On Tuesday — the same day all rosters reduced to 53 players for 2024 — the NFL adopted a rule allowing limited private equity investment in teams.
And hardly anyone cares.
Hell, I barely care. It’s a sport-business story, dealing with a pretty boring and mundane aspect of sports business. Most teams have a group of minority owners who hold a slice of equity less than what it takes to control the franchise. Now, private equity funds can buy non-voting shares of NFL franchises. Big deal.
The deeper question is whether this new door will lead to others. The maximum percentage of a team that can be owned by a private-equity fund is 10 percent. Earlier this summer, Commissioner Roger Goodell didn’t rule out the possibility of increasing that, in time.
The biggest potential long-term implication becomes whether the NFL would ever allow institutional or corporate majority ownership of teams other than the Packers, which has been publicly owned for decades. Would a pivot to something other than the current really-rich-person-buys-a-team-and-then-a-family-member-eventually-runs-it model be good or bad for the league? That depends on the quality of management of the mom-and-pop shop that would be sold, and it depends on the quality of the institution or corporation that would replace it.
The move comes in large part from the fact that the dearth of really rich people who are content to own a sliver of a team with no ability to run it makes it hard to maximize the value of the overall asset. Private equity funds exist for the purpose of dumping a bunch of money into a business that will likely generate a proper return. This new rule will make it easier both to sell minority stakes — and to maximize the price tags placed on them.
The desire to position franchises for the greatest possible valuation growth could tempt the league to expand institutional or corporate ownership. If allowing non-individuals to buy part of a team is good, allowing them to buy most of a team is, in theory, better.
Where it goes from here remains to be seen. For now, the league has overwhelmingly entered this new age of institutional money. Per multiple reports, the Bengals cast the lone dissenting vote. Although Katie Blackburn technically pulled the “no” lever, it continues a trend started by her father, Mike Brown.
As one source with knowledge of the dynamics remarked, the Bengals consistently oppose anything that contributes to modernizing the league’s financial infrastructure.
For now, the league has modernized the league’s financial infrastructure by approving several funds to buy pieces of up to six different teams, via Sports Business Daily: Arctos Partners, Ares Management Corp., Sixth Street, and a combined group consisting of Blackstone, Carlyle, CVC, Dynasty Equity, and Ludis, which was founded by Hall of Fame running back Curtis Martin.
Given that each fund can own up to 10 percent of one team and that each fund can own pieces of up to six teams, there could be one fund (in theory) with the equivalent of 60 percent of one team. Which could make it easier for the league to justify an eventual push to allow institutional or corporate money to buy franchises that currently operate like family-owned food trucks.