NFL may allow private equity firms to invest in teams. What does that mean for the Cowboys? (2024)

The NFL is looking into whether allowing private equity firms to invest in its franchises would be beneficial to the league. It’s an audacious move that would allow millions of dollars to flow into the pockets of owners to free up capital and bring in a new group of individual minority owners.

Industry experts think the Dallas Cowboys along with billionaire owner Jerry Jones and his family could stand to gain the most from private equity’s involvement.

A collaboration between the two would lead to more liquidity for the Cowboys and Jones, potentially bringing upgrades to and additional investments in Jones’ other businesses like Comstock Resources.

While MLB, MLS, the NBA and the NHL have warmed to institutional wealth in team ownership over the last five years, the NFL is the last major U.S. sports league that hasn’t given in to private equity investment.

But in May, a committee of NFL owners reportedly moved one step closer to allowing private equity investments in franchises. Commissioner Roger Goodell expects the league to have more to say by October.

“We didn’t ask for a vote, but I think it’s fair to say that [team owners] agree with the direction we’re going,” he said after a meeting in mid-May. “It’s been well thought out. The committee has worked incredibly hard, and I think they have a great appreciation for that, and as such, have great confidence in their work.”

Cowboys officials, including Jones and his son Stephen Jones, the team’s executive vice president, were unavailable at the time of publication. But Jones has said previously the NFL must proceed carefully with private equity.

“You’ve got to look around the corners, see what the consequences might be,” he told reporters after an owners meeting in May. “We’re pretty proud of the way we govern the NFL at this particular time.”

Irwin Kishner, co-chair of the Sports Law Group at Herrick, Feinstein LLP, has represented the Cowboys for nearly 20 years in regards to the team’s outside investments in other properties. To him, private equity and the NFL are a seamless match.

“I think this is actually a natural evolution of [the] use of private equity dollars,” Kishner said. “I think, with the right mindset, the right partners, it makes a lot of sense. It provides liquidity, an ability to finance purchases, ownership, expansions, new buildings, new arenas [and] enhances the fan experience.”

What is private equity? Why has the NFL resisted it?

Private equity describes the purchase of a company’s stake as an investment. Private equity firms manage those investments in companies for about three to five years with the goal of eventually turning a profit and cashing out.

MLB, MLS, the NBA and the NHL opened the doors to private equity investments in 2019. It has brought at least $200 billion to the owners of more than 60 teams, including the 2023 World Series champion Texas Rangers, according to Pitchbook.

Since then, sports-focused private equity firms have begun popping up, including Dallas-based Arctos Partners and New York-based RedBird Capital. Neither firm responded to an interview request from The Dallas Morning News.

Each has invested over $4 billion in sports teams, including the NBA’s Golden State Warriors and baseball’s Boston Red Sox.

Historically, the NFL hasn’t needed private equity firms and has clung to its strict ownership rules, which require a team to have a priority owner with a minimum 30% stake.

But the average team valuation reached $5.1 billion in 2023, a 14% increase from 2022. In 2010, the average team valuation was $1.02 billion, nearly 80% less than today’s.

That means the NFL has a small pool of potential owners who can foot the bill for a team.

“I think the NBA did the right thing by allowing [private equity]. I voted to allow it,” said Dallas Mavericks minority owner Mark Cuban. “The numbers are getting so big to buy teams, the number of potential buyers is relatively small.”

Jones bought the Cowboys for $150 million in 1989. Today, the team is valued at over $9 billion, surpassing the valuation of every professional team in the world, including baseball’s New York Yankees and soccer’s Real Madrid, which are valued at $7.1 billion and $6.07 billion, respectively.

How would private equity impact the NFL, Cowboys?

Private equity in the NFL would free up capital for owners whose net worth is dependent on their teams. It would allow owners to transition their investments to renovating or building new stadiums and arenas, for which taxpayers have paid over $4.3 billion since 2000.

A drawback for investors is that private equity firms would likely have no say in personnel like free agency signings or trades. Still, getting involved with an NFL team would bring too much prestige and profit for some to pass up, said Carrie Potter, sports finance lecturer at Rice University.

“It’s all about profit. There would be a very clear, defined structure going in,” she said. “It’s a huge asset to have in your portfolio. It’s a very attractive position to be a minority owner in a professional sports team, especially a coveted team like the Cowboys.”

