With the 2024 National Football League season set to kick off on Thursday, a landmark decision from the NFL will allow its teams to sell a stake of up to 10% to private equity firms. The NFL identified a small group of funds that are eligible to invest.
Per the NFL’s terms, a team can allow multiple funds to invest, but their combined investments must not exceed 10% of the team’s valuation, and each stake must be at least 3%. Eligible funds can invest in up to six teams. Private equity investors will be obligated to hold onto their investments for at least six years before they can sell their stakes.
In its decision, the NFL released a list of funds vetted by the organization as eligible to invest: Arctos Partners LP, Ares Management Corp., Sixth Street Partners and a consortium of Blackstone Inc., the Carlyle Group Inc., CVC Capital Partners, Dynasty Equity Partners Management LLC and Ludis Capital.
Most other North American sports leagues, including the National Basketball Association, the National Hockey League, Major League Baseball and Major League Soccer, allow investments from private equity firms. The NFL, in its decision, said its owners had been thinking about private equity investing for five years but had only become serious about it in the last year.
The approved funds include:
Arctos Partners
Arctos Partners is a major investor in sports teams. The fund has made its investments through its Arctos Sports Partners Fund I and II. Fund I closed in 2021 with $2.1 billion in commitments.
Arctos closed Fund II in April, raising $4.1 billion in commitments from its limited partners since the fund opened in 2022. In total, the firm has $7 billion in assets under management. Approximately 30% of the assets of Fund II had been invested, as of April.
According to Pitchbook, investors in Arctos Sports Partners Fund I include the Alaska Permanent Fund, the Employees Retirement System of Texas and American Airlines’ corporate pension fund. Investors in Sports Fund II include the Kentucky Public Pensions Authority, the Oregon Public Employees Retirement System and the University of Texas/Texas A&M Investment Management Co.
Arctos boasts that it is the only investor with approval to invest across MLB, NBA, NHL, NFL and MLS.
“Pending final approval, Arctos would be the only firm approved to invest in equity across each of the five most popular major North American leagues,” an Arctos spokesperson said in a statement.
To date, Arctos’ investments include stakes in the Golden State Warriors, Houston Astros, Sacramento Kings, Aston Martin’s Formula One racing team, and Paris Saint-Germain FC, among others.
The fund also holds a stake in Smith Entertainment Group, a holding company which owns the Utah Jazz, and Harris Blitzer Sports Entertainment, which owns the New Jersey Devils and the Philadelphia 76ers.
Ares Management Corp.
Ares Management invests in sports teams through its Sports, Media & Entertainment Finance Fund, which raised $3.7 billion from investors in 2022, including $2.2 billion in equity commitments.
Investors in that fund include Caisse de dépôt et placement du Québec, the California State Teachers’ Retirement System and the Maryland State Retirement and Pension System.
“We are excited for the opportunity to support the continued growth of NFL teams through Ares’ extensive investment experience and strong relationship networks in the sports, media and entertainment sector,” a spokesperson for Ares Management said in a statement to CIO.
Ares Management’s sports investments include a $500 million stake in English soccer club Chelsea FC, as well as investments in the San Diego Padres, McLaren Racing and a $225 million investment in Inter Miami CF.
Ares’ SME invests in sports across the capital structure, including senior debt, junior debt, preferred equity and minority equity in its portfolio companies.
Sixth Street
According to reports, private equity firm Sixth Street is currently raising an inaugural sports fund, although it has made pre-existing sports investments. The rumored fund would invest in sport teams, leagues and media rights.
Some of Sixth Street’s sports investments, through its sports, media, entertainment and telecom group, include investments in FC Barcelona’s LaLiga TV broadcasting rights, the San Antonio Spurs and the National Women’s Soccer League’s Bay FC, the largest institutional investment in a women’s professional sports franchise.
Blackstone
Unlike other firms on this list, Blackstone has not made direct investments in sports teams; however, the firm is the largest private equity firm in the world, with more than $1 trillion in assets under management.
In February, Blackstone reportedly walked away from talks to invest in the German Football League’s media rights.
Carlyle Group
Since 2018, Carlyle has invested more than $3 billion in sports, media and entertainment. A major private credit investor, the firm sees opportunities for the asset class across the sports ecosystem, especially in media distribution.
“One way we invested capital in the world of sports is focusing on distribution,” said Alexander Popov, Carlyle’s head of private credit, in a video on the company’s website. “In a recent investment, we backed a company called Infront [Sports &] Media, [whose] business plan is to help leagues around the world and sports teams monetize their rights globally.”
Carlyle made its first sports team investment in June, taking a stake in the NWSL’s Seattle Reign FC for $58 million. David Rubenstein, founder of the Carlyle Group, also personally owns the Baltimore Orioles.
CVC
Luxembourg-based CVC Capital Partners is a significant sports investor. The firm has made numerous investments across sports teams and leagues.
CVC’s sports portfolio includes the Gujarat Titans cricket franchise, a $3.2 billion stake in Spanish soccer association La Liga, Premiership Rugby and the Women’s Tennis Association.
Dynasty Equity
Dynasty Equity, founded in 2022, is among the newest of the funds selected. Its co-founders, Jonathan Nelson and K. Don Cornwell, are experienced in sports, media and entertainment investing.
The firm’s focus is on “strategic investment across the sports ecosystem in assets that are resilient, compelling, and differentiated,” according to Dynasty’s website.
The firm has made two investments to date: a strategic minority investment in soccer club Liverpool FC and leading the Series A round for TMRW Sports, co-founded by Tiger Woods, which aims to build “modern approaches in sports, media and entertainment.” One of TMRW’s first projects is the upcoming TGL golf league.
Ludis Capital
Ludis Capital is a Los Angeles-based venture capital firm which invests across the sports and entertainment sectors.
“We are a group of investors, founders, operators, and technologists who share a common belief in the disruptive power of sports and technology combined,” the firm’s website states. “We have successfully founded, invested, operated, and exited across a number of companies globally. At Ludis Capital, we invest in early-stage companies that operate at the intersection of sports, technology and entertainment.”
While not directly invested in sports teams, the firm has made investments in companies that include Overtime, Pumpjack Dataworks, Sport Buff and Streamsights. Former NFL running back Curtis Martin is among its founders.
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Tags: Arctos Partners, Ares Management Corporation, CVC Capital Partners, investing, NFL, Private Equity, sports