’s personal relationship with Mr. Saban, it was a transfer of a legitimate debt,” the judge concluded.
The Wall Street Journal noted, “Even as he has built a veritable football dynasty at Alabama, Mr. Saban has also quietly built a business empire off the field, a collection of investments and projects in multiple states, public records show. Those projects have included, in recent years, a collection of Mercedes-Benz dealerships, apartment complexes around Houston, an upscale residential development in Tuscaloosa, and a strip mall outside East Lansing, Mich.”
Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn