SBJ Football: NFL takes big step toward institutional capital

In the NFL’s most significant step yet toward possibly welcoming institutional capital into the league and making team ownership more accessible, Commissioner Roger Goodell has appointed five owners to a newly formed committee in charge of evaluating the league’s conservative ownership policies.

This new group will hold its first meeting Sept. 26 and is expected to prepare any recommendations in time for all owners to consider them at the March annual meeting -- “in advance of another club sale,” according to a recent memo from Goodell that I’ve seen.

This development comes in the wake of Josh Harris’ acquisition of the Commanders for $6.05 billion, a sale that ultimately pleased NFL leaders but concerned many with its failure to attract multiple serious bidders. The unusual, complex Harris bid also consumed an extraordinary amount of time for the league’s finance committee and staff as it worked to keep the bid within the rules.

With the average NFL team now worth $5.1 billion , rules aimed at long-term stability -- such as requiring the lead buyer of a team to hold at least 30% equity and limiting debt -- are now making it impossible for all but the wealthiest individuals to buy teams. Owners fear that’s holding down bid activity, potentially limiting growth and making it hard for current owners to sell limited stakes.

“Following the Denver and Washington transactions, the finance committee agreed that it would be appropriate to look at the full range of ownership policies, including permitted debt levels, minimum equity requirements and holding periods, eligible categories of investors, and expanding opportunities for more diverse ownership,” Goodell wrote.

The new committee will consist of the Falcons' Arthur Blank, Patriots' Robert Kraft, Browns' Jimmy Haslam and Broncos' Greg Penner. Chiefs owner and finance committee chairman Clark Hunt is an ex-officio member. The makeup is intriguing: Kraft, Hunt and Blank are veteran ownership leaders known to be Goodell confidants. The other two are more recent additions from the world of big business. Haslam, chairman of Pilot Flying J, is increasingly playing a role in league-level affairs; and Penner, the chairman of Walmart, is a new owner after his family acquired the Broncos for $4.65 billion in 2022.

What's likely to change?

The committee will take a serious look at every possible outcome, sources said, including following the other major pro leagues in allowing limited private equity investment in teams. However, it’s not yet clear whether that would have sufficient support, and sources agree the most likely short-term recommendations from the committee will focus on incremental changes.

More likely, the committee will endorse higher debt limits, up substantially from the current limit of $1.1 billion of debt for club acquisitions, raise the limit on 25 partners in any ownership group and to possibly lower the 30% threshold for the principal buyers. This would follow on steps taken in 2018 to eliminate cross-ownership rules and raise debt limits.

Even if the NFL drops its long-standing rule requiring all equity holders to be natural persons, that would not necessarily mean an open door to P.E. funds. It could end up focusing on entities that are, in practice, the embodiment of individuals but cannot currently buy into teams.

Consider two examples:

• Nonprofit foundations: New Commanders minority partner Mitchell Rales has a meaningful part of his wealth in the Mitchell P. Rales Family Foundation.

• GRATs (grantor retained annuity trust): Common among billionaires, these are designed to shield family transfers from taxes. Opening ownership to trusts could help wealthy potential buyers see less conflict between the rules of the NFL and their own estate/tax planning work.

Pension funds, public companies and sovereign wealth funds also could be considered.

The NBA recently allowed limited sovereign wealth investment in clubs for the first time, following up on broadly permitting private equity in 2021. MLS, MLB and NHL also allow for multi-team holdings from institutions. The rules vary, but all leagues limit the funds’ stakes to small, passive stakes in a limited number of teams, and caps the total equity in a team that can be owned by institutions.

The committee will take a serious look at every possible outcome, sources said, including following the other major pro leagues in allowing limited private equity investment in teams. However, it’s not yet clear whether that would have sufficient support, and sources agree the most likely short-term recommendations from the committee will focus on incremental changes.

More likely, the committee will endorse higher debt limits, up substantially from the current limit of $1.1 billion of debt for club acquisitions, raise the limit on 25 partners in any ownership group and to possibly lower the 30% threshold for the principal buyers. This would follow on steps taken in 2018 to eliminate cross-ownership rules and raise debt limits.

Even if the NFL drops its long-standing rule requiring all equity holders to be natural persons, that would not necessarily mean an open door to P.E. funds. It could end up focusing on entities that are, in practice, the embodiment of individuals but cannot currently buy into teams.

Consider two examples:

• Nonprofit foundations: New Commanders minority partner Mitchell Rales has a meaningful part of his wealth in the Mitchell P. Rales Family Foundation.

• GRATs (grantor retained annuity trust): Common among billionaires, these are designed to shield family transfers from taxes. Opening ownership to trusts could help wealthy potential buyers see less conflict between the rules of the NFL and their own estate/tax planning work.

Pension funds, public companies and sovereign wealth funds also could be considered.

The NBA recently allowed limited sovereign wealth investment in clubs for the first time, following up on broadly permitting private equity in 2021. MLS, MLB and NHL also allow for multi-team holdings from institutions. The rules vary, but all leagues limit the funds’ stakes to small, passive stakes in a limited number of teams, and caps the total equity in a team that can be owned by institutions.

