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Volume 22 No. 35
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Banks pitch ways to make buying NFL teams easier

The NFL invited three investment banks and a law firm to league headquarters in recent months to present ideas of possible changes to ownership rules in the wake of the sale of the Carolina Panthers. The surging prices for NFL and other sports teams has limited the pool of prospective buyers, pressuring the NFL’s conservative restrictions.

Eliminating one major rule — the cross-ownership prohibition that prevents owners of big four sports teams in NFL markets from buying an NFL team outside their city — is scheduled to come to a vote this week at the fall owners meeting in New York. 

But that could be just the first domino to fall. Sharply increasing debt limits, allowing limited partners to finance, and increasing the number of limited partners an ownership group can have are all suggestions the outside advisers brought to the league.

“The finance committee has been reviewing a number of ownership policies that are not specifically related or limited to the Panthers sale,” a league source said. “League staff has been doing research, which included talking to industry experts.”

This source disputed that the current process rose out of dissatisfaction with the Panthers sale. In a deal that closed in July, David Tepper bought the team for an NFL-record price of $2.275 billion, though that was lower than the $3 billion figure that had been bandied about when the team went on the market in January.

There had been two other, higher bids for the Panthers, but they were viewed skeptically because of liquidity concerns with those prospective buyers.

Investment banks that met with the league were PJT Partners, Inner Circle Sports and Allen & Co., the Panthers’ sell adviser. The league also spoke with Proskauer, a top sports law firm.

The NFL has long had restrictive ownership rules, but under former Executive Vice President Eric Grubman, the league laboriously screened prospective buyers long before teams came on the market. That way yellow and red flags were known well before a sale process unfolded.

That research was not used in the Panthers case, sources said, in part because of a falling out between then-Carolina owner Jerry Richardson and Grubman. Grubman handled the Los Angeles relocation process, and Richardson believed the outcome there should have left the Rams in St. Louis. Instead, the Rams won the right to relocate to their former home in 2016, with an option given to the San Diego Chargers, who relocated to L.A. a year later.

With Grubman, a former partner at Goldman Sachs, having departed the league last summer, it’s unclear whether there is a push to have the NFL continue to handle quasi-investment banking chores in-house. Grubman, now chairman of On Location Experiences, declined to comment, as did the NFL.

The cross-ownership rule has been around since the 1960s. Conversely, an MLB, NBA and NHL team owner in an NFL market cannot buy an NFL team outside of that market.

The logic behind the rule was to ensure NFL owners did not compete against each other locally. But that sentiment appears ready to fall as rapidly rising valuations cull the number of potential buyers.

Another step the league can take to make buying a team easier is to allow more borrowing. Currently, teams are capped at $350 million, a very conservative loan-to-value ratio. The league also could relax the limit just for the purpose of team purchases.