NFL poised to allow teams to sell 30% of franchise to private equity

Groups of private equity investors may soon be allowed to buy as much as 30% of National Football League franchises.

Proposals under discussion would let buyout firms individually acquire as much 10% of a team, according to people familiar with the matter, who asked not to be identified because the deliberations are confidential.

A special NFL committee is meeting to examine the league’s ownership rules. Talks are ongoing and the percentages may change, some of the people said. A spokesperson for the NFL declined to comment.

The owners will present their findings in Nashville, Tenn., over three days starting May 20, during the second of four annual league meetings. In March, the committee updated owners on its findings but delayed putting forward the matter for a vote.

The committee is led by Chair Clark Hunt, who owns the Kansas City Chiefs. The other members are team owners Arthur Blank (Atlanta Falcons); Jimmy Haslam (Cleveland Browns); Greg Penner (Denver Broncos); and Robert Kraft (New England Patriots). The group has been discussing the league’s ownership rules since September, when NFL Commissioner Roger Goodell created the panel.

Some private equity firms that have been active in buying equity in U.S. professional teams include RedBird Capital Partners, Arctos Partners and Ares Management Corp.

The NFL has made selling teams more difficult than other sports that have already expanded ownership rules to private equity and other investment entities.

“We’re making progress, I think there will be some changes as early as May — probably closer to October,” Goodell said at a March news conference. “They came very close to sort of outlining an approach and the approach is something we want to make sure the membership is aligned with. Now we have a lot of work to do to take that approach into reality.”

Much like the current process for new owners, private equity firms will have to be vetted and pre-approved by the league. Under current proposals, those buyers would have to set up a fund dedicated to NFL team ownership, rather than using a vehicle that invests more broadly, one of the people said.

The National Basketball Association caps private equity ownership of any team at 30%, while a single firm may own no more than 20% of a single franchise. PE firms can own stakes in as many as five teams.

“One of the things we’ve learned through this process is that these private equity firms are not only interested in potentially investing in NFL franchises but also being involved in some of the real estate development that goes along with stadium projects,” Hunt said in a March interview.