EAGAN, Minn. -- For the first time, institutional investors will be allowed to partially own NFL franchises.
NFL owners passed 2024 Resolution JC-7 on Tuesday, allowing private equity funds to purchase up to 10% of any franchise for passive ownership, meaning funds would not have voting or any real decision-making power with teams. According to a league source, the vote passed 31-1, with the Bengals the lone dissent.
Funds are capped at investing in a maximum of six teams, and the minimum investment for institutional wealth in any franchise is 3%. If a fund buys into a team, it must hold onto the investment for a minimum of six years. Funds must have a minimum of $2 billion of committed capital to invest and a maximum of 20% of a fund's money can be invested into one team.
Team owners or their immediate family members may invest up to 3% in a fund. Any ownership changes still need to be approved by a three-fourths majority of teams.
"They spent a lot of time, a lot of work and I'm appreciative of the kinds of interest that we have from the financial community that spent the time they did putting this together," Dallas Cowboys owner Jerry Jones said. "This is a win for the game."
The league provisionally approved eight funds as four potential groups of buyers of any available franchise stakes: Arctos Partners, Sixth Street Partners, Ares Management and a consortium comprised of Dynasty Equity, Blackstone, the Carlyle Group, CVC Capital Partners and Ludis, which is a platform founded by Hall of Fame running back Curtis Martin.
NFL commissioner Roger Goodell said it was Martin who brought together the consortium. Don Cornwell, the CEO of Dynasty, is also a former NFL employee.
"[Martin] will be investing along with them personally and to his company," Goodell said. "As well as bringing in an additional firm [Dynasty], which is primarily focused on getting people of color into ownership positions."
The league provisionally selected the firms it did because of a multitude of factors, including preferred hold times in an investment, hearing from principles of firms and understanding the commitment to the investment throughout the organization.
The structure and boundaries set up by the league was also something they wanted firms to understand. Joe Siclare, the NFL's executive vice president of finance, said they selected firms with capital ready to be used as soon as possible. The provisional approval, Kansas City Chiefs owner Clark Hunt said, is pending "long-form" agreements with the firms, but the frameworks of those deals are in place.
"While the terms will be similar across the firms that we work with, each of these are very different," said Denver Broncos CEO Greg Penner, one of the five members of a committee that looked into private equity ownership. "They have different skill sets, different people, approaches to the markets.
"What that'll do is for the owners that want to sell a stake, give them different options for partners to work with."
Sovereign wealth funds -- such as the Qatar Investment Authority, Saudi Arabia's Public Investment Fund and the wealthiest sovereign fund, the Norwegian Government Pension Fund -- are not allowed to invest into teams directly. They can, though, own part of an approved fund. No individual or single investor (including a sovereign wealth fund) may own more than 7.5% of any fund.
"We're not differentiating amongst investors or types of investors," Siclare said. "We just felt that, again, in line with this measured approach, we just sort of have that sublimit of any investment in the fund to 7.5.
"So if you sort of do the math, you get down to a pretty de minimis level of ownership that any individual institution or investor can have in any specific team."
The NFL reached this point after starting a discussion with the finance committee in 2019. Last year, Goodell appointed a five-person special committee to look at ownership changes -- the group eventually took on the name SCOOP -- consisting of Penner, Hunt, Atlanta Falcons owner Arthur Blank, New England Patriots owner Robert Kraft and Cleveland Browns owner Jimmy Haslam.
Four of the five owners on the committee had experience already in leagues with private equity -- Blank as owner of MLS' Atlanta United, Haslam with MLS' Columbus Crew and the NBA's Milwaukee Bucks, Kraft with MLS' New England Revolution and Hunt with MLS' FC Dallas.
The NFL is the last of the major sports leagues in the United States to allow private equity funding. The NBA, NHL, MLB, MLS and NWSL all allow up to 30% of a franchise to be owned by institutional investments with different caps for how much a single fund can own in one team and how many teams a fund can own throughout a league.
Hunt said even though the NFL came to a resolution on private equity acceptance Tuesday, the SCOOP special committee will likely stay together to provide oversight as the league enters a new ownership structure for the first time but will not be meeting as often. Hunt said he believes "we have a number of owners who are interested in accessing the institutional capital opportunity." Part of the reason they called the session now was so teams could potentially complete a transaction by year's end if they desired.
Hunt said his team, the Chiefs, is not going to initially look at private equity investment.
"It's a very positive day for the league," Hunt said. "And I think everybody feels really good with where we ended up. If you went back a year, I think there were a lot of owners who might have voted against it.
"It's something Roger did a really good job with at each meeting was making sure there was an update and really an educational process that went on with the whole ownership group so that by the time we got here today, we almost had a unanimous vote."
One of the most important things to the committee as it put together parameters, Hunt said, was not disrupting the larger NFL ownership framework. As they went through the process, Hunt said they wanted to both make sure they had enough support in the room to have it pass and make sure parameters they set didn't disqualify certain investment firms.
To do that, Hunt said, the committee "put in a wall" of protections and barriers against potential conflicts of interests. For example, if a firm also invests in a sports agency, there would need to be delineation of funds and fund managers, but not outright disqualification of working with the firm.
"You've got to have a separation," Hunt said. "Where the decision-makers at that firm who are overseeing the investment in [a] sports agency are not the same ones who are overseeing the investment in an NFL franchise."
Hunt said teams could use private equity for multiple reasons, including some stadium-related issues, family-related issues and changing capital structures for some owners and their families. Which, as of Monday, teams can explore in a new ownership world in the NFL.
"Not all clubs will take advantage of this," Goodell said. "But we said in the beginning with the committee and the finance committee and the membership, that this will be a benefit to all 32 teams."