Zinger Key Points
- The NFL could be changing rules on private equity investments in teams.
- The Green Bay Packers are the only public NFL team, but the shares don't rise in value.
- Get New Picks of the Market's Top Stocks
National Football League teams are fetching record-high sale prices, and their valuations continue to soar. However, investment opportunities in the growth of NFL teams and other professional sports teams remain scarce.
A new rule could potentially broaden the scope for investors to acquire stakes in NFL franchises.
What Happened: The Green Bay Packers are the only publicly traded NFL team, but many fans and investors know this is more of a ceremonial investment with no dividends, no rising value and limited ways to transfer ownership of the investment.
The NFL is considering a rule change that would allow teams in the league to sell up to 30% of their franchise to private equity. The rule change would see private equity able to buy up to 10% of a team.
A special committee led by Kansas City Chiefs CEO Clark Hunt is looking into the rule change, with a decision coming down the road, according to Bloomberg.
The findings of the committee will be shared during the annual NFL meetings with owners in late May. The league owners previously pushed back a vote on the matter.
"We're making progress, I think there will be some changes as early as May – probably closer to October," NFL Commissioner Roger Goodell said on the matter in March.
Private equity firms would need to be pre-approved by the NFL before buying a stake in a team. The companies could also be required to have a fund dedicated to their NFL team ownership instead of using a larger investment corporation.
Private equity ownership stakes could open teams up for cashing in on rising team valuations and also help fund new stadiums, real estate ventures and other investments.
"One of the things we've learned through this process is that these private equity firms are not only interested in potentially investing in NFL franchises but also being involved in some of the real estate developments that goes along with stadium projects," Hunt said in March.
The Dallas Cowboys are the most valuable team with a valuation of $9.2 billion from Sportico. The top 10 NFL teams by valuation each command a valuation of $5.77 billion or more. The bottom ranked NFL team (Cincinnati Bengals) is valued at $4 billion.
NFL team valuations are rising. The bottom 10 ranked teams by valuations saw seven of the 10 gain 30% or more in the latest Sportico valuation report.
The sale of The Washington Commanders for $6.05 billion in 2023 marked the highest price ever paid for a sports team. Other recent NFL sales also include the Denver Broncos (2022) for $4.65 billion and the Carolina Panthers (2018) for $2.28 billion.
Related Link: 2024 NFL Draft Recap: Quarterbacks, Wide Receivers, Detroit Set Records, Who Will Win Rookie Of The Year?
Why It's Important: Private equity firms like RedBird Capital Partners, Ares Management Corp. and Arctos Partners have been investing in professional sports teams in recent years.
The National Basketball Association recently changed their rules to allow private equity companies to buy stakes in teams. NBA teams can sell off up to 30% to private equity, with a single PE firm capped at 20% ownership. Most PE firms are also capped at investments in five NBA teams.
Benzinga has previously shared that publicly traded Blue Owl Capital OWL is the owner of the Dyal Homecourt sports investment subsidiary.
Dyal Homecourt owns stakes in the Atlanta Hawks, Charlotte Hornets and Sacramento Kings NBA teams. The company also previously owned a stake in the Phoenix Suns before selling for a large premium when Mat Ishbia bought the team for $4 billion. Dyal is also involved in a potential investment in the NBA's Minnesota Timberwolves.
Unlike other private equity companies, Dyal has an agreement with the NBA and is able to invest in as many teams as it wants.
If the NFL proposal is approved, Blue Owl Capital could be one of the stocks to watch as the company could consider investing in multiple NFL teams like it did with the NBA.
Image generated using artificial intelligence via Midjourney.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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