In a move that has largely gone unnoticed, the NFL has adopted a new rule allowing limited private equity investment in teams, marking a potential shift in the league's financial landscape. The decision, made on the same day rosters were reduced to 53 players for the 2024 season, aims to address the longstanding issue of maximizing the value of NFL franchises and potentially paves the way for institutional or corporate ownership.

Under the new rule, private equity funds can purchase non-voting shares of NFL franchises, with a maximum ownership limit set at 10 percent. Until now, most teams had a group of minority owners who held a smaller equity stake that didn't grant control over the franchise. This development raises the question of whether the league will eventually allow institutional or corporate majority ownership of teams beyond the Green Bay Packers, the only publicly-owned team in the NFL.

While this initial allowance may seem inconsequential, it could serve as a gateway for further changes in the future. The NFL's Commissioner, Roger Goodell, has hinted at the possibility of increasing the ownership limit over time, indicating a potential shift away from the current model of wealthy individuals buying teams.

The primary motivation behind this rule change stems from the scarcity of extremely wealthy individuals willing to settle for a minority stake with no decision-making power. Private equity funds, on the other hand, specialize in injecting substantial capital into businesses to generate substantial returns. By providing an avenue for these funds to invest, the NFL aims to make it easier to sell minority stakes and increase their overall value.

The long-term implications of this new era of institutional investment remain uncertain. Whether a shift towards institutional or corporate ownership would be beneficial or detrimental to the league hinges on the quality of management and the institutions or corporations that ultimately take control of the teams. However, the desire to boost franchise valuations might tempt the NFL to embrace further institutional ownership.

The league's move to embrace institutional money has already begun, with the approval of several private equity funds to purchase shares in multiple teams. Arctos Partners, Ares Management Corp., Sixth Street, and a combined group consisting of Blackstone, Carlyle, CVC, Dynasty Equity, and Ludis (founded by Hall of Fame running back Curtis Martin) have all been given the green light.

Each fund can now own up to 10 percent of a team, and potentially hold stakes in up to six teams, leading to the possibility of one fund amassing the equivalent of 60 percent ownership in a single team. This progression could serve as a key argument for further liberalization of ownership, potentially transforming teams that currently operate like family-owned ventures into entities driven by institutional or corporate interests.

Despite the significant step taken by the NFL, the Cincinnati Bengals voiced their dissent as Katie Blackburn, daughter of team owner Mike Brown, cast the sole opposing vote. The Bengals' constant resistance to financial infrastructure modernization further highlights the division within the league regarding the future of ownership.

As the league enters this new age of institutional money, it remains to be seen how this venture into private equity investment will shape the NFL's landscape in the long run. The potential for increased valuation growth, coupled with the changing dynamics of ownership, may pave the way for a new era in professional football.