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Dallas-based firm Arctos Partners LP has received provisional approval to make minority equity investments in NFL franchises after the league's owners voted on Aug. 27 to approve changes to its rules governing ownership.
The new rules, approved by the owners during a special meeting in Minnesota, allow institutional investors to acquire up to 10% stakes in NFL teams. The teams can only sell stakes to a list of pre-approved firms, which include Arctos Partners, Ares Management, Sixth Street and a consortium made up of Blackstone, Carlyle, CVC Capital Partners, Dynasty Equity and Ludis, a platform founded by former NFL star Curtis Martin.
Arctos was reportedly one of a "handful" of private equity firms recently involved in the meetings in the week that led up to the owners' vote.
"We are honored to be among the first private investment firms being considered by the National Football League as potential partners for their clubs and owners," the firm's leadership said in a statement. "While there is much work ahead, today is a milestone reflecting Arctos’ commitment to the sports industry, our position as the market innovator and passion for being the partner of choice for leading sports ownership groups.
Pending final approval, Arctos claims it will be the "only firm approved to invest in equity across each of the five most popular major North American leagues."
Founded in 2019 by Ian Charles of Dallas and David O’Connor and Jordan Solomon of New York, Arctos specializes in sports team investments. The firm has previously taken minority stakes in teams such as the Golden State Warriors and the Sacramento Kings of the NBA. In April the firm announced the close of a $4.1 billion fund.
Prior to the Aug. 27 vote, the NFL was the only one of the major U.S. sports leagues to not allow private equity investments. The NFL has been studying the possibility of PE investments in teams for more than a year. Kansas City Chiefs owner and Dallas resident Clark Hunt is part of a committee of team owners tasked with examining the issue.
The changes come as the value of NFL teams has skyrocketed. NFL teams are now worth an average of almost $6 billion, per Sportico. The Dallas Cowboys lead the way with a valuation of more than $10 billion. NFL insiders believe the league's prohibition against private equity hindered team valuation growth and made it more difficult for current owners to sell teams, according to Sports Business Journal.
“The capital will be very helpful to teams as they look to grow their business and improve the fan experience,” Hunt said in an interview with CNBC following the vote.
NFL Executive Vice President Joe Siclare told Axios the league eyes the first sales gaining approval during an annual owners meeting. The league is eyeing the first sales to be approved during an annual owners meeting in December. That meeting is slated to take place at the Ritz-Carlton Dallas Las Colinas.
The new rules are also more restrictive than those of the other major sports. The approved private equity groups may only buy stakes in up to six teams. The minimum investment must be $2 billion, or a 3% stake in a team. Firms must also hold their positions for at least six years.
The league also plans to take a percentage of the profits PE firms make on transactions, according to CNBC.
