Group Created with Sketch.
Volume 20 No. 41
  • Created with Sketch.
  • Created with Sketch.
  • Created with Sketch.

NFL reprises advisory role in Browns sale

The NFL acted as financial adviser to the incoming owner of the Cleveland Browns, the second consecutive team sale in which the league has taken this role, sources said.

Randy Lerner is keeping 30 percent of the Browns.
Jimmy Haslam, a current limited partner of the Pittsburgh Steelers, was directed to the Browns by the league, which guided him through the process, the typical job of a mergers and acquisitions expert.

The league similarly aided Jacksonville Jaguars owner Shahid Khan on his purchase, which closed in January.
The NFL confirmed it introduced Haslam to current Browns owner Randy Lerner, but declined to comment further.

While leagues frequently signal whom they would like to own teams (in MLB, Commissioner Bud Selig has made it such a practice that owners are often called FOBs, or friends of Bud), the NFL is taking the practice much further.

The NFL is involved in structuring the deal, performing financial analysis and other duties of an investment bank. The only area where the league will not get involved is advising on price, which in the Browns’ case is expected to be more than $900 million.

That leads some experts to believe the buyers must quietly have other advisers.

“I am sure those owners still have outside advisers on legal and technical financial matters,” said Andrew Kline, a partner with Park Lane, a sports investment banking boutique firm.

Nevertheless, the most senior executives of the NFL are involved, led by Eric Grubman, a former Goldman Sachs media and sports investment banker who is executive vice president of NFL Ventures and operations. Chief Financial Officer Joe Siclare and Jay Bauman, vice president of legal and business affairs, are also key in the process.

In sports, a crucial part of the financial adviser’s responsibilities is explaining the often very nuanced rules and regulations of leagues and team ownership, so there is likely no entity better suited than the league itself for that function.

Keeping it in-house also prevents leaks. News of the pending Browns sale emerged publicly only at the end of the process, and the completion, subject to league ownership vote, came only days later.

Haslam owns between 10 percent and 20 percent of the Steelers, sources said, a stake he will have to sell to buy the Browns. He is president and CEO of a Tennessee-based operator of travel centers. He has been interested in buying the Tennessee Titans, sources said, but the team, despite some rumors, is not currently for sale.

Lerner is retaining 30 percent of the club, though the plan is for Haslam to buy that stake eventually. Assuming a $900 million sale means Haslam needs to pay $630 million. He can borrow $200 million under league rules, and JPMorgan Chase is arranging a loan, though it could not be determined for how much.

That could brings his cash need down to $430 million (the Browns are not believed to carry much if any debt). He can reduce his cash requirement further by selling equity to limited partners.