Stay informed with free updates
Simply sign up to the Private equity myFT Digest — delivered directly to your inbox.
The $4tn private equity industry has struck its first two deals to buy stakes in National Football League teams as Wall Street’s most powerful funds eye long-term investments in the world’s most profitable sports league.
On Wednesday, Ares Management acquired a 10 per cent stake in the NFL’s Miami Dolphins franchise. Arctos, a sports-focused private equity investor, led a group that purchased a minority equity stake in the Buffalo Bills, based in upstate New York and currently owned by oil billionaire Terry Pegula, father of US tennis star Jessica Pegula.
The two deals were approved by the NFL at its owners’ meeting in Dallas, ushering in a new era where Wall Street investment funds will be allowed to own direct stakes in popular and valuable American football teams.
The deals are the first in what investors expect will be a torrent of similar minority investments in the coming years, after NFL owners approved major changes to ownership rules in August and permitted private equity firms to invest in teams.
Ares, which manages nearly $500bn in assets, is buying its minority stake from Dolphins owner and billionaire real estate mogul Stephen Ross. In addition to a stake in the football team, Ares and other investors in the group — including Alibaba cofounder Joe Tsai — will own minority stakes in the Dolphins Hard Rock Stadium in Miami and the Formula One Miami Grand Prix.
Arctos and Ares have a long record of investing in sports teams around the globe.
Dallas-based Arctos has minority stakes in several baseball teams, including the Los Angeles Dodgers and the San Francisco Giants, and basketball franchises such as the Utah Jazz. Last year the firm acquired stakes in the Qatari-owned football team Paris Saint-Germain and Aston Martin Formula One. The firm’s co-founder Ian Charles told the Financial Times earlier this year it planned to focus future investment on North America after it raised a new $4.1bn fund in April.
Ares, which specialises in credit, has completed deals with several football teams including Chelsea, Olympique Lyonnais and Inter Miami. In 2022, it raised $3.7bn for a fund dedicated to sport and media investments. It has also backed the McLaren Racing F1 team.
Ares and Arctos were among a small group of private equity firms to be approved by the NFL as potential buyers. The others were Sixth Street and a consortium made up of Blackstone, Carlyle, CVC, Dynasty Equity and Ludis.
The NFL stipulated that firms are only permitted to buy up to 10 per cent of any individual team, and blocked so-called preferred equity deals that give certain shareholders superior rights such as first dibs on dividends.
Buying an NFL franchise outright is now beyond even some of the world’s richest people, as valuations have soared into the billions of dollars in recent years. That has strengthened the case for allowing buyout firms to enter the ownership ecosystem to smooth the sales process for existing owners and facilitate liquidity.
The average NFL team was worth roughly $5.9bn in Sportico’s valuations report in August, an increase of more than 15 per cent on last year, bolstered by the league’s domestic media rights, which are worth $110bn over the 11 years through 2033.
Read the full article here
