NFL Considers Taking a Share of Private Equity Profits in Ownership Stakes
The National Football League (NFL) is considering taking a percentage of potential private equity profits on any future sales of ownership stakes, according to sources familiar with the matter. This move comes as NFL owners prepare to vote on a proposal that would allow private equity firms to hold up to a maximum 10% stake in teams. Currently, the NFL does not permit private equity investment, unlike other major sports leagues such as Major League Baseball, the National Basketball Association, and the National Hockey League. These leagues already allow up to 30% of teams to be owned by investment firms, with individual funds capped at 15% to 20%.
The NFL’s plan to take a share of the profits, also known as the “carry,” is a departure from the norm in the private equity industry. While it is unclear if this plan would apply to all or only some investment firms, or what percentage of the profits the league would take, the NFL has informally communicated to investment firms that it expects a portion of the profits to be returned if they make a return on their investment.
It remains to be seen whether the NFL’s intention to take a share of profits would deter future private equity investment or influence the owners’ vote. The league is currently in the process of approving specific funds as potential buyers, including Blackstone Partners, Sixth Street, and CVC Partners. The NFL, however, declined to comment on the matter.
The potential for private equity investment in NFL teams comes at a time when the league’s value has significantly increased over the past two decades. According to Sportico, the NFL’s total value has risen from $23.46 billion to $190 billion, an impressive 710% gain. In comparison, the S&P 500 index has risen about 660% during the same time span.
While the outcome of the NFL owners’ vote remains uncertain, it is clear that the league is exploring new avenues for growth and potentially tapping into the lucrative private equity market. The inclusion of private equity firms as potential team owners could bring fresh capital and expertise to the NFL, further driving the league’s value and solidifying its position as one of the premier sports organizations in the world. As this story continues to develop, it will be interesting to see how the NFL’s foray into private equity investment unfolds and what impact it may have on the future of team ownership in the league.
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