The NFL’s most exclusive club has accepted new members.
At the league’s special meeting in Eagan, Minnesota, on Tuesday, NFL owners voted in favor of a proposal to allow select private equity firms to buy up to 10% of teams’ shares. Each fund or consortium could do deals with up to six teams.
The vote passed with the support of 31 of the 32 franchise owners. Cincinnati Bengals owner Mike Brown voted against the measure, according to a person familiar with the vote.
Kansas City Chiefs owner Clark Hunt, who headed the special committee on ownership policy, told CNBC’s Jim Cramer after the vote that the NFL has been considering the move for more than five years and that he feels now is the right time for the league, though he acknowledged that a 10% cap would only be a “baby step.”
“This funding will be extremely helpful to the team as they look to expand and improve the fan experience,” Hunt said.
The first companies approved include: Ares Management, A consortium nicknamed “The Avengers,” including Sixth Street Partners, Arktos Partners and Dynasty Equity; Blackstone, The Carlyle GroupCVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin.
The companies, which have a combined total of $2 trillion in assets, plan to raise $12 billion in capital (including leverage) over time, according to the people, who asked not to be identified discussing private terms. At least four investor groups could each invest in up to six teams, which would add an average of $500 million in additional capital for each team that receives funding.
Under the terms of the proposal, these funds will have a minimum holding period of six years.
Pending final approval, Arktos, one of the approved companies, will be the only company approved to make equity investments in each of the five most popular major sports leagues in North America.
“We are honored to be one of the first private investment firms the NFL is considering as potential partners with its clubs and owners,” Arktos said in a statement.[We] I look forward to contributing to the league’s continued success.”
Ares said in a statement that it was honored to invest in the “iconic football team.”
“Over the years, the NFL has created an incredibly loyal fan base, an innovative approach to media and some of the most highly-watched sports franchises in the world. We are pleased with the opportunity to support the continued growth of NFL teams through Ares’ extensive investment experience and strong network of relationships in sports, media and entertainment,” the company said.
“We are pleased to have received tentative approval from the NFL following a thoughtful and rigorous process and welcome the possibility of partnering with the league,” the investment consortium, led by Blackstone, Carlyle, CVC, Dynasty Equity and Rudis, said in a statement.
Private Equity in Sports
Tuesday’s approval came after years of debate.
NFL Commissioner Roger Goodell told CNBC in July that the league was receiving significant interest from private equity.
The league established a committee in September to explore the possibility of accepting private equity funding and has been meeting recently with selected companies.
The NFL is the last major sports league to allow private equity investment and has still approached the issue cautiously, only allowing participation from a select group and at lower fees than other professional sports leagues.
The National Basketball Association, Major League Baseball, the National Hockey League and Major League Soccer all allow up to 30% ownership by private equity.
Goodell told CNBC in July that the 10% would complement the company’s existing ownership structure and that he could increase the percentage in the future.
As valuations of NFL teams rise, the number of owners with the financial means to cover the price when a team becomes available for sale is shrinking.
That dynamic was on full display last year during the sale of the Washington Commanders, when the franchise was sold for a record $6.05 billion to an ownership group that included Apollo co-founder Josh Harris and 20 other investors.
Harris said in June that the process was “a bit of a wake-up call for the NFL.”
“Unless you’re one of the 50 richest people [in the world]”Writing a $5 billion stock check is a pretty tough thing for anybody to do,” Harris told CNBC at the CNBC CEO Council Summit at the time.
The NFL’s acceptance of new capital would also free up funds for new stadiums and related projects.
“This will allow teams looking to build or renovate their stadiums to access a pool of capital they wouldn’t have had access to before,” Hunt said.
The Buffalo Bills and Tennessee Titans are both currently building new stadiums, with the Cleveland Browns, Chicago Bears and Washington Commanders also actively pursuing new stadium construction for the future.
