The National Football League’s owners voted Tuesday at a special league meeting in Eagan, Minnesota, to approve allowing some private equity groups to purchase up to a 10% share in a franchise. Deals with up to six teams will be possible for each fund or consortium.
In addition to the group known as “The Avengers,” which consists of investors and former NFL running back Curtis Martin, Blackstone, Dynasty Equity, Carlyle Group, CVC Capital Partners, and Ludis, a platform, the first firms approved are Ares Management, Sixth Street Partners, and Arctos Partners.
The companies want to raise $12 billion in capital (including leverage) over time, according to individuals familiar with the situation who requested not to be named in order to discuss details that were not made public. The businesses have $2 trillion in assets combined. This means that each team that accepts an investment will receive an additional $500 million on average, with at least four investor groups allowed to participate in up to six teams each.
NFL Commissioner Roger Goodell stated to CNBC in July that private equity has shown a great deal of interest in the league.
In September of last year, the league established a committee to investigate the prospect of accepting private equity money. More recently, the committee has started holding meetings with the chosen corporations.
As the final major sports organization to permit private equity investment, the NFL is still being cautious about the matter, permitting participation from a smaller pool of players than the other professional sports leagues.
Major League Baseball, Major League Basketball, Major League Hockey, and Major League Soccer all permit up to 30% private equity ownership.
In July, Goodell stated to CNBC that he thought the 10% was a good addition to the current ownership structure and that it may be increased in the future.
A smaller group of owners can afford to pay the full cost of an NFL club when one becomes available as a result of rising team valuations.
Last year, at the Washington Commanders’ auction, that dynamic was evident. In addition to Josh Harris, the co-founder of Apollo, the franchise sold for a record $6.05 billion to a group of investors.
The procedure “created a little bit of a wake-up call at the NFL,” according to Harris’ June statement.
At the CNBC CEO Council Summit at the time, Harris said, “Unless you’re one of the wealthiest 50 people [in the world], writing a $5 billion equity check is pretty hard for anyone.”
Funding for new stadiums and related projects will become available as the NFL welcomes new investors.
While the Cleveland Browns, Chicago Bears, and Washington Commanders are actively seeking new stadiums in the future, the Tennessee Titans, Buffalo Bills, and Chicago Bears are already in the process of developing new stadiums.
