Private equity firms will soon be able to buy minority stakes in NFL teams following approval from league owners Tuesday, providing the owners with opportunities to generate big money from private equity deals and potentially allowing for more accessible team sales amid a large jump in team valuations over the years.
The new measures were approved by league owners Tuesday. (Photo by Ric Tapia/Getty Images)
Up to 10% of each NFL team can be owned by private equity groups, with minimum stakes being set at 3% under the agreement.
Private equity funds can hold stakes in up to six teams at a time if they wish and must hold their respective stakes for a minimum of six years.
The league’s transition to private equity will likely not directly impact the daily operations of its teams and their coaches and players, with teams continuing to have several ownership restrictions including a cap on the total number of owners (25) and a minimum 30% stake secured by the controlling owner.
Private equity ownership opportunities in the NFL come as team valuations significantly swell—the average value of an NFL team increased 14% from 2022 to 2023, according to Forbes.
Money from private equity can also help owners with stadium expenses, which can cost well over $1 billion and have become a fairly common expense across the league—five new NFL stadiums have been built in the last 10 years, with more planned in the coming years.
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The funds that have been approved to buy stakes in teams are Ares Management, Arctos Partners, Sixth Street and a consortium consisting of Blackstone, Carlyle, CVC Capital Partners, Dynasty Equity and Ludis.
$5.1 billion. That was the average value of an NFL team in August 2023, according to Forbes estimates, when the Dallas Cowboys were the league’s most valuable team at $9 billion, followed by the New England Patriots ($7 billion) and the Los Angeles Rams ($6.9 billion).
NFL owners could pocket hundreds of millions of dollars from private equity deals, according to NFL.com, which notes private equity involvement should make for more accessible team sales amid a hot valuation market. The most recent NFL team sold was the Washington Commanders. The team was acquired by billionaire Josh Harris’ investment group last year in a $6.05 billion deal (including a $200 million earn-out), and because of the NFL’s rule on the controlling owner needing to hold a minimum 30% stake, Harris had to raise at least $1.8 billion for the purchase. Prior to that acquisition, the Denver Broncos sale was the most expensive, with the team selling for $4.6 billion in 2022.
NFL Team Valuations (Forbes)
The NFL Is Close To Allowing Private Equity Investors (Forbes)