The NFL may finally change its rules later this month and allow institutional investors, including private equity firms, to buy stakes in teams. But any deals involving the sale of NFL teams are still months away, according to industry insiders.
NFL team owners and executives are expected to meet in Minneapolis on Aug. 27 to discuss a framework that would allow PE firms to invest, and potentially vote on allowing institutional investors to buy into teams, according to a recent Bloomberg report confirmed by Fortune.
The NFL is the last major professional sports league in North America that prohibits private equity firms from investing in teams, a rule that reflects the owners’ historical desire to keep NFL to an insider’s club. But a special committee began reviewing potential changes to those rules in 2023. The NFL has appointed PJT Partners to serve as a liaison between the league and interested PE firms, and is considering a plan to allow PE firms to own up to 30% of a single franchise, with no single firm owning a stake larger than 10%. Current NFL owners were expected to vote on the investment framework in May, but the vote was delayed and is now scheduled for later this month.
“The NFL is taking a very considered path toward [private equity] investment which ultimately will be approved by the owners committee,” said Irwin Kishner, co-chair of the sports law group at New York law firm Herrick, Feinstein. Kishner, who has advised on M&A deals involving teams in the NFL, MLS, NBA, and MLB, expects the proposal to pass this year.
A new frontier for private equity
Last week, the NFL held meetings with several private equity firms, including Arctos Partners, Ares Management, Carlyle Group, CVC, Sixth Street and Avenue Capital Group. Blackstone, Carlyle, CVC and Dynasty Equity are working together as a consortium, Sportico, a sports business outlet, has reported.
Many of the firms that are part of the group, including Arctos, Ares, CVC and Sixth Street, have each made several direct investments in the teams of other sports leagues. Arctos, for example, owns stakes in the Golden State Warriors, Philadelphia 76ers, Chicago Cubs, Boston Red Sox, New Jersey Devils, and Real Salt Lake, a soccer club. Ares owns minority stakes, including debt or equity, in the San Diego Padres, Ottawa Senators, Inter Miami, League One Volleyball, Eagle Football (which has stakes in football clubs like Crystal Palace), Atlético Madrid, and the Professional Fighters League. CVC previously owned Formula One and currently has stakes in LaLiga and the Women’s Tennis Association.
Other PE organizations at the negotiating table with the NFL have less direct experience with investing in sports teams. Carlyle, the well-known PE firm, bought the women’s soccer team Seattle Reign FC earlier this year. (David Rubenstein, a Carlyle co-founder, led a group to acquire the Baltimore Orioles in August but that’s a personal investment for the executive.) Dynasty Equity, the sports investment firm from Providence Equity Founder Jonathan Nelson, took a minority stake in LiverPool FC in September 2023. Then there’s Blackstone, the largest alternative asset manager with $1.1 trillion in AUM, which has never made any direct investments in a sports team.
What they lack in experience, however, private equity makes up for in money. PE firms are sitting on a $1.2 trillion war chest that they have to put to work for their NFL adventure, Fortune has previously reported. This is a good thing, because valuations are so high for NFL teams that finding buyers has become problematic. Josh Harris, a cofounder of Apollo Global Management, had to assemble a 20-person consortium that included Blitzer, ex–Google CEO Eric Schmidt, and basketball legend Magic Johnson, to buy the Washington Commanders last year for more than $6 billion.
“It’s just basically NFL owners creating some liquidity for themselves, via what will be completely and totally passive assets, locked up for many years for the PE firms,” said one private equity investor, who has advised various leagues.
Not so fast
But the hype around PE’s foray into the NFL runs the risk of disrupting deals. Several transactions involving the sale of minority NFL team stakes are in process right now, and the publicity is messing with timelines and expectations. Some parties involved in the transactions believe that private equity will immediately be ready to invest once the NFL votes on Aug. 27, an advisor to the franchise said. That’s causing some sellers to delay their deals so they can take advantage of the fresh money that will be available once PE gets involved, while buyers want to speed up these deals before PE comes in and cause prices to increase, the person said. This is making it hard to get a deal done.
The vote on Aug. 27 is to secure approval from the NFL to let PE firms, they said. “Beyond that it will take time,” one of the firms involved in the negotiations said.
Kishner, of Herrick, Feinstein, also believes it will likely take months before private equity begins investing. “No guarantees on timing,” he wrote in an email to Fortune.
It’s also unclear what teams are selling. Terry and Kim Pegula earlier this year were said to be exploring the sale of a minority stake in the Buffalo Bills football team. In February, Miami Dolphins Owner Stephen Ross declared that he was looking to offload a chunk of the team, but turned down a $10 billion offer for control of the franchise, Hard Rock Stadium and the F1 Miami race just a few months later, USA Today reported. This led Tom Garfinkel, the Dolphins president, to claim the team was not for sale.
“A PE policy is imminent, but private equity deals are not,” one source said.
The history of other professional sports leagues may give some insight into the kind of NFL timeline that PE firms are looking at. In early 2020, the NBA changed its rules to allow institutional investors and PE firms to buy minority stakes. The firms used the months following the rule change to raise money for their funds, and didn’t clinch investments for more than a year. In April 2021, Arctos bought a 5% stake in the Golden State Warriors that valued the team at $5.5 billion and later that year increased it 13%, according to Sportico. Blue Owl HomeCourt, formerly known as Dyal Capital, completed its first NBA investment in July of 2021, buying a minority stake in the Phoenix Suns at a $1.55 billion valuation. In February 2023, Blue Owl sold their stake when United Wholesale Mortgage CEO Matt Ishbia bought a majority of the Suns and the Phoenix Mercury in a deal that valued the teams at $4 billion.
And if the NFL PE vote does go through, there are still many details to be worked out if and when the vote goes through, including how much PE will be allowed to buy. The NFL is expected to cap investments at 10%, sources familiar with the matter told Fortune. “It’s a nice slug of capital but it’s not a game changer. But you have to start somewhere, and that would be a good start,” an investment banker who advises on LP stake sales of sports teams told Fortune.
It's also unclear which mechanism PE firms will use to actually invest in the NFL teams. The league is expected to require PE firms to raise a fund dedicated solely for each of their NFL team investments, one PE executive who has advised sports leagues, told Fortune. These dedicated funds will likely have longer hold periods, or even an evergreen structure, than traditional PE pools, which are usually 10 years. Others think the NFL will allow the firms to place existing capital, instead of new capital, into a new structure that they will use to invest in teams.
“Once the rules are in place, it may not take long for fund investments to be made. It will depend on the specific rules that will be approved,” the PE exec said. “There's likely to be a lot of friction and high hurdling with the NFL rules though.”
