The NFL, a towering media colossus in the US, was responsible for 93 of the 100 most-watched TV broadcasts last year and made nearly $20 billion in revenue. Despite the staggering statistics, the league is reaching a crossroads as it grapples with succession-planning challenges that could threaten the traditional family ownership model, opening doors for private equity investors.
Family Tradition Under Threat
Take, for instance, the case of the Chicago Bears. The team is currently owned by 101-year-old Virginia McCaskey, the daughter of the team’s founder and first coach, George “Papa Bear” Halas. After his death in 1983, Halas had devised a plan to pass the team to his only living child without imposing a heavy tax burden. However, as the average franchise value has skyrocketed to around $5 billion, maintaining such family cohesion has become a costlier and more complicated proposition.
With the average age of the league’s 32 principal owners being 72, seven of whom are 80 or older, a large tax bill could force many of the league’s oldest families to sell their teams. This scenario has created succession-planning challenges in a league that has always valued family and tradition.
Welcoming Private Equity
In response to these challenges, the NFL has formed a special committee of five owners to consider ending the block on private-equity funds. This move would align the NFL with other top US sports leagues, such as the National Basketball Association, Major League Baseball, and the National Hockey League, which have already welcomed such investors.
This decision is expected to trigger a series of deals with six to eight teams potentially selling minority stakes within a year, according to an executive for one NFL team. The approval of the private equity plan is expected to come at the league’s annual meeting next month.
Changing Character of the League
Allowing more outside investors would undoubtedly shift the character of the league. Traditionally, limited partners have been friends of ownership, former players, local celebrities, and others who see the investment as a passion rather than a financial endeavor. The entry of private equity investors would add to the pressure to push revenues higher and for teams to change hands at ever-higher prices.
While the NFL has been flexible with teams confronting estate issues, conflicts have arisen. For instance, in 2015, the league clashed with the Tennessee Titans over a succession plan that required the three children of the team’s founder to reach consensus on major decisions surrounding the team.
As the NFL navigates these succession challenges, it will be fascinating to watch how the league maintains its tradition and family-oriented ownership model while welcoming new investment opportunities.
As the Bloomberg Billionaires Index indicates, the NFL’s prosperity has attracted interest from billionaires such as Patrick Ryan, the founder of Aon and a likely candidate to acquire the Chicago Bears if it leaves the McCaskey family. Similarly, Amazon.com Inc. founder Jeff Bezos was reported to have considered buying either the Seattle Seahawks or the Washington Commanders last year.
While the future of the NFL’s ownership model remains uncertain, what is clear is the league’s enduring mainstream appeal and unrivaled demand from investors, ensuring its spot as a leading force in the world of sports.
