A person who knows about the private-equity firm Ares Management Corp. told MarketWatch that the company still wants to invest in other NFL teams after its historic move to buy a 10% share in the Miami Dolphins.
A source said that Ares ARES +0.02%’s minority investment puts the value of the whole Dolphins franchise at $8 billion. This is part of a trend that private equity firms expect to see more of in U.S. major sports teams.
Ares’s co-heads of sports, media, and entertainment, Mark Affolter and Jim Miller, said in a statement, “The Miami Dolphins represent an iconic franchise with a deeply engaged fan base, and Ares is honored to invest… to support the team’s long-term strategic goals.”
NFL owners agreed this summer to new rules about ownership that let teams sell up to 10% of their business to more than one investor. Each share must be worth at least 3% of the team as a whole.
Private-equity funds can have stakes in up to six teams as long as they follow rules that are meant to keep information from getting shared between competing groups.
Expert in professional sports deals at the law company Haynes Boone, Errol Brown told MarketWatch that NFL owners are looking for outside investment because of the high costs of player salaries and making stadiums better for fans.
At the same time, private equity companies are becoming more interested in these kinds of deals because of how popular live sports are. Brown said that ticket and broadcast sales for events like NFL games are still growing, even though the stock market and the economy as a whole are not doing well.
“Values keep going up—the Dallas Cowboys are now worth $9 billion,” he said. “If you want to get a good return on your money, sports are still the best and most stable investment option out there.” It has nothing to do with inflation or interest rates.
Joe Tsai and Oliver Weisenberg, owners of the Brooklyn Nets, bought a 3% share in the Miami franchise to go with Ares Management’s stake.
At a league meeting on Wednesday, the NFL agreed to sell the Dolphins’ stakes and a minority stake in the Buffalo Bills to the private equity company Arctos Partners and nine other investors, one of whom is Rob Palumbo, co-managing partner of the private equity firm Accel-KKR.
The National Football League (NFL) is the last big U.S. sports league to let private equity firms invest in its teams. big League Baseball, the National Hockey League, and the NBA were the others.
Brown is a lawyer who specializes in sports business. He said that NFL team owners see value in selling some of their shares and using the money to build stadiums and make the most of their sites.
“Some teams might be against it more, but the rules are set up so that the people who already have control still make the decisions,” he said.
Based in Dallas, Arctos Partners said that its investment in the Buffalo Bills is similar to what it has done in the NBA, NHL, MLB, Major League Soccer, Formula One, Nascar, and the English Premier League.
The NFL let a small group of private equity investors (Ares, Arctos, Sixth Street Specialty Lending Inc. TSLX -1.15%, and a consortium made up of Ludis Capital, CVC Capital Partners, Blackstone Inc. BX -0.15%, Dynasty Equity, and Carlyle Group Inc. CG +0.48%) bid on ownership stakes in its 32 teams in August.
