NFL Set For Private Equity Meetings This Week; 1 Buy-Back Option Proposal

According to reports, several private equity groups are meeting with the league this week, the latest step in the league’s deliberate march towards opening its ownership ranks to institutional money.

The meetings are intended for the NFL to conduct due diligence, and to talk through potential policy preferences. The topic for discussion is the possibility of a call option that would allow the league to buy back stakes purchased by institutional funds should owners decide to reverse the policy. The league is considering different options for the size of the investment.

One of the meetings is with Arctos Partners and another is with a consortium that includes Carlyle, Blackstone, CVC, and Dynasty Equity. Other groups involved include Ares, Apollo, and Sixth Street.

The NBA, MLB, MLS, and NWSL all allow funds to hold up to 30% of a team’s equity. The NFL and owners have been discussing the 5-10% range, sources said. Other major leagues also have not required that funds raise separate capital for their franchise investments, nor have they done full due diligence on all of a fund’s limited partners as the NFL could require both.

While specifics are pending, many around the league consider it a conclusion that owners will vote to allow some sort of institutional option. Teams already have term sheets ready to execute should the rules allow.

NFL Commissioner Roger Goodell

NFL Commissioner Roger Goodell told owners to be prepared for a potential meeting should a private equity vote be required. The fund meetings this week will help dictate whether the timeline is feasible, or whether a formal change happens at a later date. Expanding potential buyers for minority stakes would likely increase evaluations across the league.

In response, the owners last year formed a committee to explore possible changes. The group includes Kansas City Chiefs owner Clark Hunt, who is chairman of the NFL’s finance committee, Cleveland Browns owner Jimmy Haslam, Atlanta Falcons owner Arthur Blank, New England Patriots owner Robert Kraft, and Denver Broncos owner Greg Penner.

In response, the owners last year formed a committee to explore possible changes. The group includes Kansas City Chiefs owner Clark Hunt, who is chairman of the NFL’s finance committee, Cleveland Browns owner Jimmy Haslam, Atlanta Falcons owner Arthur Blank, New England Patriots owner Robert Kraft, and Denver Broncos owner Greg Penner.

NFL Is Late to the Party Finally Accepting Private Equity

As the only remaining major North American pro sports league that limits team ownership to natural persons, league owners decided last summer to investigate the private equity option believing it would help improve liquidity in the marketplace for minority and controlling shares of teams, which has been slow because of rapidly rising club valuations.

The Dolphins, Raiders, Eagles, Bills, and Chargers have all tried to sell large minority shares but have remained unsuccessfully.

Private Equity/Buy-Back option

The league owners, holding fast to its old-world model of individual ownership, have been resistant to private equity and other institutional money that can provide the liquid investment that principal owners need to help fund and promote the growth and expansion of the NFL. This resistance has separated the league from all major American sports leagues – NBA, NHL, MLB.

European sports have also accepted this investment, the Big 12 Conference and Florida State University are exploring it and the NFL is realizing it needs to join the party.

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