NFL owners are considering a way to make it easier for prospective buyers to afford entry into their exclusive club.
The league is exploring allowing buyers to exceed debt limits, as well as allowing more debt for buyers of limited partnership interests, according to Kansas City Chiefs owner Clark Hunt, the new chairman of the finance committee. Commissioner Roger Goodell installed Hunt as chairman earlier this year after the passing of Houston Texans owner Bob McNair last fall, and last week’s league meeting in Scottsdale, Ariz., was Hunt’s first in the highly influential role.
The league limits teams to $350 million of debt, a conservative sum given the high valuations and cash flows of the 32 franchises. That cap proved burdensome in last year’s sale of the Carolina Panthers, which were bought by David Tepper for $2.275 billion. While a record price, it was still lower than had been expected, and there is a growing concern within the league that as prices soar, few people have the resources to afford so much equity. Thus, the move would allow buyers to assume more debt and chip away at equity.
“Here in the short run we are looking at a lot of issues related to the sale of a franchise or the sale of LP units,” Hunt said, “and how we facilitate that, and certainly allowing an acquirer to take on additional debt as part of the transaction is something we are talking about. By the same token we are looking at mechanisms that might make it easier to sell an LP interest, again involving the debt.”
Mary Ann Turcke, Renie Anderson and Tim Ellis spoke at the meetings in another sign of the NFL’s new communications strategy.ap images
With prices so high, there’s a big market for limited partnerships because they are easier to afford than purchasing an entire team. Last week NFL owners approved a deal in which the Falcons’ Arthur Blank sold a roughly 10 percent stake in his team, worth about $300 million, to a group that includes two existing limited partners and new limited partner Alan Kestenbaum.
Hunt, whose family has owned the Chiefs since their founding as the AFL’s Dallas Texans in 1960, was not optimistic that changes would come soon because of the numerous issues at play. For example, would the extra debt be set as a total amount over $350 million, or as a percentage of the overall purchase price?
“The guiding principle is that we want to ensure that every franchise remains financially healthy, does not get into a position where you are over-leveraged,” he said. “At the same token we are trying to balance this desire to make it easier for franchises to change hands.”
■ ■ ■ ■
The Chiefs reported an 18 percent rise in season-ticket sales coming off their AFC Championship game appearance. Mark Donovan, team president, said season tickets are now in the high 50,000 range. The Chiefs are also reducing capacity at Arrowhead Stadium by a few thousand. The team is spending up to $8 million to fix the concrete floor on the upper deck, part of which includes putting in wider seats that will result in the drop in capacity. Each seat will now have a cup holder, which Donovan said was one of the top requests by fans in the upper decks.
■ ■ ■ ■
It’s no secret that the NFL is seeking to expand the number of digital platforms on which games are available. The latest move is a plan to allow teams to stream their games on team mobile sites and apps, said Hans Schroeder, NFL Media COO. Fans can already stream their local games on the NFL mobile app and through Yahoo. “It’s about how you reach people,” Schroeder said.
■ ■ ■ ■
The league has identified China as a priority market, but that doesn’t mean the NFL wants to play a regular-season game there, despite a recent report. “That’s not our focus,” Goodell told SBJ. Instead, the league is negotiating with investors to launch a four-team league in that country. “That has an opportunity of going forward,” said Hunt, a member of the international committee. “It is impractical for us to play a game there or several games there like we do in London. Having a Chinese-based league that would have primarily Chinese players would do a lot to build the sport in the country.”
The league might approve such a league by next year with launch in 2021 or 2022.
■ ■ ■ ■
For the second consecutive meeting, the NFL communications staff offered periodic executive briefings to the media to update on news and information from behind the closed doors of the meetings. Renie Anderson, recently promoted to executive vice president and chief revenue officer, CMO Tim Ellis and COO Maryann Turcke talked to the media to announce the news that New Era Cap is replacing Under Armour as the official apparel brand of the combine.
■ ■ ■ ■
Pete Abitante, special assistant to the commissioner and vice president of special projects, got rare a moment to shine when he briefed reporters on his work developing the NFL’s 100th season campaign. A neat element features the league going back to eight of its original markets, like Dayton, Ohio, to host events this year. Abitante confessed that the idea came from a former player who called him and asked if Dayton, which was home to the Triangles in the league’s earliest years, would be involved. Look for 100th season elements throughout the season, including at the Bears’ opening in Chicago as the team kicks off its own centennial.
