NFL owners could investigate rule changes for team ownership: private equity a possibility

According to ESPN’s Michael Rothstein, a select committee of NFL owners have been, for the last nine months, reviewing the league’s ownership rules to allow a broader range of candidates to purchase a stake in a team.

“One of the possibilities on the table: allowing institutional wealth, including private equity, to invest in NFL franchises, which the league has never permitted,” Rothstein said.

“Owners will likely discuss - and potentially vote on - the committee’s research and findings at league meetings in Nashville this week”, he added in his report.

What benefits would the rule changes have on NFL franchises?

The report also states that a move to allow private equity firms or institutional wealth to invest as partners “could free up cash for owners to pursue projects such as stadium renovations”. This would be a huge change to the way teams are currently structured, moving from the typical family-run Businesses to a more soccer-style way of doing things.

Private equity firms, if they were eventually allowed into the mix in NFL, could, according to ESPN, ”inject millions of dollars into teams to create liquidity for majority owners” as well as offering an increased number of minority stakeholders.

‘I need a quarter of a billion dollars, what do I get? Nothing’

Currently, the NFL only allows individual or family limited partners, who have little to no decision-making power in NFL teams. Ted Leonsis, the owner of the Washington Capitals, Wizards and Mystics, pointed out to ESPN why he can see the turnoff for private investors given the way things currently work in the sport: “These people are really rich and successful”, he told the media outlet.

“They’re used to being the center of the universe. And now you go, I need a quarter of a billion dollars. Fantastic, what do I get? Nothing. Do you have any control? Any role? No, you’re passive investors. You’ll get your name on a website somewhere or something and you get to tell people I own a piece of an NFL team.”

“I would expect in the near future we would make a recommendation that could possibly be voted on”, said Clark Hunt, the owner of the current Super Bowl champions, the Kansas City Chiefs, while adding that some owners have “changed their thinking on it and are more open-minded” regarding private equity in NFL.

Private equity firms could potentially see the NFL as a huge way to make big cash. Over recent years, the valuations of various teams have shot through the roof, as has happened in soccer.

In Europe, we have seen the likes of Chelsea FC and AC Milan be taken over by US investors looking to take advantage of the booming market and it seems like the NFL could well be on its way to doing something similar. The biggest sport in the US might just be about to get even bigger...