The PE train keeps on rolling for the NFL.
Rumors are that the 49ers and Giants will be selling 10% of their teams and both will likely break the valuation record for an NFL team set by the Eagles in December. I’m guessing they will sell to private equity firms being that they are based in areas with close proximity to PE firms.
Another team that I am guessing may take private equity money soon is the Cincinnati Bengals. Why? They have one of the “poorest” owners in the league worth only $925 million dollars and the organization is notoriously cheap. They usually do not guarantee money for contracts outside of the first year (Joe Burrow being an exception). However, they have said that they want to resign Ja’Marr Chase, Tee Higgins, and Trey Hendrickson to big deals.
A quick detail about NFL contracts is that all guaranteed money is paid up front or put in escrow at the time the deal is signed. When Burrow signed a five-year, $275 million extension a couple years ago, the deal included a whopping $219 million in total guarantees. That means the Bengals owner needed $219 million in cash on hand per league rules. That is about 25% of his net worth. The team had to sign away naming rights to their stadium in order to finance the deal.
If the Bengals resign all 3 of the above guys, that could be another $150 to $200 million in cash needed and about $400 million just to those three and Burrow. Forbes did rank the Brown ownership family of having $3.9 billion total, so they could likely pitch in as a whole family to pay for it. However, if that doesn’t happen then the team will probably sell a stake to a PE firm for some instant cash.
CNBC ranked the Bengals as the least valuable franchise, but they are still worth $5.25 billion. Teams also tend to sell at valuations higher than their stated value, so the Brown family could likely get about $550 million for selling a 10% stake, which would go a long way towards helping pay for the contracts and keeping the Bengals core together.
Moving forward, outside of a team building a new stadium or completing renovations, I think teams that have to pay massive contracts are the next most likely candidates to take PE money.
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