Today, we saw a major shift in one of the most important businesses that's not available for trading. I'm talking about the NFL. Sources have confirmed with me that the NFL is going to approve private equity investing.

Owners have just voted to approve a rule allowing a portion of NFL franchises to be sold to private equity firms. In late August, for the first time ever, the most profitable sports league in the world joined other major American sports leagues in allowing private equity investing in

its teams. You're literally in the first inning, second inning of sports. This is like literally a $1 trillion industry when you take a look at all the different subsets. So I think it's a massive opportunity, I think for the

next ten years, this is where you want to be. The whole media TV landscape has shaken up because of streaming coming in, and the only thing that seems to be safe from all of that upheaval has been sports.

Viewers are still showing up, whether it's streaming or linear, regular TV, and there's just a ton of money there. So it's it's made it a very attractive investment for private equity. Major League Baseball in 2019, Major League Soccer in 2020

and the National Hockey League in 2021 all allowed their teams to sell minority stakes to private equity before the National Football League's announcement in late August. After viewing how private equity was investing in those leagues, which have limits up to 30% private equity

investment, the NFL said, "okay, we'll allow a little bit in. We'll put our toe in the
ocean and see how it works." It also has very different
minimum dollar requirements than other leagues. While the
minimum investment in an MLS club

is $20 million, the minimum
in an NFL team is 3% of that franchise's valuation. The average NFL team is
valued at $6.49 billion. That's almost $200 million. Frankly, the private equity
firms really want to get into

the NFL. It's the gold
standard. It's where they really want to be. So they
the ones that are in had to accept these different terms
in order to be able to participate. So far, four investment firms
have been approved for initial

investing in teams, flushing
them with an expected $12 billion. The money can be
used for anything like stadium projects or facility
upgrades, and three-fourths of NFL owners have to approve
the stake sale before it's

signed. So it's sort of like having a
pool of capital of faceless investors that allow us to
grow and build our asset. That capital can be used
for a lot of purposes. I think most importantly, it
will give teams that are

considering new stadiums or
renovated stadiums an opportunity to access a
capital pool that they haven't had access to in the past. The initially low investment
threshold will keep investment firms as minority
stakeholders with no voting

power, decision-making, or
governance. The only way they're going to
allow institutional capital in was if the decision-making
process remained as it has been, that there would be no
pressure on control owners or their families to alter the
way and the type of decisions

that they make. That's far from how private
equity generally operates. Typically in our private
equity strategy, there is an outcome. It's getting board
seats, it's seeing management change, or it's dividends, or
it's a specific time period to

exit and get that return. That is not what is happening
in sports. Private equity and sports
really started in Europe when three private equity funds
bought majority stakes in famed soccer team Paris
Saint-Germain in 2006, and the

U.S., the MLB was the first to
allow institutional investment. Today, 18 of 30
MLB teams have accepted private equity. The league's
franchises have grown 35% between 2019 and 2024.

The United States, we had a we
had baseball teams that had serious liquidity problems,
and some of those were solved by the investments of private
equity. Firm Arctos, which launched in
2020, is one of the most

active players in the sports
investment class. It holds minority stakes in
the Houston Astros, the Sacramento Kings, the San
Francisco Giants, the Utah Jazz, Boston Red Sox, San
Diego Padres, and the New Jersey Devils, among others.

Arctos recently closed its
second sports fund, valued at $4.1 billion, which includes
investment from pension funds, retirement systems,
endowments, insurance companies, family offices, and
global wealth platforms. Each of the six baseball
teams they hold stakes in will

be or have already renovated
their stadiums. Only the Astros are issuing
bonds to complete their $20 million renovations. 20 of the NBA's 30 teams have
ties to institutional capital. The average basketball team
is worth $4.4 billion.

That's up 15% compared to... A lot of teams in the NBA. More than people might
realize have been at a cash loss position every year,
some in a nine-figure cash loss position, you know,
significant amount. But the valuations have
increased much more than that.

And so they've been able to
avoid capital calls in some cases by selling shares to
private equity firms. So it has been a way to
create liquidity without having to borrow money and
without having to do capital calls. In July 2021, Blue Owl's Dial
Home Court Fund bought a stake

in the Phoenix Suns at a $1.5
billion valuation. Two years later, it sold its
share to the Ishbia brothers. In 2023, at a $4 billion
valuation, a 158% return in just 18 months.

