EAGAN, Minn. — The NFL on Tuesday approved the introduction of private equity into team ownership, at last bringing a lucrative source of capital into the largest and most dominant U.S. pro sports league.

The highly anticipated league vote, taken in a special meeting held here, will allow private equity investors up to 10% of an individual team’s equity—below other comparable leagues that allow up to 30%. An approved firm can hold stakes in up to six teams. The vote to approve was 31–1, with the Bengals standing as the lone dissent. 

“This has been a long process,” said Joe Siclare, NFL EVP of finance, following the vote. “Our ownership policy is one of the key foundational elements of our business model. … We were very deliberate in this approach, very measured. This is a very important thing for the league, and we have the benefit of having a lot of interest in the investment community.”

The approval, however, is by no means a free-for-all. There are only eight approved firms that can participate, at least at the outset, and there is a provision in which the league can force a sale of an equity stake held by private equity if a firm violates league terms, including conduct clauses. Additionally no governance rights in teams will be included in any of the deals. The involved firms will also be required to hold their team stakes for a minimum of six years. There is also a requirement in which the NFL will take a percentage of private equity stake sales, known as “carry.” The level of that fee will vary, but in concept, the practice differs from private equity policies adopted by other major U.S. leagues.

“The private equity firms that participate in this involved absolutely understood and expected that the NFL would have a collective [profit] participation in this,” said league commissioner Roger Goodell. “We think it’s appropriate, the private equity firms thought it was appropriate, and the way to approach this.”

Heavy Hitters

The involved firms include:

• Arctos Partners
• Ares Management
• Sixth Street Partners
• A consortium of Blackstone Partners, CVC Capital Partners, Carlyle Group, Dynasty Equity, and Ludis. The latter firm was founded and is led by Pro Football Hall of Famer Curtis Martin.

Many of these firms have already been highly active across many other parts of the sports industry. The approval is expected to set up several deals that are targeted to close before the end of the year.

“The NFL has taken a prudent, cautious approach, and by doing this in the way that they have, they’ve created a marketplace and will be in position to generate the very best deals,” George Pyne, Bruin Capital founder and CEO, tells Front Office Sports. 

Arctos in particular touted its role as the only firm approved to invest in the five largest North American pro leagues.

“While there is much work ahead, today is a milestone reflecting Arctos’ commitment to the sports industry, our position as the market innovator and passion for being the partner of choice for leading sports ownership groups,” the firm said in a statement.

Urgent Need

The private equity funds will be used for a variety of purposes, including recapitalization of clubs, generating additional liquidity, and stadium projects. Fast-rising franchise values, increasingly out of reach for even the uber-wealthy, also added to the push to finally get this done after the league’s long deliberation.

“By having four investment groups, each of which bring several billion dollars to the table, there is enough capital to address anybody who wants to avail themselves of this opportunity in the next 18 months,” said Chiefs owner Clark Hunt. “That was one of our goals, to have enough capital and enough firms to create a bit of competition.”

Eight U.S.-based private equity firms are set to benefit from the ever-growing valuation of NFL franchises after being exclusively approved to buy minority stakes in the league’s 32 clubs.

Most general sports fans may not recognize the names of the multibillion-dollar funds, but all except one have already made investments in other professional franchises, leagues, and other sports properties. The NFL has given the green light to Arctos Partners, Ares Management, and Sixth Street Partners, as well as a five-firm consortium of Blackstone Partners, Carlyle Group, CVC Capital Partners, Dynasty Equity, and Ludis, a firm founded by Pro Football Hall of Famer Curtis Martin. 

Blackstone and Ludis are the only firms without a prior known sports franchise investment.

Arctos

Arctos, founded as a sports-specific firm in 2019, is known to have more than 20 investments in professional entities. The most notable as it relates to the NFL is its investment in 76ers and Devils parent company Harris Blitzer Sports & Entertainment, founded by Commanders owner Josh Harris (above) and his business partner David Blitzer, who holds a minority stake in Washington.

