MLS Adjusts Private Equity Ownership Requirements

Nearly a year after the National Basketball Association finalized a new set of private equity ownership guidelines, Major League Soccer published its own equity ownership adjustments this week, following up on a 2020 vote to change requirements. 

The MLS’s rules are stricter than the NBA’s, where qualified private equity firms can own up to 20% in a single franchise but cannot invest in more than five teams. Neither league allows any team to have more than 30% of its equity owned by private funds.

In order for a fund to be considered “qualified,” more than 25% of the fund itself cannot be owned by a single investor, and total investments in MLS teams cannot surpass 25% of the total fund.

• Each fund must have raised at least $500 million, and no more than 10% of a fund can be invested in one team. 
• Funds are limited to four teams each.
• Each investment in a single club must be more than $20 million, but it can’t surpass 20% of the club’s equity.

The funds investing in MLS teams will not be allowed to hold a board position or have controlling ownership, and the club’s majority owner will have first negotiation rights if a fund chooses to sell its stake.

The adjustments come two months after MLS’ Inter Miami received a $150 million investment from Ares Management.