The NFL’s decision earlier this year to allow private equity to acquire up to 10 percent of each of the league’s 32 teams received outsized media attention, particularly given just how small the NFL is relative to the total size of the PE market.
The teams have an average value of $6.5 billion, compared to $308 billion in North American private equity buyouts as of 2023, according to Preqin.
Industry observers expect $12 billion in NFL PE transactions over the next five years, but that doesn’t explain all the attention.
“Sports moves the needle,” says Michael Galatioto, senior vice president at GAMCO Asset Management, who focuses on sports investments. Football has a popular hold on U.S. culture, and the NFL has valuable assets, such as broadcast rights, he adds.
So far, the league has allowed four private equity firms to invest in its franchises, including Ares Management and Sixth Street Partners. There’s also a consortium of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners, and Ludis, a platform founded by NFL Hall of Fame running back Curtis Martin.
Even strict limits, such as a 10 percent investment cap, haven’t sapped investors’ enthusiasm. Private equity firms also are abiding by the NFL’s requirement that they remain passive, without board representation — at least for now.
NFL franchise valuations have surged a cumulative 610 percent from 2004 through 2022, according to data provider Yield Street. That compares to a 317 percent increase for the S&P 500.
Football has turned into the country’s top sport. “It’s now the most popular entertainment in the U.S.,” says Paul Hardart, a professor of entertainment and media at NYU’s Stern School of Business. “And it’s expanding to young women with the romance between Travis Kelce [of the Kansas City Chiefs] and Taylor Swift.”
Football also dominates TV, with NFL games representing 93 of the 100 top-rated broadcasts in 2023.
“The demand for the NFL is insatiable among the media, driving up media rights fees,” Hardart says. In 2021, the NFL signed an 11-year, $111 billion media rights deal.
Investors are paying attention. “They realize it’s not just sports teams, but the most valuable media content,” Galatioto says.
Other opportunities that could increase team valuations include international and real estate. The NFL has been playing regular season games overseas beginning in 2005 with more to come. And some teams are helping develop property around their stadiums, giving investors exposure to real estate.
Institutional investors already have invested in sports-related private equity funds, including the California State Teachers’ Retirement System and the Maryland State Retirement and Pension fund, according to Pensions & Investments and PitchBook.
Individuals will get a crack at investing in NFL teams through approved private equity funds —perhaps for as little as $1 million.
Buoyant Supply Side for NFL PE Investing
On the supply side, there should be plenty of investment options in the NFL, industry pros say. Many owners are expected to sell a portion of their stakes to unlock massive profits and possibly address estate and tax issues.
Galatioto said he wouldn’t be surprised to see 10 to 20 of those deals in the next two years or so. Some teams might seek private equity money to reinvest in things, such as stadium renovations.
But experts don’t expect many big owners to sell control stakes in the NFL, which have significantly increased in value in recent years.
Although the NFL will remain a small part of the overall PE market in the long term, it will still be significant, industry pros say. “Capital migrates to the best opportunities,” says a team owner in another sports league. “Most of the leagues have such an appreciation of value that they will attract investors.”