Here’s a full list of Arctos sports investments:

• NBA: 76ers, Jazz, Kings, Warriors
• NHL: Devils, Lightning, Penguins, Utah HC, Wild
• MLB: Astros, Cubs, Dodgers, Giants, Padres, Red Sox
• Soccer: Liverpool, Paris Saint-Germain, Portland Timbers 
• Motor sports: Aston Martin Formula One team, Joe Gibbs Racing

Arctos is also invested in the Premier Lacrosse League. Its stakes in the Red Sox, Liverpool, and Penguins come by way of an investment in those teams’ shared parent company, Fenway Sports Group. The Jazz and Utah HC are both owned by Ryan Smith.

Ares

Ares Management was founded in 1997, but in 2022 raised $3.7 billion for a fund focused on sports, media, and entertainment finance. Its sports investments are mostly in soccer, holding minority ownership stakes in Atlético de Madrid, Chelsea, Inter Miami, and Eagle Football Holdings—the parent company of Crystal Palace and Olympique Lyonnais.

Outside of soccer, Ares has stakes in the Padres and McLaren Racing.

Sixth Street

Sixth Street’s biggest NFL tie comes by way of the majority stake it acquired in Legends in 2021. The sports hospitality agency was founded in 2008 by Cowboys owner Jerry Jones and the Steinbrenner family who owns the New York Yankees.

Additionally, Sixth Street is the lead investor in NWSL club Bay FC, and it has minority stakes in Barcelona, Real Madrid, and the San Antonio Spurs.

Best of the Rest

Three of the five firms partnering on a consortium that will invest in NFL franchises already have sports franchise investments.

Carlyle has a stake in the Seattle Reign, and the firm’s founder, David Rubenstein, bought the Orioles earlier this year. Carlyle was also reported to be in talks with Alex Rodriguez and Marc Lore to help fund their majority acquisition of the Timberwolves, which remains unsettled. 

CVC invested $150 million into the WTA last year, and it has been linked to a potential investment in the Big 12 Conference. The firm also has stakes in Indian Premier League franchise Gujarat Titans, as well as Spain’s LaLiga, France’s Ligue de Football Professionnel, and Premiership Rugby in the U.K.

Dynasty Equity was just founded in 2022, and it has only two investments, both in sports: Liverpool and TMRW Sports, the company founded by Tiger Woods and Rory McIlroy that is launching the TGL golf league next year.

As the NFL follows in the footsteps of other major U.S. sports leagues by allowing private equity ownership in its franchises, it’s going against the grain by not allowing sovereign wealth funds in on the party—sort of.

The league has approved a select list of private equity funds that can acquire up to 10% ownership of a team. And, for now at least, state-controlled entities like the Public Investment Fund of Saudi Arabia—the financial backer of LIV Golf—will not be allowed to directly pump cash into NFL clubs. 

However, the rules will not prohibit the PIF and others from being investors in a private equity fund that purchases an ownership stake in a team. A sovereign wealth fund will be allowed to own up to 7.5% of an entity that owns a maximum of 10% of an NFL club.

“I don’t think we looked at sovereign wealth any different than any other institutional investor like pensions, endowments,” said NFL EVP Joe Siclare. “We’re just taking a measured approach. … We’re not differentiating among types of investors [in the funds]. But we do have that [7.5%] sublimit. If you sort of do the math, you get down to a pretty de minimis level of ownership for any individual investor.”

Across the Country

The NBA, NHL, MLB, and MLS have no bans at all on franchises selling stakes to sovereign wealth funds. But so far, there has been just one transaction involving a foreign fund. 

Last year, the Qatar Investment Authority paid $200 million for a 5% stake in Monumental Sports & Entertainment, the parent company of the Capitals, Mystics, and Wizards. Monumental CEO Ted Leonsis predicted that his move, which brought sovereign wealth to the NBA, WNBA, and NHL, would start a trend. ​​“I believe other teams and other leagues will all be embracing pension funds, college endowments, university endowments, and sovereign wealth funds as investors, as a part of the tapestry of their investment base,” he said.

Beyond American Football

MLS commissioner Don Garber has previously said the league is open to sovereign wealth funds investing in clubs, as is commonplace among top European teams. The PIF owns Newcastle United, and Qatar Sports Investments (a separate entity from the QIA mentioned above) owns Paris Saint-Germain, for example. 

In MLS, though, New York City FC is owned by City Football Group, the multiclub portfolio that also owns Manchester City. CFG is owned by United Arab Emirates vice president Sheikh Mansour bin Zayed Al Nahyan, who is separately chairman of two UAE sovereign wealth funds.