NFL approves new private equity ownership rules
Add Axios as your preferred source to
see more of our stories on Google.
Photo: Rich Storry/Getty Images
Private equity firms can now hold ownership stakes in NFL teams, after league owners approved the new policy on Tuesday.
Why it matters: The NFL was the only major American sports league that didn't allow private equity firms into their ownership ranks.
Zoom in: The league is eyeing the first sales to be approved during an annual owners meeting in December, NFL EVP Joe Siclare tells Axios.
- Teams can only sell stakes to a list of pre-approved firms, which include Arctos Partners, Ares Management, Sixth Street and a consortium made up of Blackstone, Carlyle, CVC Capital Partners, Dynasty Equity and Ludis, a platform founded by former NFL star Curtis Martin.
- There are numerous restrictive terms for the firms, including no governance rights or preferred-equity investments. It also includes a requirement that the investors hold their positions for at least six years, with a 10% team ownership ceiling.
- Each of the four approved groups could buy stakes in up to six teams. The minimum amount to hold a stake is $2 billion (3% stake).
- The league also plans to take a percentage of the profits PE firms make on transactions, which CNBC first reported. "Our policy does require an economic participation," Siclare said.
Between the lines: The NFL is instituting heavier guardrails on private equity ownership compared to other leagues.
- The NBA, for example, allows for private equity to make up as much as 30% of an ownership group, though no single firm can hold more than 20%. It also allows sovereign wealth funds to hold 5% stakes.
- Major League Baseball has allowed private equity ownership since 2019, up to 15% per club, though there is no limit on how many teams a single firm can invest in, per Sportico.
- In European soccer, both private equity and sovereign wealth funds hold numerous controlling ownership stakes.
The big picture: The primary drivers for the new NFL rules are skyrocketing team sale prices, and the liquidity opportunities that creates for current owners. Particularly for those who are merely billionaires, rather than multi-billionaires.
- Some deals, however, might be more about growth. For example, a private equity firm injecting capital into a club that wants to renovate its stadium or develop the area surrounding those venues.
What's next: Other funds will be approved, though there is no set timeline.
- "I don't think we have any specific process in place right now, or any sort of roadmap, other than recognizing that we fully anticipate that as this program grows and franchise values increase, and perhaps more owners go down this road, that more funds would be approved," Siclare said.
