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As things currently stand, there aren’t many investments that guarantee the kind of return you’re going to get if you own an NFL team. There is a major barrier to entry when you consider ownership is reserved for obscenely rich individuals, but that could change thanks to a potentially disastrous proposal to welcome private equity into the fold.
The NFL generated approximately $12 billion in revenue in 2022, and if you exclude the drop it experienced in 2020 due to the pandemic, it’s managed to increase that number on a yearly basis for close to two decades.
It’s only natural that people with the means to get in on the action would be interested in getting a piece of that incredibly lucrative pie, and while ownership has previously been reserved for individuals, that could soon change courtesy of a proposal that’s been floated by a committee led by Chiefs owner Clark Hunt.
According to Bloomberg, that committee plans to introduce a proposal that would allow individual private equity firms to purchase up to a 10% stake in NFL franchises while allowing those outside collectives to collectively own 30% of an individual team (the plan also has the support of Atlanta’s Arthur Blank, New England’s Robert Kraft, Cleveland’s Jimmy Haslam, and Denver’s Greg Penner).
If you’re not familiar with how private equity tends to operate, you may not understand why this has the potential to have some negative ramifications.
The institutions in the space are known for maximizing short-term profits and stressing perpetual growth, and the emphasis on increasing revenue usually leads to the introduction of penny-pinching measures and new “innovations” designed to squeeze as much money as humanly possible out of customers (who are, in this case, the fans).
In far too many cases, that vampiric business strategy results in the lifeblood being slowly but surely drained from the acquired property until it transforms into a dried husk of its former self, at which point the firm does what it can to find someone willing to acquire the corpse before setting out in search of its next victim.
If you want a slightly shorter version: Dan Snyder was essentially the human equivalent of a private equity firm, and we all know how that worked out for the Commanders and its fans.
There are certainly exceptions to that trend, and the fact that potential private equity stake will be capped at 30% would theoretically reduce the amount of sway they have when it comes to dictating how teams operate. It’s also worth noting the NBA adopted a similar policy in 2021, and the fact that most fans are probably unaware that’s the case suggests the fears I’ve floated could be overblown.
With that said, you’ve been warned.