NFL owners approve rule change allowing private equity investment, with reported $12 billion already committed (1 Viewer)

[BobbyLayne]

Interesting this got approved on Cutdown Day.

NFL owners have officially approved another way for them to receive money.

The league's owners voted in favor of a rule change allowing private equity firms to buy a stake of up to 10% of a team, per Sportico, unlocking billions of committed and potential investment dollars. The NFL is a late arrival for the change, as the NBA, MLB, NHL, MLS and NWSL had all already made the jump.

31 of 32 owners reportedly voted in favor of the change, with the holdout being Mike Brown of the Cincinnati Bengals.

The specifics of the arrangement include a minimum stake of 3% for the private equity firm, funds being allowed to invest in a maximum of six teams each and a minimum holding period of six years. All funds must have $2 billion in overall capital to buy in.

The league is making this change amid the continued skyrocketing of franchise values, which has made it harder for owners to cash in on franchises that are all now worth billions of dollars. Previous rules required an ownership group to have no more than 25 people, but principal owners will now have increased flexibility in finding minority partners looking to inject them in cash in exchange for a cut of the profits.

And it looks like NFL teams won't wait long to do so. According to CNBC, a smattering of firms including Ares Management, Sixth Street Partners and Arctos Partners have committed to raising $12 billion in capital to invest in NFL teams.

 

[Desert_Power]

Just what the NFL was missing, more money.

 

[massraider]

This will wind up being big stories down the road.

The NFL is so well run. They league has to vet the funds, they can only sell 10%, etc.

Because soccer leagues have seen disasters by some fly by night shady fund trying to buy teams with borrowed money. Everton right now.

 

[Long Ball Larry]

UAE and KSA need to put their money somewhere

 

[Long Ball Larry]

And it looks like NFL teams won't wait long to do so. According to CNBC, a smattering of firms including Ares Management, Sixth Street Partners and Arctos Partners have committed to raising $12 billion in capital to invest in NFL teams.

NBA did this a few years ago. Arctos owns a piece of the Sixers, Warriors and Kings. Sixth Street owns a piece of the Spurs.

 

[eighsse2]

I am a numbers person but I don't know much about corporate finance ... What does this mean? People with lots of money can buy into NFL teams just like someone buys stock in a firm? If the team becomes more valuable, the investor makes money, and if less valuable, the investor loses money?

 

[Runkle]

I wish there were more city-owned teams, like the Packers theoretically claim to be.

 

[Runkle]

MSG is publicly traded, they own the Knicks, right?

 

[GregR]

I am a numbers person but I don't know much about corporate finance ... What does this mean? People with lots of money can buy into NFL teams just like someone buys stock in a firm? If the team becomes more valuable, the investor makes money, and if less valuable, the investor loses money?

A private equity fund is basically an adviser who pools money together from investors and goes and makes investments in whatever businesses in order to make the entire group of investors money.

So it isn't an individual, or group of individual people with the ownership stake. It's instead a financial investment group, whose members could change over time. Normally the NFL would have control over who is allowed to become a stakeholder. This would likely be less control. They could decide which equity funds could buy into the league, but they wouldn't control the fund's members changing over time. Or I'm assuming there, I suppose it could be made part of the sales contract.

(Edit: This is my understanding anyway. Not a field of expertise for me, just trying to help.)

 

[Ministry of Pain]

Much cheaper to simply be the "Big Booster" of NIL deals and take over an entire College Football program

 

[Runkle]

Apparently the offer is restricted to "non-voting" shares. So just profit/risk participants with no say in the running of the team.

 

[massraider]

Much cheaper to simply be the "Big Booster" of NIL deals and take over an entire College Football program

When do you make money? Does the college football team get sold at some point?

 

[Ministry of Pain]

Much cheaper to simply be the "Big Booster" of NIL deals and take over an entire College Football program

When do you make money? Does the college football team get sold at some point?

John Ruiz at the University of Miami seems to be doing just fine

 

[Buckna]

Very curious how this will work out in the long run. These interests must not be getting any kind of voting shares or control of any kind, just a percentage of the profits. Seems like basically a way for the long-time owners who are cash poor a way to tap their biggest asset for more $. In theory could keep teams in the hands of the current owners and families and fewer will need to sell in the future. Keep those family oligarchs intact! /s

Edit: just saw the post that is indeed non-voting which makes sense, why give up power if you don't have to?

 

[massraider]

John Ruiz at the University of Miami seems to be doing just fine

NOPE

NIL guys don't make money. They spend money to try and buy a winner. There's no profit for them.


PE buying a part of a team is a way for an NFL owner to drop 9 figures to the bank account, and not have to pay it back until he sells the team.

When Jerry Jones bought the Cowboys, $14 mill could get you 10% of the Cowboys. 10% of the Cowboys now is probably 700 mill--starting point.

 

[GregR]

John Ruiz at the University of Miami seems to be doing just fine

NOPE

NIL guys don't make money. They spend money to try and buy a winner. There's no profit for them.


