By: Lauren Cuppy
September 18, 2024
Photo Credit: La Presse
The most common form of NFL team ownership is private control by individuals or family groups. For example, the Dallas Cowboys are famously owned by Jerry Jones, and the Jones family legacy is seen throughout the franchise's senior management. However, in August, the NFL voted to allow private equity ownership of teams, capped at a 10% stake of any given team, presenting promising opportunities to franchises across the league. This rule change comes as NFL legend Tom Brady is dipping his toes into the league's corporate hierarchy through both team ownership and live broadcasting on FOX.
The current landscape for private equity ownership in sports is vast and ever-evolving. RedBird Capital Partners, for example, is a private equity firm that manages a portfolio worth approximately $10 billion worth of assets within sports, media, and entertainment, most notably AC Milan and Fenway Sports Group (known as FSG, who themselves own the Boston Red Sox, Pittsburgh Penguins, and Liverpool FC). Back in May, RedBird Capital announced a joint venture with Weatherford Capital called Collegiate Athletic Solutions in which they intend to invest in “a select group of universities” (Sports Business Journal). According to the founder of RedBird Capital, Gerry Cardinale, this project is to not only help more lucrative sports, such as football and men’s basketball, but also to help better fund and monetize sports with high potential for growth, such as women’s basketball and volleyball.
With expansion into collegiate athletics and institutional ownership already present across teams within the NBA, NHL, MLB and MLS, it’s no surprise that we are seeing this transformation happen in the NFL landscape. According to the new policy, up to 10% of a team can be owned by a set of pre-approved firms, including (but not limited to) Arctos, Ares, Blackstone, Carlyle, CVC, and Dynasty Equity. Strict rules have been put into place for these transactions, and “approved buyers had to sign up to the league’s parameters, which include no governance rights, no preferred-equity investments and a requirement to hold stakes for a minimum of six years” (Wall Street Journal). Additionally, each firm is allowed to buy stakes in up to 6 different franchises – therefore, a team could theoretically own 10% of one team and 10% of its biggest rival.
Tom Brady's interest lie parallel to this push for private equity ownership. Over a year ago, Brady bid to own 10% of the Las Vegas Raiders, which is finally on its way to approval. However, concerns have been raised due to the potential conflict of interest between Brady’s new role at FOX commentating on the NFL's live broadcasts while also (potentially) owning an NFL franchise. As a result, Brady has made it clear that he is willing to sacrifice certain aspects of his new position in order to pursue ownership, including “not being allowed to be in another team's facility, not watching practice and [being excluded from] participation in production meetings” (NFL).
Overall, the addition of private equity ownership will provide new resources to teams within the NFL, such as access to increased capital and liquidity which can be invested back into the franchise. These opportunities have the potential to “ [implement] strategic initiatives, such as stadium renovations, further expansion into global markets, and the creation of new revenue streams” (Mercer Capital). Additionally, the growing interest of famous figures such as Tom Brady seeking involvement in franchise ownership makes it interesting to see how franchises around the league will respond to these massive developments.
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