Image
Brett Yormark wants to bring private equity to the Big 12.
In 2019, Major League Baseball became America’s first major professional sports league to allow private equity investors to hold minority ownership shares in its teams. Within a few months, the NBA followed suit. Two years later, the MLS and the NHL approved PE. But NFL owners sat on their hands. After all, the league was already the richest in the world. In 2023, the league did more than $20 billion in revenue. The next closest was the NBA, which produced $13 billion. But in 2024, things changed.
As private equity proved its chops in the sports world, NFL owners started to take notice. If the name of the game was elevating valuations and bringing in more revenue, maybe it was a no-brainer? Veteran investor and former minority owner of the Texas Rangers Ken Hersh says, “The pools of capital in the institutional world dwarf the amount of capital in the high-net-worth individual population.”
On Aug. 27th, 2024, the 32 controlling owners of NFL teams convened to vote on whether shelling out a small piece of NFL teams to PE funds should be permitted. The vote passed with flying colors. Cowboys Owner Jerry Jones voted yes, as did 30 other majority owners.
Anytime you can bring sophisticated investors into team ownership at any level, i think it’s good for the nfl.
Tom Walker, Dallas Cowboys
“I think all teams can attest to the fact that you can’t ever have too many Pro Bowl quality players on your team,” says Dallas Cowboys CFO Tom Walker. “So, the same goes for investors. Anytime you can bring highly sophisticated investors into team ownership at any level, I think it’s good for the NFL.”
The parameters are simple: controlling owners can only sell up to a 10 percent stake in their franchises to funds. The regulations are more restrictive than those of the NBA and NHL, which allow 20 percent, and the MLB, which allows as much as 30 percent. The permitted investors include Dallas-based Arctos Partners—which already invested in the Buffalo Bills—as well as Ares Management—which invested in the Miami Dolphins—and Sixth Street. An investment pool that includes Blackstone, CVC, Carlyle, Dynasty Equity, and Ludis can also invest.
Notably omitted from the investor list is RedBird Capital Partners—70 percent of the firm’s $10 billion of assets are in sports, media, or entertainment. It owns stakes in the Boston Red Sox, Pittsburgh Penguins, PGA Tour, and Lebron James’ entertainment company. According to The Wall Street Journal, the firm was omitted because it is at the forefront of a merger between Skydance Media (one of its assets) and Paramount, which broadcasts NFL games on CBS and its streaming platform Paramount+.
But Gerry Cardinale, the firm’s founder and managing partner, has a long relationship with Jerry Jones—which could pull some weight in expanding funds down the road. In 2008, the two business moguls co-founded Legends Hospitality alongside the late New York Yankees owner George Steinbrenner. “The great thing about Jerry and his family is they care first and foremost about the fans, and they care about delivering a value proposition to those fans,” Cardinale told D CEO. “And that’s fantastic because then it gives partners an opportunity to come in and help do that in a responsible way.”
Image
RedBird Capital Partners helped fund the launch of the Arlington-based United Football League.
Cardinale is responsible for standing up the United Football League in 2020 alongside Hollywood star Dwayne Johnson. RedBird backed the merger between the United States Football League and the bankrupt Xtreme Football League to do so. Arlington became the UFL’s HQ. Cardinale wants to build the league into the fifth most valuable in North America, but he undoubtedly desires a slice of the pie from the richest. “Yes,” Cardinale says regarding if he wants in on an NFL team. “The NFL is the 800-pound gorilla.”
Over in Irving, Big 12 Commissioner Brett Yormark wants to be the first to introduce private equity at the collegiate conference level. “I don’t want to wake up tomorrow and read that [some other conference] partnered with a private equity firm, and someone else was the first mover in that space. I like being a first mover,” Yormark told D CEO.
A Healthy Return
Private equity is far from the main reason team valuations are soaring. But these numbers illustrate when private equity invested and how much the valuation has grown since then.
Golden State Warriors
Washington Wizards
Los Angeles Dodgers
Boston Red Sox
Inter Miami CF
Portland Timbers
Pittsburgh Penguins
Washington Capitals
But the popular argument against PE in college sports is: Would these funds really care about the sports that don’t turn a profit? (At most institutions, that is every sport except for football and men’s basketball.) After all, former College Football Playoff Executive Director Bill Hancock states the obvious, “Would a PE owner care about women’s soccer, cross country, or wrestling? I think we know the answer.”
So, would a PE fund want to break football away from the governing NCAA body? “The future is likely different,” says Bob Bowlsby, Yormark’s predecessor. “But in the end, there’ll still be contests on Saturdays, and kids will still go to school.” RedBird has already established a group to invest in college athletics.
The big question on the pro level, though, is will the Jones family ever sell a portion of the team to a PE fund? “Jerry’s been open with us: we aren’t pursuing it,” Walker says. “I don’t want to say it will never happen, but we’re not considering it right now. ” After all, the Cowboys have built 10 billion reasons not to need private equity.
Author