- Public companies, sovereign wealth funds and private equity investors currently barred from owning shares of NFL teams
- Group wants the changes to be considered next year
National Football League (NFL) owners are pushing to allow private equity firms and institutional investors to buy stakes in teams, according to Bloomberg.
The group of owners is reportedly planning to lobby for the potential shakeup at the league’s ongoing annual meeting in Phoenix and want the changes to be seriously considered next year.
An NFL spokesperson told Bloomberg there will be no official discussion regarding ownership during the meeting.
Current league rules mean only individuals, rather than companies or corporate entities, who are able to stump up the capital for at least a 30 per cent stake are able to become a principal owner of an NFL team.
In addition to having the power to vet and approve potential investors, the NFL can also limit the amount of debt new owners are able to accrue in order to fund their purchases. In 2021, the league increased the debt limit per team from US$500 million to US$1 billion. In order to qualify, prospective buyers must reportedly meet certain conditions and agree to timelines for reducing the debt to US$500 million.
According to Bloomberg, the NFL isn’t against a potential rule change on ownership. However, the league is mindful of balancing the group of owners’ desire to tap new pools of capital against some of the world’s richest people who enjoy the exclusivity that comes with owning a team.
Meanwhile, the NFL has issued US$1.27 billion in new 2023 term notes under the league-wide credit facility, according to a ratings opinion issued by Fitch Ratings.
The notes will be used to repay existing indebtedness, as well as for general corporate purposes and to provide working capital. Fitch has given the new debt a rating of ‘A’.
Sportico adds that the NFL is increasing the amount of money available through one if its revolving credit lines to US$4.113 billion and that the new notes are probably increasing the league’s total indebtedness by around US$900 million to US$10.87 billion.
Even if the NFL’s Phoenix meeting includes no formal talks over ownership, it is worth considering the ramifications of allowing private equity investment.
The league remains a closed shop to private equity, which contrasts with other major North American competitions. The notable example is the National Basketball Association (NBA) which now allows its franchises to sell minority shares.
Relaxing the rules as NFL team values continue to rise would likely generate even further competition. The likes of Amazon founder Jeff Bezos and Apollo Global Management’s Josh Harris are among those linked with a deal for the Washington Commanders, which could sell for as much as US$7 billion, while Walmart heir Rob Walton acquired the Denver Broncos for US$4.65 billion last summer.
Opening the doors to minority investors could also help address the NFL’s lack of diversity from an ownership perspective – the league currently has no Black owners.
Despite the lofty team valuations, the Commanders and Broncos have highlighted the interest in the league’s franchises. Should it allow a new avenue for investors, the NFL will surely be fielding even more demand.