NFL Moves Toward Allowing Private Equity into Ownership Groups

NFL team owners are looking to add depth to their financial bench. 

At the Sun Valley conference on Thursday, commissioner Roger Goodell said the league is en route to allowing PE groups to take ownership stakes in franchises. It’s less of a Hail Mary and more of a no-brainer.

Bend Don’t Break

The NBA, NHL, MLB, and MLS have all already opened the doors to PE team ownership, with each respective league allowing firms to own up to 30% of a franchise. The NFL — which Goodell said is likely to allow only a 10% ownership stake in its teams — is in some ways the league for which allowing PE groups is most essential.

That’s because team valuations — across all leagues — have skyrocketed as live sports become one of the most valuable cornerstones in the media landscape. For instance, the NBA, which routinely draws just a fraction of the ratings that the NFL does, this week just finalized an 11-year broadcast deal reportedly worth $76 billion. The going rate for a pro sports team is now so expensive that there are vanishingly few individuals in the world willing to buy a team all on their own:

• Last year, Apollo Management co-founder Josh Harris bought the Washington Commanders for $6.05 billion, the highest price tag in the history of North American sports. To do so, Harris had to assemble an ownership group of 20 other minority owners, in part because league rules allow new owners to only take on up to $1.2 billion in an acquisition (NFL owners have since agreed to raise the debt limit to $1.4 billion).
• “Unless you’re one of the wealthiest 50 people [in the world], writing a $5 billion equity check is pretty hard for anyone,” Harris said in an interview with Andrew Ross Sorkin at a conference earlier this year.

First and Goal: Small minority stakes in sports franchises come with little, if any, actual decision-making power. For the PE industry, which may be sitting on as much as $2.5 trillion in dry powder, that means NFL ownership is something of a passive investment. But likely a good one. While the league has long dominated culture in the US, it has relatively little international footprint. That could soon change, and a recent landmark streaming deal to place Christmas Day NFL games on Netflix may be why. “Netflix has close to 300 million subscribers on a global basis, which was really attractive for us in being able to reach that global fan. International is a huge initiative of ours,” Goodell also said on Thursday. In other words: In a few years’ time, Sunday may mark football night in America — and everywhere else.