Last August, the National Football League (NFL) approved new ownership rules that allow private equity funds (“Funds”) to purchase minority stakes in NFL franchises. The new Private Equity Policy (“Policy”), formally titled 2024 Resolution JC-7, is designed to expand ownership to include pooled investment groups.
Under the Policy, Funds may purchase up to 10% of an NFL team at a minimum equity stake of 3%.[i] Funds must hold the investment for at least six years as a passive owner with no voting rights or significant decision-making power.[ii] While Funds may invest in multiple teams, the Policy limits them to six franchises and sets forth heightened disclosures for multi-team approval.[iii] Funds must have at least $2 billion in committed capital but can only invest up to 20% of capital into one team.[iv] The Policy further permits team owners and their immediate families to invest up to 3% in approved Funds, but current NFL players may not.[v] [vi]
The Policy is the result of several years of discussion between NFL owners and the subsequent appointment of a Special Committee on Ownership Policy in 2023 by NFL Commissioner Roger Goodell.[vii] In connection with Policy approval, the NFL Finance Committee selected four private equity firms to invest in NFL teams effective August 2024. The provisionally approved investors include Arctos Partners, LP, Ares Management Corporation, Sixth Street, and a consortium led by former NFL star Curtis Martin comprised of Blackstone, Carlyle, CVC, Dynasty Equity, and Ludis.[viii]
The NFL selected each firm based partly on their demonstrated commitment to investment and preferred hold times, noting that this list could expand in the future. If so, the approval process for private equity buyers will remain consistent with any other change in NFL ownership, requiring approval by a three-fourths majority vote of teams. As of December 11, 2024, Arctos Partners and Ares Management joined the ownership groups of the Buffalo Bills[ix] and Miami Dolphins[x], respectively, marking the NFL’s first two private equity investments since the Policy’s adoption.
Still, the NFL is a markedly late adopter of private equity ownership as Funds have been investing in other American sports leagues since 2019 in accordance with the terms provided in the table below.[xi]
| NFL | NBA | MLB | NHL | MLS | NWSL | |
| Year of Approval | 2024 | 2021 | 2019 | 2021 | 2021 | Unknown[xii] |
| Maximum Equity a Team Can Sell to Funds | 10% | 30% | 30% | 30% | 30% | 30% |
| Maximum Equity a Single Fund Can Own in One Team | 10% | 20% | 15% | 20% | 20% | 15% |
| Maximum Number of Teams a Fund Can Own | 6 | 5 | Unlimited | 5 | 4 | 3 |
| Maximum Investment | 3% | Unknown | Unknown | $20 million | $20 million | 5% |
| Minimum Hold Period | 6 years | Unknown | Unknown | Unknown | Unknown | Unknown |
| Average Franchise Value | $5.93 billion | $4 billion | $2.64 billion | $1.31 billion | $678 million | $66 million |
The NFL Policy is consistent with the reality that professional sports has become an asset class in and of itself. Private equity firms are particularly attracted to professional sports investments because of the steady growth in team valuations, maxed-out media rights deals, and the unwavering popularity of sports across the globe. First, American sports teams have a notably lower correlation value than other assets like stocks, mortgages, and commodities. Put more simply, American sports can withstand recessions and downturned markets.[xiii] The low correlation value is based in part on the irrationality of the American sports market (read: American sports fans). Despite inconsistent on-field performance, professional sports fans have deep loyalties to their favorite teams and will support them from the stadium or the couch.[xiv] Further, given the steady growth in team valuations, several professionals conclude that sports teams have consistently outperformed the S&P 500 for the last 20 years.[xv]
Unlike other professional sports leagues, every NFL team is profitable and yields higher multiples when sold.[xvi] The profitability of the NFL is only expected to increase over the next decade thanks to the $111 billion media rights deal.[xvii] In effect, the Policy has opened the door of ownership transactions to a new pool of buyers, resulting in heightened demand and increased returns on investment at sale. This latest influx of liquid capital better positions NFL teams to strategically address the capital and operational expenditures required to build an enduring legacy. Nevertheless, despite the clear advantages of NFL team ownership, widespread access to institutional investors is still a way off.
[i] Judy Battista, “NFL owners vote to allow private equity funds to buy stakes in teams,” NFL.com, August 27, 2024.
[ii] Id.
[iii] Id.
[iv] Michael Rothstein, “NFL owners approve private equity investment,” ESPN.com, August 27, 2024.
[v] As distinguished from the National Basketball Association’s 2023 Collective Bargaining Agreement permitting current NBA players to invest in NBA teams through private equity funds at up to 5% ownership. Collin Salao, “NBA Stars Like LeBron James Can Now Invest In An Opportunity That Was Previously Banned,” TheStreet, July 6, 2023.
[vi] Rothstein, supra note 4.
[vii] Battista, supra note 1.
[viii] Rothstein, supra note 4
[ix] “Buffalo Bills welcome 10 new limited partners to ownership group,” BuffaloBills.com, December 11, 2024.
[x] Dolphins Staff, “Miami Dolphins Announce Sale of Limited Interest to Ares Management for Continued Investment into South Florida and the Ross Sports and Entertainment Portfolio,” MiamiDolphins.com, December 11, 2024.
[xi] Brendan Coffey et al., “NFL Owners Approve Private Equity Deals, Unlock Billions,” Sportico, August 27, 2024.
[xii] The NWSL has allowed private equity investments for some time, though the date of initial approval is unknown. Still, in June 2024, the NWSL released formalized investment policies to govern institutional investments in the future. Brendan Coffey, “NWSL Private Equity Rules: What Stake Can PE Have in Teams?” Sportico, June 19, 2024.
[xiii] Brendan Coffey, “Sports Grow From Private Equity Afterthought to Booming Market,” Sportico, May 16, 2024.
[xiv] Ryan Prete, “PE firms flocked to lucrative sports, media and music deals in 2021,” US PE Breakdown, PitchBook, Jan. 20, 2022.
[xv] Id.
[xvi] Kurt Badenhausen, “Every NFL Team Sees More Profit Than Any Premier League Club,” Sportico, September 10, 2023.
[xvii] Id.
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