The NFL stands apart from nearly every top-level professional sports league in the world by declining to allow private equity or other institutional investment in its teams. By comparison, the NBA allows PE, pension funds and even sovereign wealth funds to invest, while global soccer was the first to allow private equity to own teams outright, leading to the current boom in fund interest in owning at least part of teams.
However, the NFL appears to be moving in the direction of allowing private equity into its ownership ranks. In spring 2024, the league retained an investment bank, PJT Partners, to act as a liaison between the league and potential PE partners.
“They’re moving forward with a sense of urgency, and they are looking to speak with private equity firms to see if the PE firms will agree with their format,” said Errol Brown, an attorney with a specialty in sports, media and entertainment financing at Haynes and Boone, a law firm that represents several PE firms for various transactions. Speaking by phone in May, Brown addressed the topic generally, not with any insider knowledge of the NFL’s proceedings.
Still, despite the movement by the league, a time frame for approval of PE ownership in the NFL isn’t known and the league ultimately may not allow funds to become part owners of teams.
Who is allowed to own NFL teams today?
Right now, the NFL operates by the traditional sports team ownership model—one owner for each team. That person leads the organization, attends owner meetings and votes on matters the NFL puts before its owners.
Of course, not every franchise is 100% owned by one person; the NFL requires one person to be the decision-maker while allowing others to hold minority stakes in teams. In long-standing exceptions to that rule, the league allows large extended families to divide equity among many family members, like with the Chicago Bears. Even more than half a million fans claim team ownership through publicly available shares of stock in the case of the Green Bay Packers.
What are the ownership guidelines today?
Despite the exceptions noted above, the league puts some rules in place for its ownership.
- An incoming owner must own at least 30% of the franchise, though it is said the league strongly prefers a new owner to hold half outright. NFL teams with the same owner for at least a decade then see that rule loosened, with the controlling owner having to own just 1% of the franchise equity, while their families need to own 30%.
- A maximum of 25 people can be in any ownership group.
- A detailed succession plan for each team’s ownership must be filed and then updated annually with the league office. Of course, the NFL owners themselves can approve or decline any new owner if 24 of the 32 vote for it, and the owners can always vote to change their rules at any time.
Why should the NFL consider allowing private equity into ownership ranks?
Skyrocketing team values means it is harder to find a single billionaire who wants to pay a not-so-small fortune to buy even 10% of a team—though based on most recent team sales (the Commanders and the Broncos), the league has yet to truly see any difficulty in that regard. Additionally, very few perks come with the purchase, beyond pride of limited ownership.
By permitting PE to buy limited partner stakes, the NFL would greatly increase the market for buyers and ease the process of selling for existing minority owners—and for majority owners who find the need to sell some team equity now and again.
“There’s just been a crisis over the last five or so years of deploying PE capital,” Dan Malone, a partner at Haynes and Boone, said. “You’ve got an industry that’s got anywhere from $2 to $4 trillion—with a T—of dry powder that they’re looking to deploy, and you’ve got a league in the NFL that is as rich as ever in terms of valuation. … It seems like a natural marriage.”
What might private equity investment in the NFL look like?
The NFL’s rules on private equity in ownership will probably look similar to the other American pro leagues. The NFL almost certainly won’t allow institutions to control teams, and the league will likely cap how much minority stock of a team PE can own and how many teams one fund can invest in. Additionally, it will probably put further restrictions on PE beyond what it does on individual limited partners.
To date, there are indications that the NFL may limit PE to no more than 10% ownership of any franchise. There have also been rumblings that the league isn’t fully comfortable with the fee structure PE collects in its investments. Typically a PE firm will collect a 2% annual fee from its investors on their capital, as well as 20% of the long term profits and, in many cases, charge a management fee to the companies they invest in in return for helping management. If the NFL doesn’t approve of that, expect it to take a page from the NBA, which demands at least one PE fund that can buy into its teams, Blue Owl, share a portion of fees and profits with the league.
While the NFL (and major sports leagues in general) hold leverage over PE firms that other industries often can’t exert, both Brown and Malone are skeptical the league will be able to hammer down the long-established “2 and 20” structure of PE. “I do think then the traditional sharing of economics will still be in effect,” Malone said.
There is value that gets returned for the PE fees, Brown added. “There are a lot of smart people in private equity. [The NFL] is going to learn efficiencies, be it with concession stands, handling media buying, in terms of real estate development, and going into other new markets,” he said.
Will other types of funds will be allowed?
If the NFL follows the path of its peer leagues, it will probably just allow PE first. Some leagues approved PE and then later permitted the addition of university endowments, pension plans and sovereign wealth funds to be, at least theoretically, permitted.
Unlike sports such as basketball, baseball, soccer and ice hockey, which have sizeable followings outside the U.S. and Canada in at least handful of countries, American football is largely just a North American game, at least as far as people who play. In the case of sovereign wealth funds, which often have a goal of advancing a sport or business in their home country through their investments, the NFL may be too American for them to want to invest.