The NFL’s most exclusive club just let in new members.
At a special league meeting in Eagan, Minnesota, on Tuesday, National Football League owners voted in favor of allowing select private equity firms to buy up to a 10% stake of a team. Each fund or consortium will be able to do deals with up to six teams.
The initial approved firms include Ares Management, Sixth Street Partners and Arctos Partners, in addition to a consortium nicknamed “The Avengers” that includes Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin.
The firms collectively have $2 trillion in assets and intend to commit $12 billion of capital to be raised (inclusive of leverage) over time, according to people familiar with the matter, who asked not to be identified to speak about terms that were not public. With at least four investor groups able to invest in up to six teams each, that works out to $500 million of added capital on average for each team that receives an investment.
NFL Commissioner Roger Goodell told CNBC in July that the league has had tremendous interest from private equity.
The league created a committee last September to look at the possibility of welcoming private equity funding and has been meeting with the selected firms more recently.
The NFL is the last major sports league to allow private equity investment, and it’s still treading lightly on the issue by allowing only a select group to participate and at a lower rate than the other professional sports leagues.
The National Basketball Association, Major League Baseball, the National Hockey League and Major League Soccer all allow private equity ownership of up to 30%.
Goodell told CNBC in July that he believes the 10% is a complement to the existing ownership structure and that the percentage could be raised at some point in the future.
As NFL team valuations rise, it’s meant a smaller pool of owners have the money to foot the price tag when teams become available.
That dynamic was on display during the sale of the Washington Commanders last year. The franchise sold for a record $6.05 billion to an ownership group that included Apollo co-founder Josh Harris and 20 other investors.
Harris said in June that the process “created a little bit of a wake-up call at the NFL.”
“Unless you’re one of the wealthiest 50 people [in the world], writing a $5 billion equity check is pretty hard for anyone,” Harris told CNBC at the CNBC CEO Council Summit at the time.
As the NFL opens its doors to fresh capital, the money will also free up funding for new stadiums and related projects.
The Buffalo Bills and Tennessee Titans are both currently in the process of building new stadiums, while the Cleveland Browns, Chicago Bears and Washington Commanders are actively pursuing new stadiums in the future.