PE buying a part of a team is a way for an NFL owner to drop 9 figures to the bank account, and not have to pay it back until he sells the team.

When Jerry Jones bought the Cowboys, $14 mill could get you 10% of the Cowboys. 10% of the Cowboys now is probably 700 mill--starting point.

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

Which spawned the discussion of what exactly would be in it for them, the ones supplying the money? Boosters do it mainly out of wanting to see the program succeed and it's sunk money. Maybe there are some ways to recoup some of it for, say, a trading card or sports apparel company. See the details of Marvin Harrison Jr's card contract he's getting sued for breach of contract over. But that's a deal with the individual player by a company that directly is involved in sports sales. Maybe some local brand could benefit from sweetheart marketing deals ("The official pool filter of the Alabama Crimson Tide football team!") or something, I don't know. But yes, it doesn't seem like much of an investment opportunity unless there's some synergy already existing.

 

[Ministry of Pain]

John Ruiz at the University of Miami seems to be doing just fine

NOPE

NIL guys don't make money. They spend money to try and buy a winner. There's no profit for them.


PE buying a part of a team is a way for an NFL owner to drop 9 figures to the bank account, and not have to pay it back until he sells the team.

When Jerry Jones bought the Cowboys, $14 mill could get you 10% of the Cowboys. 10% of the Cowboys now is probably 700 mill--starting point.

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

Which spawned the discussion of what exactly would be in it for them, the ones supplying the money? Boosters do it mainly out of wanting to see the program succeed and it's sunk money. Maybe there are some ways to recoup some of it for, say, a trading card or sports apparel company. See the details of Marvin Harrison Jr's card contract he's getting sued for breach of contract over. But that's a deal with the individual player by a company that directly is involved in sports sales. Maybe some local brand could benefit from sweetheart marketing deals ("The official pool filter of the Alabama Crimson Tide football team!") or something, I don't know. But yes, it doesn't seem like much of an investment opportunity unless there's some synergy already existing.

I work directly with/for the University of Miami and I can assure you John Ruiz makes it all back off the field thru his many works and companies and things that just fall into his lap that on the surface might not seem to connect to the NIL stuff but being in charge of all that NIL for a major University makes people appear in the spotlight a lot.

There are many ways for Ruiz to recoup his money without being directly related to UM
Billy Corbin has shown the massive bread crumb trail, same guy who appears on LeBatard, made a few films including Cocaine Cowboys and of course both 30 for 30 on the "U"

But sure there's no money in spearheading NIL deals, OK

 

[massraider]

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

I really cannot believe what a clown this Connor Stallions guy is.

 

[massraider]

There are many ways for Ruiz to recoup his money without being directly related to UM
Billy Corbin has shown the massive bread crumb trail, same guy who appears on LeBatard, made a few films including Cocaine Cowboys and of course both 30 for 30 on the "U"

Actually, I will backtrack a bit, and agree some NIL backers see a return. A car dealer can sell more cars, and on and on. For sure, I think you are correct.


Just not the same magnitude of return as owning part of a team. That's really what I mean.

 

[Ministry of Pain]

There are many ways for Ruiz to recoup his money without being directly related to UM
Billy Corbin has shown the massive bread crumb trail, same guy who appears on LeBatard, made a few films including Cocaine Cowboys and of course both 30 for 30 on the "U"

Actually, I will backtrack a bit, and agree some NIL backers see a return. A car dealer can sell more cars, and on and on. For sure, I think you are correct.


Just not the same magnitude of return as owning part of a team. That's really what I mean.

Appreciate that

Back to the topic at hand, I would like to nominate Stephen Ross as having the inside F-1 Track on being the 1st owner to sell a 1-time 10% share in his $6.5B Miami Dolphins
What's $650M between a. couple of friends? I would bet he is one of the first to get this done
Ross already has a boatload of minority shareholders he's been able to bring on since buying the team.

Ken Griffin recently donated $50M to the Univ of Miami and is from Suuth Florida, I heard he is building a new HQ for The Citadel in Miami, he's the CEO
No end to the amount of money this guy seems to create, I'd put him on a short list of folks that would like to buy that stake and perhaps even thru his company, however that works.

Let's see if any of this unfolds

 

[Leroy Hoard]

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

I really cannot believe what a clown this Connor Stallions guy is.

The guy sells used vacuum cleaners for a living.

 

[Chaka]

Just what the NFL was missing, more money.

The NFL is roughly a $14 billion industry, roughly the size of Sherwin Williams paint.

~Freakonomics

 

[Long Ball Larry]

John Ruiz at the University of Miami seems to be doing just fine

NOPE

NIL guys don't make money. They spend money to try and buy a winner. There's no profit for them.


PE buying a part of a team is a way for an NFL owner to drop 9 figures to the bank account, and not have to pay it back until he sells the team.

When Jerry Jones bought the Cowboys, $14 mill could get you 10% of the Cowboys. 10% of the Cowboys now is probably 700 mill--starting point.

