The NFL Does Not Need to Fear Private Equity

Wednesday was minority stake day in the National Football League. Private equity and asset management firms now own pieces of the Buffalo Bills and Miami Dolphins. A couple of undisclosed investors that various reporters have called “family investment groups” have bought a combined 8 percent stake in the Philadelphia Eagles, valuing the team at $8.3 billion—the highest figure yet for an NFL team. Napkin math says the new investors poured more than $660 million into the Eagles for that stake. These transactions come on top of Tom Brady’s move in October to get 10 percent of the Las Vegas Raiders, who were valued at a pathetic $3.5 billion.

All of these purchases flow from a dilemma the NFL created for itself: It has become too lucrative a business for its owners’ own good. As a special arm of the U.S. Mint with a license to print money for itself, the NFL has presided over an explosion in franchise values. Teams have gotten so valuable that the country is running out of socially acceptable rich guys who can reach into their pockets and consummate a simple transaction. When billionaire-several-times-over Josh Harris sought to buy the Washington Commanders last year, the deal took months to get to the finish line, and Harris got it done only with the help of 20ish limited partners. NFL owners control their own gold mines but have lacked liquidity. Institutional investors are a nice way to solve this problem.

It might be scary, though. Some of these investors are private equity investors, and that doesn’t conjure good thoughts in anyone’s mind. This is the industry of Barbarians at the Gate, the one best known for buying companies with borrowed money, extracting the parts of those companies it likes, then discarding the business without regard for its customers, employees, or community. It is the industry that hoovers up everything from veterinary clinics to newspapers, not necessarily to the benefit of either dog owners or journalists. Perhaps you have a dystopian view of what private equity will do in the NFL. Miami’s beloved dolphin mascot, T.D., could be forced to work as a day laborer to make the team’s investors whole after the deal goes awry. Kickers will have to work overtime as punters to cut costs. Fans will suddenly pay a huge markup for tickets, and they’ll only get half a seat to sit in.

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