Uncle Sam Becomes Your Partner (the Depreciation Logic of Control Ownership)

Control ownership of a franchise lets the tax code co-fund the purchase — a structural after-tax edge a passive minority stake can't fully capture.

Problem it solves

Why a controlling interest in a sports franchise beats a passive limited-partner stake on after-tax returns — and part of why control commands a premium.

Best for

Operators buying control of an asset who also have other income to shelter.

Not ideal for

Passive minority investors, who can't capture the same depreciation benefit.

Overview

Why this framework exists

Kraft's most quotable framing of the asymmetry between control and minority ownership: a control owner can depreciate/amortize the franchise asset and use it to offset income from their other business ventures, so 'Uncle Sam becomes your partner in buying the asset.' A passive LP doesn't get the same shelter, which is part of the structural reason control stakes are worth more than minority ones.

Core principles

3 total

Control ownership unlocks depreciation/amortization a minority LP largely can't use.
'Uncle Sam becomes your partner in buying the asset' — the tax shield offsets income across the owner's wider portfolio.
That after-tax edge is one reason control stakes carry a premium over LP stakes (and why the LP discount existed).