Private equity readies a play for NFL teams

The National Football League is setting the stage for a select group of private-equity players to get the opportunity to invest in its teams.

The Big Picture: The NFL has long been the last holdout of the major leagues to bar PE firms from flooding the zone with cash. The break in the dam marks a new era for pro football that will likely make team valuations skyrocket.

Between the Lines: Yesterday, NFL owners passed a new policy allowing them to sell up to 10% of their teams to PE firms… but there are some stipulations.

• Only Arctos, Ares Management, Sixth Street, and a consortium made up of Blackstone, Carlyle, CVC, and Dynasty Equity are eligible to participate at first.
• They’ll each be able to invest in up to six teams but will have no governance rights, no preferred equity investments, and a requirement to hold stakes for a minimum of six years.
• The rules are pretty unusual for private equity plays, which typically want a strong hand in influencing investments’ directions and like to extract as much value as possible before exiting.

Closing Thoughts: The policy change is an answer to PE firm’s prayers, as there’s no business quite as attractive as professional football teams, which, up until now, were only allowed to be owned by people instead of entities. But, teams are getting too expensive for only individuals to invest, so relaxing the rules was inevitable. It’s safe to say that every eligible firm will pounce right away.

Go Deeper: Only one team will be unavailable for investment — the Green Bay Packers, which is community-owned.