The NFL’s most exclusive club just let in new members.
At a special league meeting in Eagan, Minnesota, on Tuesday, National Football League owners voted in favor of allowing select private equity firms to buy up to a 10% stake of a team. Each fund or consortium will be able to do deals with up to six teams.
The vote passed with support from 31 of the 32 franchise owners. Cincinnati Bengals owner Mike Brown voted against the measure, according to a person familiar with the vote.
Kansas City Chiefs owner Clark Hunt led the special committee on ownership policy. He told CNBC’s Jim Cramer after the vote that the NFL has been considering such a move for upwards of 5 years and felt it was the right time for the league — though he acknowledged the 10% cap amounted to “baby steps.”
“The capital will be very helpful to teams as they look to grow their business and improve the fan experience,” Hunt said.
The initial approved firms include Ares Management, Sixth Street Partners and Arctos Partners, in addition to a consortium nicknamed “The Avengers” that includes Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin.
The firms collectively have $2 trillion in assets and intend to commit $12 billion of capital to be raised (inclusive of leverage) over time, according to people familiar with the matter, who asked not to be identified to speak about terms that were not public. With at least four investor groups able to invest in up to six teams each, that works out to $500 million of added capital on average for each team that receives an investment.
According to the terms of the proposal, the minimum hold period for these funds will be six years.
“We thought it’s an opportunity for us to really change how some of the ownership groups have real problems with the illiquidity, they have big families and have to solve a lot of problems that are not usual,” New England Patriots owner Robert Kraft told CNBC’s “Squawk Box” on Wednesday. “And so we thought this was a great source of capital and could be done in a way that was very functional and wouldn’t affect the operation.”
Pending final approval, Arctos, one of the approved firms, would be the only firm approved to invest in equity across each of the five most popular major North American sports leagues.
“We are honored to be among the first private investment firms being considered by the National Football League as potential partners for their clubs and owners,” Arctos said in a statement. “[We] look forward to contributing to the League’s continued success.”
Ares said in a statement it was honored to be able to invest in “iconic football franchises.”
“The NFL has long engendered deeply loyal fanbases, innovative approaches to media and some of the most viewed and highest valued sports franchises in the world. We are excited for the opportunity to support the continued growth of NFL teams through Ares’ extensive…
Read More: NFL private equity ownership vote approves select firms