It feels pathetic and gauche to say something about the Super Bowl parade shootings without also discussing, on some level, a solution. But I know that’s a pointless conversation, so I mostly keep quiet. That hopelessness is so sad.
In tonight’s newsletter, I look at three issues that came up often in Las Vegas last week: The NFL’s consideration of private equity, the future of On Location Experiences and the international commercial rights for NFL teams.
Both Chiefs owner Clark Hunt and Falcons owner Arthur Blank gave positive indications about private equity’s chance to get into NFL ownership soon, but the important details are up in the air with a wide range of outcomes still possible, sources tell me.
This much is clear: This is not simply a yes/no question of whether the NFL will adopt a system comparable to MLB, NBA, MLS or NHL, in which sports-focused private equity firms can buy up to a certain percentage in a certain number of teams. The NFL’s special ownership committee is having an expansive discussion about tactics to make the ownership market more liquid, diversify ownership and push valuations higher.
“Private equity” was the shorthand for this conversation around the Super Bowl gatherings in Las Vegas last week, but “institutional capital” is the better term. There are kinds of funds interested in the NFL that weren’t that concerned with the other leagues, raising new possibilities. Even within “private equity,” it’s possible the NFL could prioritize single-use funds that would need to be created de novo rather than general funds that would be ready to buy LP stakes right away.
Another concept floated was a leaguewide fund, with institutional investors, that could be tapped by teams in need of liquidity.
Separately, the committee is also looking at making it easier for natural persons, including raising the acquisition debt limit above $1.2 billion; lowering the equity required by principal owners below 30%, or increasing the cap on investors above 25. Those are easier questions and could happen quickly, sources say.
There’s little opposition in principle to institutions; owners now see that restricting equity to natural persons is clearly chilling the market. But the debate over how far they’re willing to go is fluid, and the most important voices in the debate are cautious by nature. As one source put it, “Anybody who says they know where this going before the March committee meetings is probably wrong.”
The special ownership committee (Blank, Jimmy Haslam, David Tepper, Robert Kraft and Hunt) will meet in Manhattan the first week of March and then present to the full ownership in Orlando during league meetings March 25-27. There could be votes taken on the basic rules of ownership at that time, but a vote to allow institutions into the club is more likely to happen in May or even later.
The NFL would effectively have veto rights over the sale of On Location Experiences if private equity firm Silver Lake successfully takes Endeavor private and starts divesting, several key sources tell me. The league could both steer a deal to its preferred buyer and profit through a renegotiation of its long-term license of Super Bowl tickets, the hospitality company’s most important asset. The timetable for Endeavor going private remains unclear, and there’s still no decision to sell On Location.
It’s “unthinkable” the NFL doesn’t have a change-in-control provision in the license given the importance of controlling the Super Bowl experience, one expert said. At one point, the NFL held a large minority stake in the hospitality company it founded, but in 2022, it converted that 32% stake to a 1.5% stake in Endeavor. It still has huge sway through the ticket license, making any sale a tripartite negotiation.
“It’d be like trading for a superstar with one year left on his contract,” an insider said (this comparison isn’t perfect — there are many more years left on the current license). “The deal couldn’t get done without the player negotiating an extension with the new team first.”
With that leverage, NFL owners might profit handsomely from this circumstance. A new buyer might want to restart the clock on a long-term license. Also, the value of a Super Bowl ticket only has increased since Endeavor acquired majority control of On Location in January 2020. Some owners are eager to find new ways of capitalizing on the Super Bowl, in part because its Endeavor shares have struggled since it became an owner, undermining its goal of spurring equity growth alongside fee income.
The NFL founded On Location in-house in 2015, but later sold equity to RedBird Capital Partners, Bruin Capital and the Carlyle Group to fund growth before Endeavor bought out those others. Endeavor has always argued that its combination of other sports and entertainment assets creates an ideal flywheel for On Location growth, but multiple sources say the events division would be a strong candidate to be sold if Silver Lake successfully takes it private.
Many NFL teams that have stayed away from the Global Markets program are now reconsidering — an indication that we are close to another influx of teams activating commercial rights abroad.
Since the international program’s January 2022 launch, 21 teams have obtained media and sponsorship rights in foreign countries (like what they enjoy in their home U.S. markets). Among the 11 holdouts, reasons have varied, but mostly it has been because their owners have been underwhelmed by the projected economics.
But in the last two weeks, execs from six of those 11 have told me privately they have — or will — submit bids for league approval, which is expected to be acted upon the coming months.
There are a few reasons for this change of heart. A big one is the December owners’ vote to increase the limit on foreign games from five to nine annually. This makes it far more likely that a team with rights in a country will get to play a game there, a game-changer for possible sponsors or media rightsholders.
Others pointed to the positive example set by the most aggressive teams abroad, like the Chiefs, who have signed multiple corporate sponsorships in Germany and turned heads with their “ChampionShip” in Frankfurt this year.
League rule changes have helped, too. Until last year, venues hosting NFL International Series games were league-controlled sites, like the Super Bowl or Pro Bowl. Now, participating teams can get in-venue advertising and activation space. Also, the league opened up the sports betting category abroad. Finally, in other cases, teams’ internal circumstances have changed, with prior crises subsiding or overseas interests evolving since the program started.
The 11 teams currently outside the program are the Ravens, Lions, Bengals, Commanders, Colts, Chargers, Giants, Browns, Bills, Titans and Packers.
- With the all the Super Bowl audience numbers that have bounced around this week, my viewership-minded colleague Austin Karp says these are the ones to remember:
- 123.7 million: The total audience for the game across all platforms (English + Spanish) — a record for any audience on U.S. (Karp says vague audience figures being thrown around this week about the 1969 moon landing are anecdotal and not actually documented by Nielsen or others)
- 129.3 million: Usher’s halftime performance — a record for any Super Bowl halftime show
- 58.8 million: The record number of women who watched
- 120.3 million: What CBS drew on its own in English (including streaming)
- 10 million: The number of Canadians who watched on TSN/CTV/RDS (a Super Bowl record north of the border)
- 2.3 million: Univision/TUDN’s audience for the Spanish-language broadcast in the U.S.
- 1.2 million: Nickelodeon’s audience for the SpongeBob-themed alt-cast (a first for the Super Bowl)
- One week after DraftKings announced a promo that will have LeBron James picking football winners, NFL players said they will push to lift restrictions that keep them from betting on other sports during their season, reports SBJ’s Bill King.
- The Club Level lounge on the south end of Seattle’s Lumen Field will be extensively overhauled this offseason, with the project finishing in time to open for the 2024 NFL season, reports SBJ’s Bret McCormick. The former Ring of Honor Lounge will become the newly entitled T-Mobile Endzone, a new 2,625-square-foot sports bar containing the exclusive and new 1976 Club (named after the year the Seahawks joined the NFL).
