The NFL just made a major announcement! The team owners have approved private equity and it could bring in billions of dollars to the league in the future. In fact, the NFL is the last major US sports franchise to record the monumental change. So, how does it work, and what are the nuances of it?

Now, your favorite team can sell up to 10% of their common equity to private equity firms. If outside forces want to invest, they can start with a minimum of 3% and can buy as much as 10% of the team. However, there are some limitations to it. No single fund can invest in more than six teams and the minimum hold period for each investment is six years.

The motion was passed with 31 teams consenting to the change while the Cincinnati Bengals were the only ones to pass on the offer. The meeting held in Minnesota also decided on at least $2 billion in committed capital while also barring teams from representing 20% of a single fund.

Judy Battista made a layman’s analysis of the situation and made it easier for everyone to understand. “The most important thing to know is that private equity funds are not going to be running your football team,” Battista explained. “But what this is, is you heard Roger Goodell say, like, it’s capital. It’s a ready way for owners to access cash, millions, hundreds of millions of dollars in cash.”

NFL agreeing on this limiting merger means that your favorite teams will now have money to take on ambitious projects like building a new stadium or renovating the existing one. Up until this time, taxpayers’ money was used to some extent to give the stadiums a facelift and this merger might mean that taxes may be diverted somewhere else now.

Firms like Arctos Partners, Ares Management, and Sixth Street; and a consortium of Blackstone, Carlyle Group, Luxembourg-based CVC, and Dynasty Equity, which is being led by Ludis Capital, a platform founded and led by retired NFL Hall of Famer Curtis Martin, are the ones significantly invested in the motion right now.

The numbers and nuances of the NFL’s new potential scheme

In 5 years since 2020, the average NFL franchise value has increased by $2.84 billion. In 2020, it used to be $3.09Bn and in 2024, it’s $5.94 billion. According to a column from Sportico, there may be a provision for teams to buy back stakes within a limited period. Also, the NFL is also slated to make a profit from this new arrangement.

Sportico also reported that “term sheets for at least a handful of deals have already been prepped in anticipation of approval.” This bump in support also implies that players’ salaries might also increase by a huge margin in the future. However, if you’re afraid that your favorite football team might undergo massive changes, don’t worry because this participation is very limited.

An interesting thing to note is that while other sports leagues like the MLB, NBA, NHL, MLS, and NWSL allow a 30% maximum equity a team can sell to funds, the NFL has limited that number to 10%. What do you think about these possible changes that can occur in the future? Let us know below.