Private equity is eating sports
Private equity firms may soon own your favorite football franchise.
If you think private equity is eating everything, you're right.
Thursday, the Financial Times reported that private equity firms have been preparing funds to invest exclusively in the NFL. This marks a huge shift for the NFL, as it’s the only major American sports league without institutional investors.
Pitchbook published an excellent report in January breaking down private equity ownership stakes in the NBA, MLB, MLS, and NHL, showing that 31 teams across the four leagues have some level of private equity ownership.
Why are private equity firms interested in owning NFL teams? Because they are lucrative businesses, and team valuations have been soaring thanks to the league’s latest media rights contract.
Unlike other professional sports, such as baseball, where local media deals control the distribution of some games, all NFL games are packaged into league-wide deals with an equal revenue-sharing agreement between clubs.
In 2021, the NFL signed an 11-year, $110B contract that would begin in the 2023 season, and last season, each team took home roughly $400M from the league’s media and sponsorship deals.
Last year, Apollo Global Management cofounder Josh Harris bought the Washington Commanders for $6.05B last year, the highest price ever paid for any professional team in any league.
Rich, stable cash flows make NFL teams prized assets, but soaring valuations have reduced the number of qualified individuals that could afford a stake. Private equity firms, however, have billions of dollars to deploy, making them prime candidates to invest.
According to the Financial Times, the NFL is asking firms to create "American football-only funds" that wouldn't be able to invest in other sports leagues.