For fans, one consequence of private equity investment could be higher ticket prices. Tickets to Cowboys home games already average $331.

Should Jones sell a stake of the team and AT&T Stadium receives more investments, price increases will probably follow, said Ken Wiles, executive director of the HMTF Center for Private Equity Finance at the University of Texas.

“If you increase the services, make the stadiums nicer, you’ll increase demand,” he said. “You’re going to drive up prices, and it’s already very expensive.”

But it’s unclear if Jones, who already has a net worth of $12.6 billion, would use private equity. His enormous personal capital means he doesn’t necessarily need a cash injection, said Robert Covington, founder and managing partner of Dallas-based private equity firm Braemont Capital and former partner at RedBird Capital.

“I’m not sure Jerry Jones has any need or desire … to have private equity investment. Not because it’s a bad idea for the league; he just doesn’t need it,” Covington said. “There’s other ways for him to execute development plans or other things without selling the team.”

Jones already draws millions of dollars from Cowboys merch and his other investments like Comstock Resources Inc., Blue Star Land and more. But a private equity investment in the Cowboys would give him even more liquidity to pump into his non-sports businesses.

But more important to Cowboys fans, greater liquidity for Jones means he could invest more in AT&T Stadium — his crown jewel in Arlington is dubbed Jerry World — and keep promoting it as the league’s top stadium. The building was built in 2009 for $1.3 billion.

Though AT&T Stadium remains an advanced facility and is receiving a $350 million investment ahead of the 2026 World Cup, other bigger and more expensive NFL stadiums have been built since or are on the way. SoFi Stadium in Inglewood, Calif., which is shared by the Los Angeles Chargers and Los Angeles Rams, opened in 2020 at a cost of $5.5 billion. And New Nissan Stadium in Nashville, which will be home to the Tennessee Titans, is expected to open in 2026 at a cost of $2.1 billion.

“There’s pushback on public funding for stadiums nowadays,” Wiles said. “I think Jerry Jones absolutely would use this to help build that franchise because that stadium is so much more than just an NFL home. It is part of the iconic identity of the Dallas-Fort Worth metroplex.

“Plus, the better it is, the easier it is to sell for future events like a Super Bowl, WrestleMania and World Cup. It could ensure the Cowboys maintain the facility at the top.”

But Covington doesn’t see what’s stopping Jones from the kind of innovation and development he’s already accomplished in his decades owning the Cowboys, calling him a “trailblazer” in running his team like a business.

“I think if he wanted to go do some massive development like he did with The Star related to the stadium, he could absolutely seek out partners to do that,” Covington said. “But let’s be clear, he’s already done that.”

Still, even if Jones doesn’t welcome private equity investment in the team, his family could still benefit from the change. If other teams see an increase in value, the Cowboys will follow suit, said Richard Alm, a writer-in-residence for the Bridwell Institute for Economic Freedom at Southern Methodist University.

“I think long term, it’ll just inflate franchise values even more,” he said.

What’s next?

The proposed change in league ownership rules was postponed in May with the determination that a more cautious approach is needed. The next owner’s meeting will take place in October. Another vote will probably happen then, with approval from 24 of 32 owners needed for a policy change to pass.

Because of the potential money at stake for owners, October could mark the start of private equity investment in the NFL, Kishner said.

“As quickly as ownership wants to allow it to happen, it’s going to happen,” he said. “I think professional sports investing at the right underwriting is a very profitable way of running a business. And I think that this is going to be something that should be met with immediate welcome.”

Time will tell how or if Jones and the Cowboys respond. But what’s clear is that the NFL’s next chapter will bring with it lots of success and most importantly, heaps of money.

“I think that the league is on a trajectory that is brilliant. They have the fan experience, there’s demand for their media rights, they’re expanding beyond the U.S., even Taylor Swift is adding something,” Rice’s Potter said. “This is just going to keep them skyrocketing financially.”

Regardless of what position the NFL takes regarding private equity, the Jones family will likely always have a seat at the table.

“I don’t think fans necessarily care who owns the team or who the minority investors are. I think they want their teams to win,” Alm said. “Cowboy fans will still have Jerry Jones to grouse about because he’s going to continue to run this team.”