ELECTRONICALLY REPRINTED FROM AUGUST 2024

Don’t Expect to Find
Bargains in the NFL as
PE Prepares to Invest
The NFL lifted its ban on institutional ownership on
Tuesday and will allow minority investments, expanding
PE’s growing involvement in professional sports. But
there will be no bargains to be found in the NFL,
professional sports’ most valuable league as a whole.
AUGUST 27, 2024 | PAUL ELIAS
SO, YOU WANT TO BE AN NFL OWNER?
Well, get ready to cut a giant
check, because the price tag for these
coveted franchises has skyrocketed inrecent years.
Nonetheless, a number of private
equity firms including Arctos Partners,
Ares Management (NYSE: ARES), Carlyle
Group (Nasdaq: CG), CVC, Sixth Street andAvenue Capital Group have made theirinterest in investing in the league clear.
That’s because the NFL is booming
on financial fronts beyond valuation
appreciation at a time when PE’s $1.2
trillion in dry powder is reaching criticalmass for deployment.
Franchise multiples have jumped fromthree or four times to at least 10 times

revenue, says Kroll managing director
Mark Mondello, head of the firm’s media,entertainment and sports practice.
The NFL’s national media deal,distributed equally among the teams, is
one of the biggest drivers of valuations.
All four major television networks andAmazon (Nasdaq: AMZN) in 2021 agreed
to collectively pay $110 billion over 11 years
to broadcast games, essentially double theprevious eight-year, $39.9 billion contract.
“That growth in the multiple has reallyfollowed the growth in media revenues,”
Mondello says.
Mondello says the last three NFLownership changes highlight the soaring
valuations of NFL teams:
Billionaire hedge fund manager David

Tepper in 2018 bought the Carolina
Panthers for almost $2.3 billion afterinvestors paid the NFL $206 million in 1993
to join the league as an expansion team.
A group led by Walmart Inc. (NYSE:WMT) heir Rob Walton paid $4.6 billion
for the Denver Broncos in 2022 that
previously sold for $70 million in 1984.
Apollo Global Management(NYSE: APO) founder Josh Harris led
a consortium of investors that paid arecord $6 billion for the Washington
Commanders last year. Previous owner
Dan Snyder paid $800 million for thefranchise in 1999.
“It’s hard to beat the value of theNFL,” Mondello says of professional
sports investing. “If you multiply by all 32
teams, I would say it’s the most valuable
sports league in the world.”
Mondello and other analysts say theNFL teams have also transitioned froman art-like investment into a cashgenerating machine through ticket sales,sponsorship deals, merchandising anddigital platforms. Sports betting andexpanding the international market arealso expected to drive revenues higher.
“Why are you paying such a large
multiple? You’re paying because
you expect the revenue to increase,”
Mondello says. “And by examining thehistory of the transactions in the space,you’ve seen that there’s been significant
capital appreciation in these franchises.”
On the other side of the table,
Mondello says rising valuations are alsoa major reason why NFL owners havewelcomed minority PE investments.
“Private equity’s minority strategy is
attractive to the NFL owners because it
gives them an opportunity to get a littleliquidity,” Mondello says. “They keepcontrol, but they can generate a significant
amount of money just by selling a small
percentage of their team.” M&A
Updated to include the owners’ decision at aleague meeting.

Posted with permission from the August 2024 issue of Mergers & Acquisitions. Copyright 2022. All rights reserved.
For more information on the use of this content, contact Wright’s Media at 877-652-5295.

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