SBJ Football: Key detail emerges in NFL private equity rules

The consortium of private equity funds fronted by Pro Football HOFer Curtis Martin has been approved to invest in up to 12 NFL teams, the NFL confirmed, twice as many as the six-per-fund limit created for Arctos Partners, Ares Management and Sixth Street . That has not previously been reported. Sources said the higher limits reflect the vastly larger resources held collectively by the group of Blackstone, Carlyle, CVC, Dynasty Equity and Ludis -- sometimes dubbed “The Avengers” by insiders.

The different rules shine a light on the competitive dynamics at play as funds and teams jockey for the best terms for equity sales, with at least some owners hoping to close deals before the end of the calendar year. For now, the supply of private equity capital created by the new NFL policy appears to far exceed demand. Over the long term, the higher limit for the consortium means that as many as 30 (instead of 24 as initially believed) teams could take on private equity investors without a policy change. A consortium representative could not be reached comment.

The NFL and the funds continue to finalize the provisional approval granted by owners at their Aug. 27 special meeting in Minneapolis . While the participation of Arctos, Ares and Sixth Street is relatively straightforward, important details about how the consortium will operate are still unknown to many in the sports finance world. Even the name itself is unclear -- some influential insiders have used the word “Ludis” to refer to the consortium itself, while the NFL’s official statements about the policy used that brand name to refer to Martin’s platform specifically.

The rules limiting how many teams each fund can invest in are designed to limit the league’s risk. Other key rules cap their interest in teams at 10%, set a minimum of six years before an exit and requires $2 billion in committed capital. The NFL’s finance and special ownership policy committees meet next week in NYC.

The first round of NFL private equity deals are certain to set new high-water marks for team enterprise valuations if Arctos Partners' Chad Hutchinson’s read of the room is accurate.

“Everybody realizes these teams are now worth $7 billion or $8 billion [for control], and if they want to continue to grow and build franchise value, there is a bunch to do,” Hutchinson said onstage at SBJ’s AXS DRIVE event .

At present, Josh Harris’ 2023 purchase of the Commanders for $6.05 billion (though in reality, it’s more like $5.85 billion ) is the record -- $1 billion less than Hutchinson’s range. To be clear, enterprise valuations in the context of a passive 10% stake is not the same thing as a control transaction. But multiple NFL teams, including the Eagles and the Dolphins , are in talks with possible buyers at prices that align with Hutchinson’s remarks.

Arctos and the other funds approved by the NFL had to swallow an extraordinary condition: That upon exit, the league will take some of the gains. That, combined with more conservative limits on equity purchases, limits the upside for the firms compared to other leagues. But the NFL’s financials are so strong that it’s not a deterrent. “The rules and framework that they’ve laid out are very conservative, but justly so,” Hutchinson said.

Aside from the obvious benefit to owners -- liquidity -- Arctos can bring two other areas of expertise to their eventual NFL properties: Expertise on stadium-adjacent development, and international growth. “These teams are asking us, ‘Hey, how do we monetize Spain or France or the U.K.?'” Hutchinson said. “'How should we think about that and building our brand in some of these areas? Arctos, you own a piece of Paris Saint-Germain, and with what you're doing in France, how do we maybe, potentially, sync up and do something creative to drive value to our NFL team?'"

Hutchinson predicted just a “handful” of NFL PE deals in the short term, observing that a critical mass of team owners are waiting for others to go first. When asked if PE would get to half the league in five years, he said: “Yeah, I think so.”

The Panthers-Raiders game at 4pm ET on Sunday in Las Vegas marks a new milestone for the NFL’s front-office diversity efforts: For the first time in league history, two teams with women presidents will play each other.

The Panthers’ Kristi Coleman (an SBJ 2024 Game Changers honoree ) and the Raiders’ Sandra Douglass Morgan both achieved those titles* in the 2022 offseason, but the intra-conference schedule cycle kept their teams from playing each other until now. The duo will meet on the sidelines of Allegiant Stadium before the game for a ball-exchange photo opportunity, which will be shared with broadcaster CBS. They’re also doing joint media appearances with CNBC on Friday and did an interview with Fortune magazine earlier this week, and Coleman will discuss the occasion on “We Need to Talk,” CBS’ all-women sports show.

“It’s the first of something that’s happening, but both of our goals is that it’s not going to be the last time,” Morgan said.