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

Which spawned the discussion of what exactly would be in it for them, the ones supplying the money? Boosters do it mainly out of wanting to see the program succeed and it's sunk money. Maybe there are some ways to recoup some of it for, say, a trading card or sports apparel company. See the details of Marvin Harrison Jr's card contract he's getting sued for breach of contract over. But that's a deal with the individual player by a company that directly is involved in sports sales. Maybe some local brand could benefit from sweetheart marketing deals ("The official pool filter of the Alabama Crimson Tide football team!") or something, I don't know. But yes, it doesn't seem like much of an investment opportunity unless there's some synergy already existing.

I work directly with/for the University of Miami and I can assure you John Ruiz makes it all back off the field thru his many works and companies and things that just fall into his lap that on the surface might not seem to connect to the NIL stuff but being in charge of all that NIL for a major University makes people appear in the spotlight a lot.

There are many ways for Ruiz to recoup his money without being directly related to UM
Billy Corbin has shown the massive bread crumb trail, same guy who appears on LeBatard, made a few films including Cocaine Cowboys and of course both 30 for 30 on the "U"

But sure there's no money in spearheading NIL deals, OK

The people who might want to be part of a PE investment in a football team likely don’t give a damn about football or doing any work for their return like a booster would.

 

[rockaction]

The NFL is roughly a $14 billion industry, roughly the size of Sherwin Williams paint.

~Freakonomics

If that’s true, that made my day.

 

[Hot Sauce Guy]

I don't understand why a league that is essentially a legal monopoly that mints money would want to dilute itself like this.

 

[massraider]

I don't understand why a league that is essentially a legal monopoly that mints money would want to dilute itself like this.

Mark Davis owns the Raiders. He's not liquid. He doesn't own a hedge fund, or an oil company.

He owns something worth 6+ billion. But he is maybe only pulling in 10s of millions of dollars himself. Once it's alllll said and done, and everyone i s paid, and bills and taxes are paid, etc. Maybe 30 mill, maybe 80 mill, I am spitballing. (Players salary cap gives us an idea of what teams bring in)

He doesn't get interest off the value of the Raiders. He could probably sell 10% to PE for a 800 mill, or close to it. These evaluations are never accurate, Redskins don't have a stadium, and went for 6 billion. Actually, come to think of it, I would start the bidding at 1 billion, for 10%, if I was Davis. Davis can then invest that money, and never have to pay it back.
When would he ever regret giving away 10% to a completely silent partner? When he sells down the road, and he has to pay them 10%. He has had all this time, between now and selling, to have that money work for him.

They have no voting rights, it is essentially a piggy bank for them, as safe an investment as there gets. These PE guys don't want to own a team, they want diversification, and to see their investment grow. These are faceless mega investors, who are the kind of guys to get a prospectus asking for $100 mill cash. These guys make a big cash profit, and are parking it in an NFL team. Untaxed.

If you want to leave the team to your kids, there's a massive bill there, and you need to be liquid. You can sell 10% of the team, and ensure your family never HAS to sell.

Look, I think there are times selling a chunk to PE is a bad idea. I am only talking about this instance, mainly because the NFL cut themselves such a sweetheart deal.

Andrew Brandt addresses this in his latest podcast.

 

[Ministry of Pain]

John Ruiz at the University of Miami seems to be doing just fine

NOPE

NIL guys don't make money. They spend money to try and buy a winner. There's no profit for them.


PE buying a part of a team is a way for an NFL owner to drop 9 figures to the bank account, and not have to pay it back until he sells the team.

When Jerry Jones bought the Cowboys, $14 mill could get you 10% of the Cowboys. 10% of the Cowboys now is probably 700 mill--starting point.

This was getting discussed on local sports radio, in regard to the U of Michigan guy at the center of the sign stealing incident, having stated he tried to get Saudi Arabian money to invest in NIL.

Which spawned the discussion of what exactly would be in it for them, the ones supplying the money? Boosters do it mainly out of wanting to see the program succeed and it's sunk money. Maybe there are some ways to recoup some of it for, say, a trading card or sports apparel company. See the details of Marvin Harrison Jr's card contract he's getting sued for breach of contract over. But that's a deal with the individual player by a company that directly is involved in sports sales. Maybe some local brand could benefit from sweetheart marketing deals ("The official pool filter of the Alabama Crimson Tide football team!") or something, I don't know. But yes, it doesn't seem like much of an investment opportunity unless there's some synergy already existing.

I work directly with/for the University of Miami and I can assure you John Ruiz makes it all back off the field thru his many works and companies and things that just fall into his lap that on the surface might not seem to connect to the NIL stuff but being in charge of all that NIL for a major University makes people appear in the spotlight a lot.

There are many ways for Ruiz to recoup his money without being directly related to UM
Billy Corbin has shown the massive bread crumb trail, same guy who appears on LeBatard, made a few films including Cocaine Cowboys and of course both 30 for 30 on the "U"

But sure there's no money in spearheading NIL deals, OK

The people who might want to be part of a PE investment in a football team likely don’t give a damn about football or doing any work for their return like a booster would.

That's a very good point LBL