The National Football League (NFL) has officially opened its doors to private equity investment, following in the footsteps of the NBA and other major professional sports leagues. This landmark decision allows institutional investors to acquire minority stakes in teams, marking a significant shift in ownership structures.
League owners recently voted to approve the sale of two 10% stakes, the maximum allowable acquisition for institutional investors under new ownership rules established earlier this year. Ares Management Corporation has secured a stake in the Miami Dolphins, while Arctos Partners has acquired a portion of the Buffalo Bills. Both deals had been previously reported by Bloomberg.
This move has the potential to further inflate already soaring franchise valuations. Owners believe that welcoming deep-pocketed investors will facilitate funding for major capital projects, such as stadium renovations. Beyond institutional investors, the league also approved acquisitions by individuals. Joe Tsai, co-founder of Alibaba and owner of the Brooklyn Nets, is purchasing a 3% stake in the Dolphins, while a consortium of investors is acquiring approximately 11% of the Bills.
The Philadelphia Eagles have also sold an 8% stake to two investor groups: one led by Susan Kim, executive vice chairman of Amkor Technology, and the other by Zac Peskowitz and Olivia Peskowitz Suter, children of Ed Peskowitz, founder of United Communications Group. This transaction values the Eagles at an impressive $8.3 billion.
A key driver behind this shift towards private equity involvement is estate tax mitigation. Many NFL owners, nearing retirement age, are looking to pass on their teams to their families. Selling a minority stake can significantly reduce the substantial estate tax burden, potentially saving hundreds of millions of dollars.
The NFL anticipates further investment deals. The league has already approved additional firms to pursue acquisitions. Unlike controlling owners, limited to investing in a single team, private equity investors can hold stakes in up to six teams simultaneously.
The NFL’s enduring financial strength makes it an attractive investment opportunity. Boasting the highest average franchise valuation among major sports leagues and secured by a lucrative $100 billion media deal, the league offers a compelling proposition for investors.
Arctos Partners’ investment in the Bills underscores this appeal. Doc O’Connor, managing partner at Arctos, highlighted the inherent value of owning a fraction of the NFL, a global business behemoth. “So much of the value of any one franchise resides with the fact that you are 1/32 of the global business that is the NFL,” O’Connor stated, emphasizing the significant advantage this represents. The influx of private equity capital marks a new era for the NFL, potentially reshaping the league’s financial landscape and ownership dynamics for years to come.
