Professional sports leagues get creative with ownership options
In an effort to expand the pool of potential team buyers, the NFL, NBA and MLB are considering drastic changes to how business is done.
Why it matters: Team valuations have skyrocketed in recent years, creating a dearth of individuals wealthy enough to buy the next teams put up for sale.
1. The NFL is considering increasing the amount of money that prospective owners can borrow from $350 million to $1 billion.
- The backdrop: The catalyst for this change appears to be the Panthers' sale to David Tepper last summer. Despite one group outbidding him, Tepper was the only one with enough cash upfront to do the deal, which led to him paying less than what the market expected.
- The bottom line: This change would add more potential buyers to the mix, while also helping to ensure that valuations continue to rise by increasing competition.
2. The NBA is mulling the creation of an investment vehicle that would buy minority ownership stakes across multiple teams.
- What they're saying: "Being a passive sports team owner is really being the person who pays the most for good seats. But owning a portfolio could be appealing for long-term money, and it's only a matter of time before we get a league-managed or third-party fund/marketplace for these interests," writes Axios' Dan Primack.
3. MLB has altered its rules to allow investment funds to buy limited stakes in multiple franchises.
- What they're saying: "Traditionally, baseball owners have been wealthy individuals, but the new policy could bring in cash from Wall Street firms and college endowments," writes Bloomberg's Scott Soshnick.