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In less than a week NFL owners are likely to vote on allowing private equity firms to become part owners of one or more iconic football franchises. In a review of the sports investments the league’s potential PE investors already have, the NFL would be a significant addition. Even so, sports would still constitute just a sliver of their business.
As Sportico has reported, the league has advanced seven PE firms during its process, with at least three others culled after preliminary talks. The final seven break down like this: four very large PE firms—Ares Capital, Blackstone Partners, Carlyle Group and CVC Partners; one medium-sized firm, Sixth Street; and two small sports-centric outfits, Arctos Partners and Dynasty Equity. Four of those have pitched themselves as a consortium, comprised of Blackstone, CVC, Carlyle and Dynasty. The other three are believed to be stand-alone potential investors.
As a group, their heft is huge. The final seven have nearly $2.2 trillion in assets under management across some 2,025 portfolio holdings, according to S&P Global Market Intelligence data. Sports investments comprise just 43 of those two-thousand-plus holdings, excluding betting enterprises and general businesses that may touch sports along with other sectors. The sports investments are worth $22 billion total, based on publicly disclosed deal terms, Sportico reporting and S&P data. That’s just 1% of the group’s total assets.
Should the NFL permit PE to invest in its clubs, it probably wouldn’t even double sports assets for the group: The league has discussed limiting PE stakes in clubs to 10% ownership or less, compared to 30% for the other major North American leagues. All 32 NFL franchises combined are worth $190 billion, meaning just $19 billion would be available to PE under that proposal, even if every owner wanted to sell.
Given the three largest PE firms in the running—Blackstone, Carlyle and Ares—have $1.9 trillion in assets among them, the NFL is a drop in the bucket. Why even pursue the league?
“You can describe it as a drop in the bucket, as you have so aptly done, but a lot of drops start coming and you get a puddle,” Irwin Kishner, co-chair of the Sports Law Group at Herrick Feinstein, said on a phone call. “Sports, live sports programming and gambling rights associated with that are a tremendous value proposition, where smart money sees opportunity to achieve the returns that they are looking to achieve. It’s still big numbers.”
PE firms are in the business of finding outsized returns, and the NFL, at least historically, has provided that: Over the past 20 years, the league’s total value has risen from $23.46 billion to $190 billion, a 710% gain. By comparison, the S&P 500 index has risen 660% the past 20 years. Not only do franchises provide outsized returns, but team values tend to be less volatile than other investments like stocks and bonds—or, in Wall Street-speak, they are more highly non-correlated with other securities, a characteristic valued by long-term investors that hand PE firms their money.
Ares, with $447 billion under management, has been targeting sports as one of its growth areas in recent years. “When you look at what we're building for the future in places like Asia-Pacific private equity, credit, secondaries [and] sports, media and entertainment, I have a hunch that when we're together with you in a couple of years, you'll see movement of those new strategies at an accelerated pace as well,” co-founder and CEO Michael Arougheti told analysts in May.
Three years ago, Ares began raising capital for an SME fund, eventually exceeding its target and pulling in $2.2 billion of assets. The fund has mainly debt-related investments, including about $100 million (as of mid-2021) in loans to the San Diego Padres. It also has soccer investments in Inter Miami, Olympique Lyonnais and Atlético Madrid.
By comparison, Blackstone, the world’s largest PE firm, and Carlyle have barely dipped their toes into sports. Blackstone has just a handful of investments that touch sports (like Outerstuff, which makes licensed apparel), and only one that is mainly sports: a 13% stake in the YES Network, the regional sports channel that shows Yankees and Nets games, according to S&P data. Carlyle’s only identified sports investment is majority ownership of the Seattle Reign, the NWSL team valued at $58 million when it invested this spring. Beyond seeking returns, Carlyle’s interest in sports could be driven by its recent aim to extend its business into private wealth management. Being able to own a sliver of an NFL franchise could have huge appeal to well-off clients who aren’t rich enough to buy into a team on their own.
More active has been CVC, which has about $6 billion in sports, mainly rugby and French and Spanish soccer, and Sixth Street, the largest sports investment of which is probably Legends, the hospitality and experiences firm it owns with minority partners the Yankees and Cowboys. Sixth Street also has majority ownership of the NWSL's Bay FC; a 20% stake in the San Antonio Spurs, probably acquired for $360 million in 2021; and $200-million-plus deals with Barcelona and LaLiga in soccer.
The remaining two NFL finalists are sports-centric: Dynasty Equity is a sports-franchise-focused fund that manages $343 million, according to a recent regulatory disclosure. Founded two years ago by sports banking veteran Don Cornwell and PE veteran Jonathan Nelson, Dynasty has two investments, in Liverpool FC and TMRW Sports.
Arctos is a name known in the sports business as the most successful pioneer of the sports franchise investment model. Arctos has $9.8 billion under management, according to a 2024 SEC filing, all in sports franchises and some related businesses, including limited partner stakes in six MLB teams, five NBA teams and three NHL teams.
Interestingly, Arctos is seeking to expand outward from sports, deploying a version of its limited partner investment approach into helping other private equity firm owners with liquidity. It’s closing on its first investment in that sector, helping management of a Canadian asset manager buy out their firm.
Every business, it seems, could use people willing to buy minority stakes.
(This story has been updated in the fifth-to-last paragraph to add information about Sixth Street's majority ownership of the NWSL's Bay FC.)
