NFL franchises and PE firms are a match made in heaven

Earlier this week, Bloomberg reported that the NFL is meeting on August 27 to “discuss and potentially vote on allowing institutional investors to buy into teams,” and the NFL hired PJT Partners to “assess private equity interest.”

Assuming that a deal were to come together, it makes a ton of sense for both team owners and private equity firms. The reason? NFL teams are really, really, expensive, and private equity firms need somewhere to invest their capital.

There are 32 NFL franchises, and the average franchise is worth $5.1 billion, up from $423 million (or $773 million in 2023 dollars) in 2000. The NFL requires the majority owner of a team to own a 30% stake in the franchise, which means $1.5 billion, on average. There aren’t that many people who can afford to purchase an NFL team. If we assume that an owner wouldn’t want to spend more than 30% of their own wealth on an NFL franchise, only 214 billionaires in America worth $5.1 billion or more would fit the bill. Taking into account that only some percentage of them would have any interest in owning an NFL team, and that market shrinks even further.

Meanwhile, as noted in my other private equity piece, PE firms are raising more than they know what to do with, and they need assets in which they can invest billions of dollars. NFL franchises are cash-generating machines (18 franchises made more than $100 million in operating income in 2023, and all made more than $50 million), and previous discussions between team owners raised the possibility of institutional investors buying 10% to 30% stakes in companies. A 10% stake in the NFL’s least valuable franchise, the Bengals, would cost $350 million, giving these funds a much-needed destination for their cash and providing interested owners with sought-after liquidity.