The NFL’s new rules regarding private equity ownership are significantly more conservative than what’s allowed in the other major U.S. sports leagues.
NFL owners voted on Tuesday to allow institutional funds to buy passive minority stakes in teams. That’s already allowed in the NBA, MLB, NHL, MLS and NWSL, but every league has taken a slightly different approach to the issue, which unlocks a whole new pool of capital for owners looking to sell small stakes in their franchises.
As the world’s most valuable sports league, the NFL was able to sit and watch its peers before crafting its policies. It also had the leverage to demand more league-friendly terms. And as expected, the NFL’s rules are by far the tightest, at least right now.
For starters, the NFL approved a handful of “permitted funds” at the outset. Those funds are Ares, Arctos, Sixth Street, and then a consortium comprised of Blackstone, Carlyle, CVC, Dynasty Equity and Curtis Martin’s Ludis. The NBA’s initial private equity push began with an exclusive relationship with Dyal’s HomeCourt fund, but that quickly faded into a much more open approach.
While every other league major league allows teams to sell up to 30% of their equity to PE firms, the NFL is restricting that to just 10%. The maximum amount a single fund can hold in an NFL franchise, therefore, is also 10%. It’s 15% in the NWSL and MLB, and 20% in the NBA, NHL and MLS.
The NFL is also demanding that PE investors hold their funds for a minimum of six years. It’s unclear if any other league has a similar provision.
Perhaps the biggest differences, however, are not yet fully apparent. As Sportico previously reported, the league was considering a provision that would allow the NFL to buy back stakes within a certain period of time if owners decided to reverse course. According to CNBC, the NFL was also looking to take a percentage of profits on sales down the line. Sportico is unaware of any other league having either provision.
If the NFL is the least open to private equity, the NWSL might be the most permissive. It is the only major U.S. league that allows institutional funds to hold control stakes of teams. Sixth Street, as an example, owns Bay FC. The NWSL’s PE rules only apply to funds that own pieces of multiple teams.
