The National Football League has approved sweeping changes to its ownership policies that will allow the private equity industry to invest in teams, opening the most lucrative sports league in the US to the buyout industry for the first time.
NFL owners on Tuesday gave the green light to the changes, which would allow team owners to sell minority stakes to private equity firms.
It has named a handful of investment managers including Ares Management, Arctos Partners, Sixth Street and a consortium made up of Blackstone, Carlyle, CVC, Dynasty Equity and Ludis, which was founded and led by retired NFL player Curtis Martin, as preferred buyers for owners looking to sell.
The NFL will allow firms to buy a stake of up to 10 per cent stake of the common equity of individual teams, barring so-called preferred equity investments that have been typical in other leagues.
Each approved investor has committed to invest at least $2bn in the league, including leverage, and can divide that across multiple teams. The total commitment is expected to reach $12bn. The league has required the buyout shops to hold their stakes in individual teams for at least six years, and has capped each at investing in six teams.
A top NFL executive added that the buyout shops chosen as permitted investors had been selected in part because they could put a large amount of capital to work on “day one”, but that it was anticipated that more firms would likely be added to the list.
The deal will pave the way for team owners looking to cash out, with franchise values soaring into the billions of dollars, and finally bring Wall Street to the richest US sports league.
“The support today in the room was very strong,” Greg Penner, the Walmart chair and an owner of the Denver Broncos, said of the vote by team owners.
Penner added that it was important for the league to give “owners a different option for capital sources but at the same time maintaining how we operate and our core ethos of being partners. Thirty-two owners around the table, making decisions, deliberating, and that won’t change with this step today.”
The NFL is the last big US sports organisation to open itself to institutional investment. Major League Baseball became the first US league to do so in 2019, with large US soccer, basketball and hockey leagues following in short order.
The list of the NFL’s preferred buyers represent the doyen of the sports investment world. Ares, which manages more than $400bn, has invested in Chelsea FC in the Premier League and Inter Miami in the US.
Arctos has bought stakes in the National Basketball Association’s Golden State Warriors and indirectly in MLB’s Boston Red Sox; Sixth Street has invested in the San Antonio Spurs and Real Madrid; and Dynasty owns a minority stake in English football club Liverpool.
Investors have long coveted an entry into US football, which enjoys the most lucrative and expensive media rights package in the country. The $110bn 11-year deal and revenue sharing agreements, which were struck in 2021, have bolstered the valuations of league’s teams.
Franchises have also been fetching increasingly higher prices.
Walmart heir Rob Walton led a group of investors, including Penner, in 2022 that bought the Denver Broncos for a reported $4.6bn, which was followed a year later by the $6bn purchase of the Washington Commanders by Apollo Global Management co-founder Josh Harris.
Now that NFL franchises change hands for billions of dollars, it is harder for billionaires to put up the cash to cover the price tag in full. By relaxing its ownership rules, the NFL will make it easier for franchises to raise capital and for existing owners to sell down their stakes or exit.
“They need to institutionalise and they need to increase franchise values,” one private equity investor said. “Josh bought the Commanders for $6bn and if he wants to sell it for $10bn to $12bn down the road, not that many people have that money. The law of large numbers is kicking in.”
Even so, the NFL’s ownership rules remain far more stringent than those set in some other sports and leagues, where private equity and other investment firms are permitted to buy outright control of teams.
RedBird Capital Partners, the investment firm founded by former Goldman Sachs dealmaker Gerry Cardinale, owns Italian football club AC Milan, while Los Angeles-based distressed debt investor Oaktree Capital seized control of rival Inter Milan in May after the football club’s Chinese owners failed to repay a €400mn loan.
Private equity firm Clearlake Capital and US financier Todd Boehly led the £2.5bn acquisition of Chelsea in 2022.
State-linked entities also have freer rein in European football.
Saudi Arabia’s sovereign wealth fund bought a controlling stake in English club Newcastle United in 2021. Qatar Sports Investments owns French champions Paris Saint-Germain, which now counts Arctos as a minority shareholder.
In the US, the Qatar Investment Authority, a sovereign wealth fund, last year acquired a 5 per cent stake in the owner of Washington’s professional basketball and hockey teams for $200mn.
