On December 24, 2024, Barron’s quoted Larry Mandelker in a story about potential tax saving opportunities for professional athletes who earn high-value contracts.
According to the article, major league baseball player, Juan Soto’s, signed a record-setting $765 million, 15-year contract with the New York Mets. However, he could be facing millions in federal income taxes, state taxes, and “jock taxes” when visiting various cities and states for games.
Mandelker emphasized the importance of understanding the tax landscape before negotiating deals. "When an athlete signs a megadeal like Soto's, you can be sure that it is the product of intense negotiations and bargaining," said Mandelker. "What is not as apparent is the significant tax planning and structuring that forms the foundation of the deal. These tax preparation steps are an absolute necessity for anyone engaging in a significant transaction."
Mandelker also stressed to be aware of the significant difference in tax rates from state to state. State taxes matter. With high income-tax rates in some states—such as California, which has a top rate of 12.3%—it may make sense for clients with large contracts to consider moving during that peak-earnings period, he explained. "We see this frequently in the sports world," said Mandelker. "An example is if the person rushes to sign a deal before year end so that he can report that income as a Texas resident, rather than a NY resident."
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