Let’s run through some other key committee assignments, always watched closely for insights into owner-commissioner politics. Five years after buying the Panthers, David Tepper has been invited to join the powerful finance committee. It’s a vote of confidence from the commissioner and other owners in Tepper, who has always been respected for his financial expertise but had a steep learning curve as an NFL owner since 2018. It’s been known Tepper wanted on the committee from the start.

Blank and Kraft are both leaving the finance committee, after 17 years and 25 years of membership, respectively. They remain respected, critical parts of the ownership fraternity, as indicated by their membership on the special committee, but 65-year-old Tepper stepping in while the octogenarians depart could be a generational inflection point. "I know that everyone joins me in thanking them for their many contributions over that time,” Goodell said.

New Commanders owner Josh Harris is on one committee: business ventures, chaired by Jaguars owner Shad Khan. Harris’ business and financial chops are in high demand around the NFL -- Jerry Jones told me he wants Harris' "fresh eyes" on the league -- but he’s got more than a full plate in Washington for now. Also new on that committee are Penner and Vikings co-owner Zygi Wilf. (Mark Wilf and Dan Snyder had been on that panel).

One more note: Dolphins owner Stephen Ross, who lost spots on four committees as part of his punishment for tampering in 2022, has returned to just one committee so far: international. Before his suspension, he had also been on finance, owned-and-operated media and sports betting.

Earlier today, the NFL recommitted to its relationship with the Premier League side Tottenham, locking in Tottenham Hotspur Stadium in north London as the host of at least two NFL games annually through the 2029 season.

It’s not a surprise, exactly -- the NFL contributed $10 million to the construction of the stadium and first committed to playing games there in 2015. It’s the only sports venue outside the U.S. to be built with NFL specifications in mind. But as the NFL accelerates its international growth projects, Tottenham Chief Commercial Officer Todd Kline believes the deal is a platform for more activity.

With Tottenham now officially deemed the “Home of the NFL in the U.K.” under this extension, Kline said, all manner of NFL activity abroad can be tied into the stadium and its environs, from international player development to U.K. community events to be staged by the NFL Foundation, Nike and Tottenham. “This is about a lot more than just the games,” said Kline, formerly CCO at the Dolphins and Commanders. “It’s a reaffirmation of the league’s commitment to growing the game internationally, using Tottenham to do that," Kline said.

It pays off for Tottenham, too. “That’s part of the story I like to tell, because it’s so core to what we do,” Kline said. “This drives recurring commercial revenue in the football team that we continually invest in the men’s program, the women’s program and the academy.”

In this week's SBJ cover story, I talked with the Patriots' Robert Kraft and four other owners about their own reflections from their early days, hoping their experience might aid new Commanders owner Josh Harris -- a veteran co-owner of the NBA’s 76ers and the NHL’s Devils and a minority owner of Premier League club Crystal Palace -- in getting familiar with the unique world of the NFL.

• My boss Abe Madkour in his Forum this week wrote when it comes to quiet power brokers among NFL owners, don’t lose sight of the Chiefs' Hunt. "The 58-year-old Hunt may not look the role of NFL influencer, but he’s incredibly well respected in league circles for his approach, style and substance. He bleeds the NFL brand, brings a family and historical perspective to the league, runs a first-class franchise and is a strong negotiator."

• Just hours before the first “Monday Night Football” game of the season, Disney and Charter reached a deal to restore ABC and ESPN on Spectrum cable systems. Disney’s Justin Connolly was one of the key execs on that deal, and he joined SBJ's John Ourand and the N.Y. Post's Andrew Marchand on this week's Sports Media Podcast to talk about the deal.

• The $250 million renovation has created a new, improved entrance and F&B options for Gillette Stadium along with the largest video board at a stadium, notes SBJ's Bret McCormick, who also looked at how the Broncos finished what was estimated to be approximately two years’ worth of work on Empower Field at Mile High during this past offseason, despite hosting nine events.

• The runaway train that is the same-game parlay has found its way into the microbetting offering that Simplebet will power for DraftKings, Caesars, Bet365 and a handful of other sportsbooks this NFL season, with the B2B software provider launching a “same drive” parlay product, reports my colleague Bill King.

• Aaron Rodgers’ short-lived debut with the Jets against the Bills delivered the most-watched “Monday Night Football” game yet for ESPN, which first acquired the package in 2006, notes SBJ's Austin Karp. For Week 1 on the whole, games averaged 18.7 million viewers, marking the best Week 1 average since 2016.

• The Bills-Jets game at MetLife Stadium featured PixMob's LED wristband lighting tech, as the company created a light show aimed at fostering audience participation and enhancing the live experience for fans, notes SBJ's Rob Schaefer.

• F&B service provider Delaware North has paired with Amazon’s Just Walk Out and Amazon One tech to create the DUUUVAL Express in EverBank Stadium, reports SBJ's Ethan Joyce. The store will be used by fans for the first time this weekend with the Jaguars playing the Chiefs in their home opener.