Private equity firms will finally have the opportunity to invest in National Football League (NFL) franchises after NFL owners voted in favor of the proposal on Tuesday.
The introduction of private equity firms into the ownership of a sports team isn’t a new concept. All other three major leagues in the United States – NBA, MLB, and NHL – have rules in place that allow these types of moves. On the other hand, the NFL has long opposed joining the pack, instead barring investment companies from owning a piece of the team and only allowing a limited number of partners.
However, the potential financial benefits have now prompted the NFL to change its stance. Moving forward, private equity firms will be able to own up to 10% of a single NFL franchise while being allowed to invest in up to six different teams. Additionally, these firms will have to be pre-approved by the league.
While private equity firms will have no voting power or say in the day-to-day running of the franchise, they would stand to benefit from the surging valuation of NFL teams. For example, the most recent NFL team to be sold, the Washington Commanders, fetched a price of $6.05 billion, representing the record amount paid for a sports franchise.
On the other hand, NFL team owners will get an opportunity to cash in on the franchise they helped build or get additional funds available to them for costly projects like stadium upgrades.