Key Takeaways
- NFL owners are expected to approve a policy that would allow private-equity firms to buy up a 10% stake in franchises.
- The policy would extend to three pre-approved firms and one additional consortium.
- The likely policy change comes as NFL team valuations have skyrocketed, including the sale of the Washington Commanders for $6 billion in 2023.
National Football League (NFL) owners are expected to vote Tuesday to approve a policy change that would allow private-equity firms to buy stakes in teams of up to 10%.
For decades, the NFL has prohibited institutional investors, requiring its owners to be actual people. Now that’s expected to change, according to The Wall Street Journal.
The new policy would allow owners to sell stakes in their teams to three pre-approved firms: Arctos (which already owns stakes in Major League Baseball, National Basketball Association, National Hockey League, and powerhouse European soccer franchises); Ares Management; and Sixth Street, the report said. It will also approve sales to a consortium including Carlyle Group, Blackstone, CVC Capital Partners and the sports-centric firm Dynasty Equity.
The vote comes as valuations for NFL franchises have skyrocketed. Last year, the Washington Commanders were sold for $6 billion, the largest deal in league history. Longtime owner Dan Snyder had bought the team in 1999 for $800 million, which at the time was also a record-high sale price.
Rules of Engagement
Private-equity firms reportedly have agreed to restrictive ownership terms to get their piece of the NFL pie.
The rules include no preferred-equity stakes, no governance rights, and a requirement that firms hold their stakes for at least six years, per the Journal. That’s outside the bounds of what private-equity firms typically agree to.
Each pre-approved firm will be able to purchase stakes of up to 10% in six different teams. However, that means that even if all four went in on six teams, there wouldn’t be enough private equity for the NFL’s full slate of 32 teams. That could mean an expansion of the policy in the future if things go to plan.
That percentage is lower than the NBA’s upper limit of 30% to institutional investors (no more than 20% per fund) and European soccer clubs, where often no upper limit exists. Importantly, the NFL is not allowing investment from sovereign-wealth funds, such as Saudi Arabia’s Public Investment Fund, which is the majority owner of the Premier League’s Newcastle United.