Primarily, the way private
equity money has impacted the NBA is... It's helped push up
the value of teams because when you have a greater
interest, in other words, you have a greater supply of
investors and more money

looking to buy an asset. But the supply of assets
remains unchanged. There are still only 30 teams
in the NBA. It's going to push up prices. The National Women's Soccer
League is an outlier amongst its peer sports leagues, in
that it allowed private equity

firms to own majority
controlling shares in teams. Bay FC owner Sixth Street is
also one of the approved funds for the NFL. Sixth Street CEO
Alan Waxman serves on the NWSL Board of Governors, and even
led the consortium that

launched Bay FC from scratch,
investing 125 million and then a $53 million expansion fee. It sold out its first home
game in 2024 with a record high 18,000 attendees. Usually with private equity,
there's a specific time and

way of getting out of a
deal. There's an exit strategy. There's a return on
investment. This is not at all traditional in that sense,
but yet people want to be in it. Private equity investment in
sports does come with some

inherent risks, one being an
increase in the role of the funds the NFL set itself. In an announcement the league
long resisted WPS involvement, partly due to the fear of
misaligned incentives. The NFL wants what's best for
its teams, fans and the sport

in general. The league has
always remained staunch about its focus on heritage,
community and reputation. That hasn't always been the
case for private equity. Known for its laser focus on
financial return by deep cost cutting and maximizing
revenue, we.

Have the very tight rules that
we have in the NFL. Having individuals be able to
come in and invest is difficult, so it's a perfect
addition and limiting the investment to 10% is a way
to keep it under control from

our point of view. I think over time, you'll
definitely see the percentage of private equity money that
it's allowed to go into a team increase. NFL ownership is kept to a
very select few billionaires, making every effort to keep
controversies to a minimum.

Now the league is exposed to
outsiders. Do any of the private equity
firms get in trouble? Do they get into political
trouble? Are they going to be
boycotted for investments like we've seen them boycotted in
investments in oil or in

certain countries in the
world? These are just things that have never. The NFL has
not had to deal with because of its pristine ownership
rules. The selection process of the
approved funds was extremely secretive. It remains to be
seen if the league decides to

expand the pool of investors,
adding another layer of risk. I do think the league will
continue to allow other forms of investment, whether it's
more private equity or other types of institutional
investment, perhaps allowing some foreign ownership down
the road because all the

sports leagues, but in
particular the NFL, has huge interest from overseas
investors.

What Private Equity Will Mean For The NFL

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NFL owners voted to allow private equity firms to invest in NFL franchises.

This decision follows other major American sports leagues in allowing private equity investment.

The sports industry is a massive opportunity, estimated at over $1 trillion.

Sports remain a stable investment despite changes in the media and TV landscape.

MLB, MLS, and NHL previously allowed private equity investment, influencing the NFL's decision.

Terms and Conditions of NFL Private Equity Investment

The NFL has different minimum investment requirements than other leagues;  the minimum investment is 3% of a franchise's valuation (almost $200 million on average).

Four investment firms have been approved, with an expected investment of $12 billion.

Three-fourths of NFL owners must approve each stake sale.

The investment can be used for various purposes, including stadium projects.

Private equity firms will hold minority stakes with no voting power or decision-making influence.

Differences Between Traditional Private Equity and Sports Investments

The NFL's approach differs from traditional private equity, where firms often seek board seats or management changes.

Traditional private equity strategies often involve specific exit strategies and return on investment timelines.

Private equity investment in sports began in Europe and later spread to the US, starting with MLB.

18 of 30 MLB teams have accepted private equity, resulting in a 35% franchise growth.

Examples of Private Equity Investment in Other Leagues

Arctos, an active player in sports investment, holds stakes in multiple teams across different leagues.

Arctos' second sports fund is valued at $4.1 billion and includes investments from various sources.

Many NBA teams have ties to institutional capital, and team valuations have increased despite some teams experiencing cash losses.

Example of a successful private equity investment in the NBA: Blue Owl's investment in the Phoenix Suns.

Private equity investment in the NBA has increased team values due to increased demand and limited supply.

The NWSL is an outlier, allowing private equity firms to own majority shares.

Sixth Street, an approved NFL fund, also owns Bay FC, demonstrating the potential for success.

Private equity investment in sports has unique characteristics, differing from traditional exit strategies.

Risks associated with private equity investment include potential misaligned incentives and challenges to the league's heritage and focus.

The NFL's strict rules make private equity investment a controlled approach.

The NFL's exposure to outside investors introduces new risks, including potential controversies and boycotts.

The secretive selection process of approved funds adds another layer of uncertainty.

The league might expand investment options in the future, including foreign ownership.

High interest from overseas investors suggests potential future expansion.