SBJ Football: Will Tom Gores ever control the Chargers?

Now that Pistons owner and Platinum Equity founder Tom Gores has bought 27% of the Chargers with no contractual path to control, it’s fair to ask the question: Why?

After all, conventional wisdom has long held that there’s limited demand for such a costly chunk of equity with no governance rights, right of first offer/refusal on control of the franchise or a second tranche of equity coming (we don’t know what Gores paid, but it’s reasonable to assume it’s at least very high nine figures).

Gores isn’t talking, but -- and I can’t believe I’m typing these words -- an anonymous X account had a smart take on the question. @Spag_dretti wrote : “I know the contract did not include a path to full ownership but he holds more of a stake in the Chargers than [any member] of the Spanos family. Eventually, he will own this franchise because he is INSANELY wealthy.”

Now if you take this literally, @Spag_dretti is going too far with his second sentence. The Spanos family did this deal to end a family feud that could have threatened their control of the team, and they intend to keep it for a long time. Having said that, @Spag_dretti is onto something, directionally at least, some of my sources say. 

Historically speaking, it’s easier said than done to keep an NFL franchise in a family in the long term. Family businesses have a way of getting complicated. People age, assets soar in valuation and/or priorities change. In the event the Spanos family ever decides -- or is compelled by external forces -- to give up control, Gores is now their obvious first call. He’s local, vetted, familiar on a personal level, and simply would have to buy less additional equity than any other buyer to obtain control.

That’s certainly one reason to do the deal.

Why it’s a good investment even without control

Sports consultant Marc Ganis, confidant to Commissioner Roger Goodell and other owners, predicted the Gores-Spanos dynamic will become more common, and that there’s plenty of value in significant minority stakes in NFL clubs. He said the conventional wisdom around LP stakes is wrong, and predicts that the Gores acquisition of a large piece of the Chargers is "not an outlier, but a forerunner.”

Why? For many of the same reasons lenders love NFL debt: Its strong fundamentals in the form of cash flow and contractually guaranteed revenue growth. “The NFL provides cash flow, growth, certainty and tax benefits,” Ganis said. “Forget about a holy trinity, those four are the holy grail of limited partner investment.”

Of course, the numbers still must make sense for any given buyer, and Gores likely benefited on that front from the Spanos family’s eagerness to settle their sibling feud, making them motivated sellers. 

Dolphins find a different path with PE 

The powerless LP dynamic frustrated Dolphins owner Stephen Ross earlier this year when he saw negotiations with Citadel founder Ken Griffin stymied on that point. But Ross has found his answer through private equity, Bloomberg reported last night . 

There’s no need for guessing about the buyer’s motivation here. Ares Management, which will be among the first funds to hold a stake in an NFL team, will look to exit in six or more years with a double-digit return under a conventional PE game plan. And the one traditional individual LP coming along in the deal, Nets owner Joe Tsai, will buy 3%, a far more pedestrian level of investment common to NFL clubs compared to Gores’ 27%.

There are still millions of Brits who need an introduction to American football, but the Jets and Vikings are also hoping to deepen ties with people they already know well this year. It’s the Vikings’ fourth game in the U.K. and the Jets’ second time -- and it’s the first time that two teams with commercial rights in the U.K. are playing each other there.

Teams are learning that the live games offer an outsized opportunity to build fan ties compared to anything else they do there.

“We’re learning what’s the most effective, and leaning into those things, and doubling down on those things,” said John MacCarter, the Jets' VP/finance and analytics. “We started digital first, and were having great engagement, but with the game in London, it gives you reason and opportunity to do more. Sponsors have responded, too.” 

As part of a big U.K. flag football activation this weekend, the Jets will get to see the girls from Ealing Fields High School again, who Jets legends Wayne Chrebet and Laveranues Coles know from prior engagements. That suburban London high school team has won consecutive championships in the Jets and Bears NFL Girls Flag Football league . This year, they’ll receive championship rings at the Jets Touchdown Tailgate, a large activation in Ely’s Yard in east London on Saturday. The Ealing Fields team will then be honored at Tottenham Hotspur Stadium at the game on Sunday, and play in a competition on Monday. 

The Jets tailgate on Saturday is designed to focus attention on the team and, ideally, catch the eye of passers-by and teach them a little about American football culture. Nike and Avery Dennison are sponsors.

Here’s a full run-down of Jets activations in London, and the same for the Vikings .

Former NFLPA Executive Director DeMaurice Smith will be the lead instructor next week in London for the Miami School of Law’s second short course on player licensing and international games.

Smith, an adjunct faculty and board member at the law school, will lead the weeklong course that coincides with the NFL International Series. Instruction starts with a full history of the NFL union contract, group licensing rules and international games, and then moves into sessions about the present-day and future landscape.

Sidley Austin partner Irwin Raij will present on stadium finance and development overseas, and class members will visit a soccer club and Wimbledon and hear from NFL and Bears execs. They will conclude with an assignment to develop a hypothetical licensing deal for a sports drink to become an official NFL London games sponsor.

• Some intriguing news from Bloomberg this afternoon: The NFL, Skydance and RedBird are talking about a possible deal that would make the NFL a Paramount shareholder, or Paramount the new owner of some NFL media assets.

• The NFLPA named former union president and Browns center JC Tretter as chief strategy officer, a new executive position. Tretter, who served four years as the NFLPA’s top elected leader, will report to NFLPA Executive Director Lloyd Howell and be involved in most major issues facing the union.

• The Jets hired former team General Counsel Andy Lee to return as chief legal officer, replacing Jill Kelley, who left in July. TurnkeyZRG did the search for the Jets.

• Prime Video saw its best “Thursday Night Football” audience yet in Week 4, as the first matchup of the Giants and Cowboys on “TNF” (dating back to when the package started in 2006) delivered 16.22 million viewers, notes SBJ's Austin Karp.

• The NFL’s data-driven approach to reducing injuries continues to show progress through the help of AI, AWS and the Digital Athlete program, notes my colleague Joe Lemire. Lower-extremity injuries have become a major focus for the league, with the first two weeks of preseason training camp -- a period of re-acclimation to the sport -- as the period of greatest risk, yet for the first time ever, the NFL saw a reduction in leg injuries in consecutive summers.

• Lemire also notes the Rams are the first NFL team to partner with human performance technology company SprintAI to organize and analyze the voluminous data collected about each athlete on and off the field.