Private equity ownership in the NFL could be terrible for fans

It was only a matter of time before private equity infiltrated the NFL. While the most valuable sports league in the world held out for a while — perhaps because of how lucrative ownership is — it finally relented. Thanks to a 31-1 vote (with the Bengals dissenting) private equity firms can now buy into franchises.  

This doesn’t mean that managers at Blackstone will make choices about roster cuts or coaching changes just yet, as companies are only able to purchase up to 10 percent of a franchise. However, this could end up having a major impact on teams and their fans.

Even though NFL owners are some of the richest folks in the world, they’ve welcomed private equity with open arms simply because it will infuse billions of dollars into the league. This could make it easier and faster to raise cash for things like real estate deals. For example, if a team wanted to build a new stadium.

Real estate is often a huge reason why private equity firms are interested in owning a team, as the land a stadium sits on — and the surrounding parking lots, shops, restaurants, etc. — can be enormously valuable. Teams also have many revenue streams, along with media rights. Plus, there is the status that comes with owning a piece of a rare commodity. And, of course, if/when a team is sold, there will almost certainly be a massive payday, and this is the thing that fans should perhaps be most concerned about.

Private equity firms are typically focused on making as much money as possible in short periods of time. The new NFL rules stipulate that they need to keep their investment for at least six years, so it makes sense that they will want to get the biggest ROI in that timeframe. This means that they may want decisions to be made to increase the profitability of a team with the intention of selling. This could result in knee-jerk reactions that mortgage a team’s future, all for the sake of a few extra wins right away.

But having just a 10 percent stake in a team would limit decision-making power, right? Well, yes, but also possibly no. Due to the many other business ventures of owners, it could actually end up being significant, as they will almost certainly do what they can to make — and keep — these firms happy.

The NFL is the last major sports league in the U.S. to allow private equity funding, as it has been allowed in the NBA, MLB, NHL and MLS for several years now. While it doesn’t seem to be having a negative impact, fans may want to keep a closer eye on who’s pulling the strings for their favorite football teams.