US NFL Finally Allows Wall Street Private Equity Investment... Up to 10% Maximum

Owners of American football league (NFL) teams have allowed private equity funds to own up to 10% of team shares. This has opened the door to Wall Street capital, which had previously been closed.

[Image source=Reuters Yonhap News]

According to the Associated Press and others, the 32 NFL team owners held a special meeting on the 27th (local time) in Eagan, Minnesota, and passed a proposal to relax ownership rules accordingly. The private equity funds initially approved in the vote include Actos Partners, Ares Management Corporation, Six Street, and a fund consortium consisting of Blackstone, Carlyle, CVC, Dynasty Equity, and Ludis. This could be expanded to other private equity funds in the future.

Accordingly, these private equity funds will be able to purchase up to 10% of the shares of up to six teams each. The minimum investment is 3%, and the purchased shares must be held for at least six years. The proposal also includes provisions that prevent investing the entire amount in a single team by setting investment limits for each. Additionally, preferred stock investments and exercising control rights, which are commonly allowed in other sports, are prohibited.

NFL Commissioner Roger Goodell said to reporters immediately afterward, "This allows us to access capital that has long shown interest in us," and explained, "It is appropriate to secure liquidity so that teams can reinvest in the game." Private equity investors plan to invest a total of $12 billion in capital.

Until now, unlike Major League Baseball (MLB), the National Basketball Association (NBA), and hockey leagues, the NFL has restricted private equity investments. However, as team values have recently risen and share purchases have become difficult, it is interpreted that the league has finally opened its doors to Wall Street financial capital. To this end, NFL team owners formed a special committee about a year ago and have been discussing related matters.

However, the 10% ownership allowed by NFL team owners is considered low compared to other sports, where ownership can reach up to 30%, according to the Associated Press. In MLB, there is no limit on the number of teams in which one can invest. Such stringent restrictions are seen as measures to prevent the popular NFL league in the U.S. from becoming dependent on Wall Street financial capital. Private equity investors, who have long sought to invest in the NFL, are reportedly welcoming this move despite the strict guardrail provisions proposed by the team owners.

Ted Jenkin, co-founder of Oxygen Financial, said, "Unless you are a billionaire, it is almost impossible to buy an NFL team today," and explained, "Under the new rules, team owners will have more freedom with cash flow tied up in team capital, allowing them to spend money on stadium improvements." Currently, the Buffalo Bills and Tennessee Titans are building new stadiums. The Cleveland Browns, Chicago Bears, and Washington Commanders are also pursuing stadium construction.

Looking at the list of private equity funds approved by NFL team owners this time, many have experience in sports investment. Actos, which manages over $400 billion in assets, has invested in Premier League Chelsea FC and Inter Miami in the U.S., and has indirectly purchased shares in NBA’s Golden State Warriors and MLB’s Boston Red Sox. Six Street has invested in the San Antonio Spurs and Real Madrid. Dynasty Equity, included in the consortium, holds a minority stake in Liverpool FC in the UK.