Joe Robbie

Joe Robbie was a lawyer from Sisseton, South Dakota, who ran unsuccessfully for governor and then, in 1965, put together the money for an AFL expansion franchise in Miami with the comedian Danny Thomas. The buy-in was $7.5 million. The Dolphins started play in 1966 and went undefeated in 1972, which remains the only perfect season in NFL history.

In 1976 the City of Miami moved to raise his rent at the Orange Bowl. Robbie's response was to build his own stadium — and to build it, uniquely, with no public money at all. Joe Robbie Stadium broke ground in December 1985, opened August 16, 1987, and cost $115 million. It was the first multipurpose stadium in the United States financed entirely privately.

It is, on any reading, one of the great American sports business careers. It is also, on any reading, one of the great American estate-planning disasters, and the two facts are the same fact.

Joe Robbie died on January 7, 1990, in Coral Gables, at 73. His estate was valued at roughly $70 million. It consisted, in overwhelming proportion, of a football team and a football stadium.

A pour-over will and a revocable trust

Robbie had done estate planning. That is the part people miss. He had a pour-over will and a revocable living trust — the same architecture that serves most families extremely well, and the architecture we draft constantly.

The trust was built around the marital deduction. His widow, Elizabeth, would receive the income from the trust for life; on her death, the remainder would pass to the named beneficiaries. Structured properly, that defers federal estate tax on the marital portion until the second spouse dies. Robbie's plan was designed to buy time — a full generation of it — for a family that would eventually need to figure out how to pay.

The deferral had one requirement: the surviving spouse actually has to take the arrangement. The estate tax marital deduction is not a gift the government makes to married couples; it is a bargain in which the tax on the marital share is postponed because that share will be taxed in the survivor's estate instead. Break the bargain and the tax comes due immediately.

And the income the trust would generate depended on assets that produced very little of it. A football franchise's value sits in the franchise, not in a dividend stream. A stadium carrying construction debt does not throw off cash to a life beneficiary.

March 1991: the widow elects against the trust

In March 1991, Elizabeth Robbie petitioned for her elective share — the portion of a deceased spouse's estate that Florida law guarantees a surviving spouse regardless of what the will and trust say. At the time it was 30% of the estate. On a $70 million estate, that is roughly $21 million, and she wanted it in cash rather than in shares of a football team.

She was entitled to do it. That is the point. The elective share exists precisely so that a surviving spouse cannot be handed an illiquid life interest and told to be grateful.

But the election detonated the tax plan. Once the surviving spouse steps out of the marital trust, the deferral supporting it goes with her. Reporting at the time put the accelerated liability in excess of $25 million plus interest, against total estate taxes ultimately reported between $43 million and $47 million. Figures in the coverage vary; the direction does not.

Elizabeth Robbie died in November 1991, eight months after filing. Her claim did not die with her — a perfected elective share is a property right, and it stayed with her estate. Which meant the money still had to be found, and now the person who might have compromised was gone.

Three trustees, and the rest of the children

Robbie's plan put control of the Dolphins in the hands of three of his children as trustees: sons Tim and Dan, and daughter Janet. The other children were beneficiaries without control.

That structure produced exactly what such structures produce. The trustees dismissed their brother Mike from the team's front office, where he had been general manager from 1978 to 1989. In 1990 they approved the sale of 50% of Joe Robbie Stadium and 15% of the Dolphins to H. Wayne Huizenga. Three of the siblings filed suit against the three trustees, alleging that the sale breached a family agreement signed the year before that had been intended to prevent precisely this conflict.

Elizabeth Robbie's own will, executed before her death, reflected which side of the family fight she had been on. The estate litigation settled in July 1992.

By January 1994, Huizenga had acquired sole ownership of the team and the stadium. NFL reporting puts his total outlay at $168 million; other accounts of the 1994 transaction alone report lower figures. Each of Joe Robbie's children was reported to have been left with about $6 million after taxes.

In 1996 the naming rights were sold and the building became Pro Player Stadium. In 2009 Huizenga sold the franchise and the stadium in a transaction valued at roughly $1.1 billion.

• 1990 — Huizenga buys 50% of the stadium and 15% of the team.
• Jul 1992 — the family litigation settles.
• Jan 1994 — Huizenga becomes sole owner; NFL accounts put the total at $168 million.
• 1996 — the name comes off the building.
• 2009 — the same team and stadium sell for about $1.1 billion.

The last two lines are the ones that sting. The asset was not a bad asset. It was a spectacular asset that had to be sold on a nine-month clock, and the buyer who could write the check in 1994 captured the difference.

What actually caused it

It has become a talking point to describe this as a case of the estate tax destroying a family business, and that is a highly selective reading. The estate tax supplied the deadline. It did not supply the rest.

The rest was a plan whose entire tax deferral depended on a surviving spouse's cooperation, held assets that could not fund her income interest, gave control to three of the children and not the others, and included no liquidity source of any kind — no life insurance, no funded buy-sell agreement, no sinking fund.

Robbie also had a business that was still carrying stadium debt and had seen cash flow tighten after construction. The estate that owed $43 million or more had, functionally, no way to produce $43 million except by selling the thing the whole plan was built to keep.