NFL owners are set to vote on selling stakes in their franchises to private equity, potentially joining a shift by professional sports leagues to attract institutional investors.
The discussion will take place on Tuesday afternoon in a Minneapolis hotel during a special one-day league meeting, according to people familiar with the matter. Barring a last minute change in the schedule, a vote will then follow.
The NFL is taking a cautious approach by potentially allowing three individual firms and one consortium to buy stakes. The three pre—approved firms are expected to be Arctos Partners, Ares Management and Sixth Street Partners, while the consortium is comprised of Dynasty Equity, Blackstone, Carlyle and CVC Capital Partners, the people added, asking not to be named discussing private information. Former NFL running back Curtis Martin played a role in bringing the consortium together, a person familiar with the matter said.
Unlike controlling owners, who can only invest in one team at a time, private equity investors are expected to be able to buy stakes in up to six teams at once, the person said. The NBA has a similar ruling.
The NFL is also considering putting forward the policy where only controlling owners and family members who are limited partners could sell stakes, the people said.
For example, the Atlanta Falcons added four new limited partners to club’s ownership in May, but none would be able to sell to institutional investors because they are not controlling owners or are not members of primary owner Arthur Blank’s family.
The NFL, Sixth Street, Ares, Dynasty, Arctos, declined to comment. Blackstone, Carlyle and CVC did not respond to an immediate request for comment.
Bloomberg reported in May the owners were considering allowing institutional investors to be able to buy 10% of clubs, while some owners would like the cap at 5%. The NFL hired PJT Partners, an investment bank, to assess interest from private equity funds.
NFL team valuations range from $4.71 billion to $10.32 billion, according to Sportico, while the average NFL team is valued at $5.93 billion. This means stakes from NFL teams could sell anywhere from about $470 million to $1 billion.
Currently there are stakes from the Los Angeles Chargers and the Buffalo Bills on the market, Bloomberg has reported. The Philadelphia Eagles’ owner Jeffery Lurie is also considering selling part of his team.
Other sports leagues including the NBA and MLB have already expanded ownership rules to private equity and other investors. In comparison, the NFL has some of the strictest ownership rules.
A principal owner must be able to pay for at least 30% of a team and an ownership group can’t surpass 25 people. This setup has made selling teams more difficult than in other sports, given the amount if capital needed up front.
That was apparent last year when a large investor group, led by private equity billionaire Josh Harris, completed what was described as a complicated deal to buy the Washington Commanders for $6 billion. The sales process also didn’t attract many suitors, raising concerns that the league’s conservative rules were too limiting and would depress future sales.
Following the Commanders deal, NFL Commissioner Roger Goodell created a committee of owners to weigh changes to ownership rules.
Kansas City Chiefs owner Clark Hunt has backed private equity entering the league because it can be helpful source of capital, including for funding the renovation or building of stadiums, investment that is getting increasingly difficult to be obtained through local government subsidies.
Surging valuations for NFL teams have also created the potential for giant tax bills when ownership is passed down to the next generation. An owner could offset that by selling a stake to private equity.
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