It’s been coming for a while. It could soon be happening.
According to Ben Fischer of Sports Business Journal, the NFL has formed a committee of owners to explore the league’s outdated ownership rules.
Four owners have been appointed to the group: Falcons owner Arthur Blank, Patriots owner Robert Kraft, Browns owner Jimmy Haslam, and Broncos Greg Penner. Finance committee chair Chiefs owner Clark Hunt is an ex-officio member of the committee.
“Following the Denver and Washington transactions, the finance committee agreed that it would be appropriate to look at the full range of ownership policies, including permitted debt levels, minimum equity requirements and holding periods, eligible categories of investors, and expanding opportunities for more diverse ownership,” Commissioner Roger Goodell wrote in the memo announcing the committee.
As franchise values increase, the NFL is having a harder and harder time finding buyers who can purchase teams. The lead owner must be able to essentially write a check for 30 percent of the total equity. Other rules apply regarding the size of the remaining ownership group and the amount of debt associated with the deal.
The most recent purchase of a team, by Josh Harris, required plenty of work and effort to comply with the current rules.
“The deal was hard,” Harris recently told FrontOfficeSports.com. “It was all stressful. I had to put together a group of 20 investors, raise capital, and then convince the NFL that we were going to be good stewards. So, it was a really complicated deal.”
The NFL can’t afford to have deals get even harder, if fewer interested buyers can afford to buy a team based on current rules.
As Fischer explains it the committee is “more likely” to increase debt limits from $1.1 billion, to allow for more than 25 limited partners in an ownership group, and/or to possibly lower the 30-percent minimum than to endorse limited investment by private-equity firms.
At some point, the NFL needs to explore revolutionary changes, whether due to financial issues or operational concerns. From investment by private equity to the reconstitution of teams as corporations, all options should be on the table.
As explained during Wednesday’s #PFTPM devoted to the Jim Trotter litigation against the NFL, the league would be better off if it ditches the oligarch approach, given the difficulty in holding multi-billionaires accountable. It would be better for the league to have CEOs run teams, since it would be easier for CEOs to be replaced if, for example, it’s proven that they made horribly racist comments and/or presided over chronically toxic workplaces. That approach also would avoid the chronic problem of estate issues potentially forcing franchise sales.
If every team was a corporation, every team could be governed by a board of directors and supported by committees that would work to ensure proper employment procedures and genuine oversight and regulation of top executives whose words or conduct are unbecoming to the team or The Shield. While plenty of corporations do plenty of heinous things, it would be easier to dump someone who did something wrong if the ultimate power was held by a CEO who could be fired by a board of directors and replaced with someone else.
