NFL Seeking More Power To Regulate Ownership Structures
In a bid to compel better team succession planning, the NFL is seeking owners’ approval to dramatically increase penalties for teams that don’t comply with league rules about ownership structures.
The measure, first debated at the Oct. 12-13 league meeting, reflects a growing concern that the league has insufficient power to enforce requirements that a single person have at least 30% equity and autonomy on all team matters.
This debate comes as five longtime controlling owners have passed away in the last three years, in some cases generating difficult legal battles. League insiders expect more teams to transfer to younger generations or new owners in the coming decade. Stricter enforcement of the controlling ownership rules would not necessarily prevent family disputes, but would act as a cudgel to force owners and their families to develop clear plans and address problems promptly.
“The drumbeat has been beating louder and louder, with several older owners looking to pass the torch,” a source familiar with the debate said. “And the league is hoping to clean it all up, and vest a lot of authority and control in the office of the commissioner to handle those estate issues and ensure smooth transitions.”
The resolution would give NFL Commissioner Roger Goodell the power to fine teams up to $5 million at first, and up to $10 million annually, if they remain out of compliance after given a “reasonable opportunity” to fix the problem. Individual owners could be fined $2 million to start and up to $5 million annually. Violators could also be stripped of their committee assignments or even suspended, according to the resolution. Today, possible sanctions are limited to the low six figures.
Ultimately, the resolution was tabled without a vote, but it will likely return at a December meeting. Two sources said they expect it to pass at that point. There were no strong objection in the room during the most recent meeting, just requests for more details
The Saints and Broncos have both struggled with family feuds in the wake of their respective longtime owners’ death, and the Titans were also out of compliance after Bud Adams died in 2013. But the rule changes are not intended to target any single case, sources said.
Succession planning has become far more complex and creative in recent years, experts said, driven by the rapid escalation of team valuations, the resulting estate tax implications, and the sheer size of some multi-generational ownership families. Major tax law changes could further accelerate transfers, and the NFL is concerned that it lacks the ability to deal proactively with possible problems. “I think part of it is, there’s no punishment currently speaking, or it’s at least hard to enforce,” said one source.
The Titans were the last team known to have been fined for non-compliance, in part due to how control and equity was split between controlling Owner Amy Adams Strunk and her family after Bud Adams’ death. In April 2019, Goodell said that the Titans were still not in full compliance, but “clearly there is a lot of movement in a positive direction on that.” At the time, Adams Strunk said: “I can’t speak for Commissioner Goodell, but I think it’s a dead issue.” The Titans and the NFL did not reply to questions asked by SBJ.
Along with the 30% rule, another rule is that if a team is owned by a family trust, the controlling owner must be a family member. The Broncos are currently controlled by a trust formed after the death of Pat Bowlen in 2019, and team President Joe Ellis is the controlling owner. While the league wants a resolution swiftly, the Broncos have secured a waiver to the rule requiring a family member to lead the organization while the legal dispute between Bowlen’s heirs plays out.
Three other teams have seen their controlling owner die since 2018: the Seahawks (Paul Allen), the Cardinals (Bill Bidwill) and the Texans (Bob McNair). In general, the league is reluctant to interfere with teams as long as they are generally running smoothly, and the resolution is designed to maintain that flexibility. The Finance Committee, led by Chiefs CEO & Chair Clark Hunt, would play a major role in advising on possible fines.