NFL wants a cut of private equity investment profits

NFL wants a cut of private equity investment profits
By: cnbc Posted On: August 27, 2024 View: 142

Brock Purdy, #13 of the San Francisco 49ers, prepares to take a snap in the first quarter against the Kansas City Chiefs during Super Bowl LVIII at Allegiant Stadium in Las Vegas on Feb. 11, 2024.
Michael Reaves | Getty Images

The National Football League has informed owners and investment firms that it intends to take a percentage of private equity profits on any future sales of ownership stakes, according to people familiar with the matter.

NFL owners voted Tuesday to allow private equity firms to take a maximum 10% stake in teams.

The league has never allowed private equity investment before. Major League Baseball, the National Basketball Association and the National Hockey League already allow up to 30% of teams to be owned by investment firms, though the cap for individual funds is between 15% and 20%.

No other league takes a percentage of the so-called carry — the percentage of a fund's investment profits that managers typically receive as compensation — for all private equity firms. It was unclear heading into the owners' meeting if the NFL plan would apply to all or only some firms, or what percentage of the profits the league wanted to take.

The NFL has informally told investment firms that if they make a return on an investment, it wants a portion of the profits to be returned to the league.

It was also unclear if the NFL's plans to take a piece of profits would deter future investment from private equity. The initial approved firms include Ares Management, Sixth Street Partners and Arctos Partners, and a consortium of investors including Dynasty Equity, Blackstone, Carlyle GroupCVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin.

The NFL declined to comment.

Over the past 20 years, the league's total value has risen from $23.46 billion to $190 billion, a 710% gain, according to Sportico. The S&P 500 index has risen about 660% during the same time span.

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