Andrew Sack, a sports law attorney with The Law Offices of Steven Mitchell Sack, says private equity (PE) investment in National Football League (NFL) teams will not only be beneficial for the sport, but will result in improved fan experiences and engagement.
After five years of discussions, the NFL recently announced that PE funds will now be allowed to buy a stake in an NFL team after it was approved by the owners by a 31-1 vote. However, this comes with some restrictions. For example, they can own no more than 10% of a team. They can only have a stake of up to six teams and must hold onto that ownership for at least six years.
Since PE firms are minority owners, they cannot be involved in the team’s football operations, nor can they vote on issues such as rules changes. In addition, pension and sovereign wealth funds cannot be used to buy part of a team.
The NFL said allowing PE firms to invest in its teams will unlock $2 billion in revenue. Mr. Sack said that will go far as the sport continues to evolve.
“In an always changing landscape, the NFL has smartly decided to allow private equity firms to invest in its teams,” Mr. Sack said. “It is a positive move because this will now free up owners to spend more money on ensuring fan retention, such as stadium upgrades and merchandising. While right now there are only a handful of PE firms allowed to invest in NFL teams at only 10% of an ownership stake, it opens the door for teams to potentially sell more and make billions down the line. Considering that PE firms can invest in other sports, there is no question that the ability to own pieces of NFL franchises will jump to the top of their wish lists.”
Mr. Sack has a legal background in the sports industry which he brought to the firm as a new practice area. He teaches both Bachelor’s- and Master’s-level sports law courses at LIU Post which entail the legal and ethical issues, sports marketing and management and the business of sports, such as Sports Law, Legal and Ethical Issues in Sport, Sports Marketing, Legal Aspects of Business Administration, and Principles of Management.