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The National Football League has approved sweeping changes to its ownership policies that will allow the private equity industry to invest in teams, opening the most lucrative sports league in the US to the buyout industry for the first time.
NFL owners on Tuesday greenlit the changes, which would allow team owners to sell minority stakes to private equity firms.
It has named a handful of investment managers including Ares Management, Arctos Partners, Sixth Street and a consortium made up of Blackstone, Carlyle, CVC and Dynasty Equity as preferred buyers for owners looking to sell.
The deal will pave the way for team owners looking to cash out of teams, with values soaring into the billions, and finally bring Wall Street to the richest US sports league.
The NFL is the last major US sports organisation to open itself to institutional investment. Major League Baseball became the first US league to do so in 2019, with major US soccer, basketball and hockey leagues following in short order.
The list of the NFL’s preferred buyers represent the doyen of the sports investment world. Ares, which manages more than $400bn, has invested in Chelsea FC in the Premier League and Inter Miami in the US.
Arctos has bought stakes in the National Basketball Association’s Golden State Warriors and indirectly in MLB’s Boston Red Sox; Sixth Street has invested in the San Antonio Spurs and Real Madrid; and Dynasty owns a minority stake in Liverpool Football Club, another English football club.
Investors have long coveted an entry into US football, which enjoys the most lucrative and expensive media rights package in the country. The $110bn 11-year deal and revenue sharing agreements, which were struck in 2021, have bolstered the valuations of teams across the country.
Teams have also been fetching increasingly higher prices.
Walmart heir Rob Walton led a group of investors in 2022 that bought the Denver Broncos for a reported $4.6bn, which was followed a year later by the $6bn purchase of the Washington Commanders by Apollo Global Management co-founder Josh Harris.
Now that NFL franchises change hands for billions of dollars, it is harder even for billionaires to put up the cash to cover the price tag in full. By relaxing its ownership rules, the NFL will make it easier for franchises to raise capital and for existing owners to sell down their stakes or exit.
“They need to institutionalise and they need to increase franchise values,” one private equity investor said. “Josh bought the Commanders for $6bn and if he wants to sell it for $10bn to $12bn down the road, not that many people have that money. The law of large numbers is kicking in.”
Even so, the NFL’s ownership rules remain far more stringent than those set by many other sports and leagues, where private equity and other investment firms are permitted to buy outright control of teams.
RedBird Capital Partners, the investment firm founded by former Goldman Sachs dealmaker Gerry Cardinale, owns Italian football club AC Milan, while Los Angeles-based distressed debt investor Oaktree Capital seized control of rival Inter Milan in May this year after the football club’s Chinese owners failed to repay a €400mn loan.
Private equity firm Clearlake Capital and US financier Todd Boehly led the £2.5bn acquisition of Chelsea in 2022.
State-linked entities also have freer rein in European football.
Saudi Arabia’s sovereign wealth fund bought a controlling stake in English club Newcastle United in 2021. Qatar Sports Investments owns French champions Paris Saint-Germain, which now counts Arctos as a minority shareholder.
In the US, the Qatar Investment Authority, a sovereign wealth fund, last year acquired a five per cent stake in the owner of Washington’s professional basketball and hockey teams for $200mn.
