Investment in the big four U.S. professional sports leagues was closed to private equity until MLB became the first to allow it in 2019. In just six years since, the NBA, NHL, and finally last year the NFL have all approved minority PE stakes in teams.
These sales—which continue to set higher and higher valuations—bring in liquid capital for teams with majority owning families to reinvest back into their franchise.
While some fans might bring up concerns about PE firms wanting to raise ticket prices, stadium concessions, and merchandise, Jeffrey Kaplan, co-founder of Andalusian Sports Advisors, said fans should look forward to the flexibility the cash injection gives their favorite teams. Andalusian has advised on some of the biggest team sales in sports, including David Tepper’s purchase of the Carolina Panthers (Kaplan worked with Tepper at his Appaloosa hedge fund), Josh Harris’s purchase of the Commanders, the Friedkin Group’s purchase of Everton FC, and minority stake sales of the Philadelphia Eagles and L.A. Chargers.
“You should be pleased that, as a fan, the enterprise that you love so much, the team that you embrace, the New York Giants selling 10% to an individual other than the Maras or the Tisches or to an institution, only reinforces the strength of the enterprise,” Kaplan told Front Office Sports on the latest episode of Portfolio Players. (The Mara and Tisch families each own 50% of the Giants.)
New money can be used “to build a great new stadium or build out a practice facility for your team,” Kaplan says. “So the capital that used to be constrained by families, who as legacy owners could not necessarily put that type of capital into teams that are now worth $8 and $10 and $12 billion.”
The liquidity gives majority owners greater flexibility to manage a salary cap, making it easier to convert base salaries to signing bonuses, which can be paid upfront. Owners can attract top players to their franchise with money they might not have previously had.
The 49ers announced the sale of a 6.2% stake in the team on May 20. On the same day the team re-signed quarterback Brock Purdy to a five-year deal with $265 million, and $181 million guaranteed.
The Fisher family, who owns 95% of the A’s, is aiming to sell a minority stake in the team at a $2 billion valuation. This will help finance the franchise’s new stadium in Las Vegas, that is set to open in 2028.
Former MLB CFO Jonathan Mariner echoed Kaplan’s sentiment about why PE is not only welcome but a necessary aid for family owners: “Given franchise values, I think it really requires other sources of capital to sustain the kind of prices that are being asked for,” Mariner told Front Office Sports on an episode of Portfolio Players. It was inevitable that you would have to get to that point. It’s hard to write a check if a franchise is going for $3, $4, or $5 billion. It’s hard to find someone to write a check for, say, half of that.”
