Buffalo Bills, Miami Dolphins Finalize NFL’s 1st Private Equity Investments

Arctos Partners and Ares Management will take stakes in the Bills and the Dolphins, respectively, following a landmark August decision that permitted PE investments in the football league.

The Buffalo Bills and the Miami Dolphins will be the first NFL teams to sell stakes to private equity firms, the teams announced yesterday after the separate sales of non-controlling interests were approved by the National Football League.

Arctos Partners L.P., a private equity firm with a focus on sports investing, will acquire a stake in the Buffalo Bills, while Ares Management will buy a 10% stake in the Miami Dolphins.

“This has been an incredible journey to add such an impressive and diverse group of limited partners along with a reputable private equity partner in Arctos that has an extensive track record of success with professional sports franchises,” said Terry Pegula, Buffalo’s owner and CEO, in a statement.

The Bills will add 10 limited partners to the team’s ownership group, including Arctos Partners; Rob Palumbo, co-managing partner of Accel-KKR; Sue McCollum, CEO and owner of Eagle Brand Sales; Theresia Gouw, co-founder and managing partner in Acrew Capital; Mike Joo, chief operating officer and head of North America corporate and investment banking at Bank of America; Tom Burger, co-founder and managing partner of Gridiron Capital, and Rob Ward, co-founder and managing partner of Meritech Capital. Other investors included Vince Carter and Tracy McGrady, both former basketball players, and Jozy Altidore, a former soccer player.

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The Dolphins’ list of new investors is considerably shorter: In addition to Ares Management, Brooklyn Nets owners Joe Tsai and Oliver Weisberg will together take a 3% stake.

“As we continue our relentless pursuit of building a best-in-class organization, we were fortunate to attract significant interest from multiple investors, which gave us the opportunity to be highly selective in choosing partners who align with our core values and long-term vision,” said Stephen Ross, the Dolphins’ owner, in a statement.

In October, CIO reported that the Bills were in talks to sell a stake to Arctos. That followed the NFL’s August decision to allow private equity investment into the league’s teams. A handful of private equity firms, including Arctos, Sixth Street, Ares Management, as well as a consortium that includes Blackstone, Ludis Capital, Dynasty Equity CVC Capital Partners and the Carlyle Group, were selected as firms approved to hold stakes in the NFL’s teams.

Most of the private equity firms selected by the NFL have extensive experience in sports investing. Arctos Partners owns stakes in the Los Angeles Dodgers, the Tampa Bay Lighting, the Philadelphia 76ers, the Golden State Warriors and Paris Saint-Germain.

Ares has made debt and equity investments in Chelsea F.C., the San Diego Padres, McLaren Racing and Inter Miami C.F.

Eligible firms can purchase team stakes of between 3% and 10%. Teams are allowed to sell up to a 10% stake in their teams to private equity. Eligible PE investors will be able to take stakes in a maximum of six of the league’s 32 teams.

According to the Ross-Arctos Sports Franchise Index, developed by Arctos and the Ross School of Business at the University of Michigan, investments in sports franchises have returned nearly double the return of the S&P 500 since 2000. Proponents of sports investing cite it as an asset class that is uncorrelated to traditional equity and debt investments.

According to Coller Capital, in its semi-annual global private capital barometer, 81% of surveyed institutional investors in private markets said the risks involved in sports focused funds are too great to invest. Among these concerns are uncertainties of valuations and track records.

Still, one-fifth of surveyed investors said they have exposure to sports, with appetite to the industry strongest among public pension funds and endowments.

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Tags: Arctos Partners, Ares Management, Buffalo Bills, Miami Dolphins, Private Equity, sports, Stephen Ross, Terry Pegula

U.K. defined benefit consolidator Clara-Pensions Ltd. announced Thursday that it will take custody of the pension liabilities of the Wates defined benefit pension plan, which includes 210 million pounds ($267 million) in assets for 1,500 beneficiaries. Wates is a U.K.-based construction and property services company.

The transaction is the U.K.’s third “superfund” transaction and the first with an active sponsor, according to the Clara-Pensions announcement. Through this model, members of the Wates pension will spend from five to 10 years under Clara-Pensions, after which pension liabilities will be bought out by an insurer.

Clara operates a pension risk transfer and consolidation model it calls the ‘superfund,’ in which the trustees of individual pension funds transfer their assets and liabilities to Clara, removing the employer covenant, which is replaced by a funded capital buffer.

In the Wates transaction, Clara will also provide 19 million pounds in funding to the plan in the form of a one-off payment to support the plan’s financial health.

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The capital buffer is funded by Clara’s capital providers. According to Clara, the one-off payment is less than the costs of running a plan in-house, with lower risk to the business. The goal of this model is to give a plan under custody five to 10 years to improve its funded status and prepare it for a buyout with an insurer.

“Superfunds, like insurer buyouts, allow companies to remove DB pension promises from their balance sheets and streamline for broader corporate activities, such as corporate restructuring,” wrote Suzanne Vaughan, head of retirement at WTW, in January after Clara announced a similar transaction. “However, the cost of a superfund transaction is generally expected to be materially less than the equivalent cost of an insurer buyout, making it an attractive option to consider in the right circumstance.”

Clara-Pensions has already made two such transactions: the first in November 2023, when 9,600 members of the Sears pension were transferred to Clara, and another in March, when 10,400 members of the Debenhams Retirement Scheme were transferred.

The Wates transaction is the first with an active sponsor, according to the announcement. This transfer comes as the U.K.’s Labour Party government is pushing, led by Chancellor of the Exchequer Rachel Reeves, for pension reforms, specifically calling for the consolidation of more than 80 multi-employer defined contribution plans into a handful of funds.