In most ways, it’s a routine regular-season game. NFL presidents are operators above all else, tasked with an extraordinary range of both leadership and support roles, and Sunday will be no different. Coleman will be leading a contingent of 45 sponsorship guests and 38 members of the Panthers’ “fifty3” premium club on a trip from Charlotte to Vegas, where they’ll enjoy the Strip on Saturday and attend the game Sunday. It’s the Panthers’ first visit to Allegiant Stadium. Morgan will be overseeing the usual game-day operations for the home team.

But they understand the significance of their roles and the importance of noting the milestone and being visible. Morgan, a newcomer to sports, found Coleman, a Panthers front-office veteran, to talk at her first league meeting. They later visited each other to mark International Women’s Day in ’23. Morgan: “It was great for our female employees, all of our employees, really, to see another woman president in a different light, because we have different backgrounds.” Coleman has learned, too, that part of her job is to be a visible inspiration internally and externally. “I think it goes to: ‘If you see it, you can be it, and you can believe it’ kind of thing,” she said.

* Bills co-owner Kim Pegula was the first woman to hold the title president for an NFL team from 2018 to 2022. Longtime Raiders boss Amy Trask was the highest-ranking executive from 1997-2013, but her title was CEO. The Chargers’ Jeanne Bonk is the highest-ranking non-ownership family executive for the Chargers, but her title is EVP and COO .

The Seahawks and Falcons have both launched new mascots for use in international fan outreach, an interesting wrinkle to NFL teams’ increasingly sophisticated overseas marketing. The Seahawks introduced “ Bam C. Hawk ,” who is supposedly the uncle of Seattle local bird Blitz and wears a road white jersey, and the Falcons launched “ Fritz Falcon ,” a German version of the usual “Freddie Falcon.”

Seattle’s concept grew out of the practical reality of sheer distance, said Allison Hoover, the Seahawks’ managing director/marketing. Nobody -- not even a human-sized bird -- can frequently fly back and forth from Seattle to central Europe. But the Seahawks want a big mascot presence in their Europe markets. All teams activating abroad have seen fans react positively to the quintessentially American concept of a giant, mute character hyping up the team, and without players available for far-away appearances, they can become the focal point of watch parties and pep rallies.

“Do we re-create Blitz?” was the original question at the creative table, Hoover said. “It just didn’t feel right. Blitz is Blitz, and we wanted there to be more to the story.” So they took Blitz, changed his jersey to road whites and gave him No. 12 (for the team fan base’s nickname “The 12s”) and space on the jersey for changeable country flag depending on which market he’s in. “We want a mascot who is immediately recognizable as the Seahawks, but something that can be unique to fans and specifically our fans, the 12s, everywhere, and they can see they have that representative no matter where they are.”

The Colts have taken a different path, believing their mascot Blue has strong enough brand equity to thrive anywhere. But in light of the demand in their new markets, the team is hiring a secondary performer to embody Blue on a full-time basis in Europe. “There are mascots [in Europe], but they don’t always seem to be as big a part of sports culture as they are in the U.S.,” said Colts VP/Marketing Stephanie Pemberton. “So there is this curiosity, and acceptance of it as this authentic thing about American football, so everything we’ve gotten in terms of feedback is that mascots can be a powerful tool over there.”

• The UFL announced it would return for a second season on March 28, a new Friday night TV window that will be a regular component of the full schedule (it hasn't been released yet). The Friday games were created partially to clear up weekend afternoon space on league co-owner Fox Sports’ new IndyCar deal and to fill the vacancy created by WWE "Smackdown," which left Fox for USA Network recently.

• ESPN's Troy Aikman was a guest on this week's SBJ Sports Media Podcast and talked to my colleague Austin Karp about his shift to "Monday Night Football," his relationship with Joe Buck, whether NFL viewership can keep climbing and his new beer brand, Eight.

• Legacy consumer electronics brand Altec Lansing signed on as a sponsor of the Raiders, reports SBJ's Terry Lefton. The deal expands the brand’s NFL sponsorship footprint westward, since it already includes the Cowboys, Dolphins and Giants.

• Levy Restaurants and the Falcons have ordered 100,000 hot dogs and bags of chips in preparation for a mass giveaway celebrating owner Arthur Blank’s induction into the Falcons Ring of Honor on Sunday.

• One of the Cowboys’ biggest ventures in recent years is The Star, its 91-acre mixed-use facility that hosts the Cowboys HQ and practice facility. But when Frisco first approached the Cowboys, Jerry Jones had no interest in the project. SBJ's Irving Mejia-Hilario looked at how the Jones family has, and continues to, grow the brand.