The Denver Broncos ($4.65 billion in 2022) and Washington Commanders ($6.01 billion) set records in consecutive years for the highest price ever paid for an NFL team. With revenue skyrocketing every year, a new committee could have an even bigger influence on the future of club ownership.
Recent sales of the Commanders and Broncos delivered realizations for team owners and league officials. While record-setting purchases meant franchise valuations were exploding and teams were now worth billions of dollars more than in previous years, it also hinted at a long-term issue.
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The NFL is fully aware of its recent trends. David Tepper bought the Carolina Panthers for a then-record $2.275 billion in 2018. Four years later, the Broncos sold to Rob Walton for more than double that price. This summer, Josh Harris led a group that purchased the Commanders from Daniel Snyder for $6 billion.
All of this is great news for the league from a business perspective, but the rising prices also drastically limit the market of future owners. There are only so many billionaires in the country and only a handful of those meet the league’s qualifications and would even have interest in buying a team. That’s why changes are now under consideration.
According to Ben Fischer of the Sports Business Journal, the NFL has created an elite owners’ committee that will examine the rules regarding the financing of teams and ownership stakes. It’s seen as a massive step towards potentially allowing for institutions to become primary investors in clubs.
How new ownership rules could influence the NFL
The NFL has a long history of tweaking its ownership rules and making adjustments on the fly during the vetting process. When there were multiple bidders for the Broncos, the NFL added a stipulation that helped swing things to the point where the Walton-Penner Group had a key edge and they eventually won the bid.
Team owners also altered their process this year. During the Commanders’ sale process, the league’s finance committee originally had a list of issues with the Harris-led group. Among them, the number of parties involved in his group and his percentage of equity in the team.
Because of the league’s overwhelming desire to get rid of Daniel Snyder, it approved the deal and Harris was welcomed into the ownership ranks. However, the process highlighted areas of improvement for the future.
Moving forward, the starting price for any NFL franchise that is put up for sale will likely start at a $5 billion evaluation. For the most high-profile clubs, either located in a huge market or featuring a start quarterback, the price could even eclipse $6.1 billion.
While that’s good for the bottom line and increasing franchise values mean more revenue is coming in, it also creates a problem. There are less than 800 billionaires in the United States and many of those don’t have the liquid capital to buy an NFL team at that price with the league’s existing rules.
If team owners and league officials determine they want to let private equity firms, nonprofit foundations and other entities get involved, it’s a game-changer. An even bigger domino would be the league lowering its required ownership stake for the primary owner from its current 30 percent.
It would open the door for Saudi Arabia, using the Public Investment Fund, to get involved. The Saudi’s PIF could prove billions of dollars to candidates of its choice to serve as the face of the ownership group for a team, with the PIF covering a majority of the financial costs while finally being a part of the most popular entertainment product in the United States.
Of course, that would also open up the NFL to new criticism. However, the ramifications of it might be seen as worth it given the tens of billions of dollars that could suddenly be made available. As for what team could be the next franchise up for sale, the Seattle Seahawks remain the favorites. However, new rules that would allow for the PIF and other private equity funds to bid for teams would likely make more current owners willing to sell their franchises.
