The 32 team owners from the American football’s NFL have formally voted through a rule that will allow limited private investment into franchises.
Through the legalization, which has been voted through at a special meeting in Minnesota before the start of the 2024 season, certain firms will be allowed to buy stakes of up to 10% in NFL sides. This represents the first time that owners from one of the most commercially successful sports leagues worldwide will open their properties up to outside investment.
The selected and approved firms are: Arctos Partners, Ares Management Corporation and Sixth Street, as well as a consortium of five funds — Blackstone, Carlyle, CVC, Dynasty Equity, and Ludis.
Alongside the 10% cap, other regulations include each purchase being held for a minimum of six years, each fund being able to invest in a maximum of six teams each, and no more than 20% of a fund being allocated to any one NFL franchise.
The league itself will also receive a percentage of the funds from each sale.
Last year, the league formed a committee to explore changing its ownership rules, following which lengthy discussions around all aspects of private investment have taken place. On that committee can be found Clark Hunt, Greg Penner, Robert Kraft, Jimmy Haslam, and Atlanta’s Arthur Blank.
In terms of how the new NFL rules differ from regulations across other North American major sports leagues, the sale of stakes worth up to 30% in teams across basketball’s NBA, ice hockey’s NHL, baseball’s MLB, and Major League Soccer, is permitted.
Roger Goodell, the commissioner of the NFL, has now said: “It’s an access to capital that has been of interest to us for a long time. I think it’s an appropriate thing to give teams that liquidity to reinvest in the game and to their teams.
“This is something that we’ve long fought for and tried to find ways to encourage that.
He added that the new investors “will not be in any kind of decision-making influence in any way.”
The Washington Commanders were the last NFL team to be sold, in mid-2023 to an ownership group led by billionaire Josh Harris, in a record-breaking deal valued at $6.05 billion. For that deal, over 20 investors were required to make up the equity cash necessary to buy the team.
Private equity’s introduction into league ownership may widen the pool of potential available team owners, as these rising valuations mean that only a select few now are rich enough to buy into the league, a fact that conversely locks current owners out of selling their assets when they may wish to divest.
The rules could potentially spur a rush of new investment into the NFL at a time when franchise valuations are higher than ever as owners may look to partially cash in on these soaring valuations while still maintaining control of their teams.
Dallas Cowboys’ president Jerry Jones has commented on the vote, saying: “I know this - this is good for anybody that’s in love with the NFL, any part of it.”
In a statement reacting to the vote, meanwhile, Arctos Partners have said: “We are honored to be among the first private investment firms being considered by the National Football League as potential partners for their clubs and owners. While there is much work ahead, today is a milestone reflecting Arctos’ commitment to the sports industry, our position as the market innovator and passion for being the partner of choice for leading sports ownership groups.”
