SBJ Football: Seahawks sale could test NFL’s private equity cap

Remember, the NFL Referees Association contract doesn’t expire until May 31, and the NFL regular season is still five months away. The strife appears real, but let’s give it the weight it deserves considering how labor negotiations tend to change closer to deadlines.

The powerful NFL finance committee will be watching the Seahawks sale process for any indication they need to relax the league’s 10% cap on private equity investment in teams, chairman and Chiefs owner Clark Hunt said.

“We’ll learn a lot about our private equity policies through that sales process, and I have no doubt that private equity will probably be part of the equation with whoever ends up buying the Seahawks,” Hunt said at the NFL league meetings in Phoenix. “It’ll be very, very helpful to that transaction.”

In the roughly 1.5 years since the league first allowed PE investments in franchises, four teams have sold stakes to a fund: the Dolphins (10%, Ares Capital Management), Chargers (8%, Arctos), Bills (10%, Arctos) and Patriots (8%, Sixth Street). Those controlling owners did not want to sell more than 10%, so the supply-demand question has not really been tested, Hunt said.

“But at some point that will change; perhaps it’s a controlled transaction like the Seahawks,” he said.

The one-off LP stake sales have mostly been efforts in equity financing that didn’t have to happen. But at a sales price that could exceed $9 billion, all but the world’s very richest people will need significant participation from co-investors to afford the Seahawks.

Owners were briefed on the Seahawks auction this week but were told little other than there is strong demand. Timing is one thing to watch, however. Usually, NFL team sales can start and finish in the offseason, and league insiders really don’t want the 2026 season to start with an unsettled franchise-control issue. But because the Seahawks were in the Super Bowl, the process got a late start, and it may take extraordinary efforts to close before the season.

Hunt’s remarks about the Seahawks sale’s policy ramifications will be noted with interest in many corners. But sports finance insiders should have low expectations for changes in the short term. Hunt said the Special Committee on Ownership Policy believes the status quo is appropriate for the time being on the 10% cap, the exclusion of sovereign wealth funds and the expansion of the roster of approved P.E. funds (Ares, Arctos, Sixth Street, and the Carlyle-Dynasty combination).

NFL owners signed off on a series of changes to the league’s internet resolution and related policies that determine what teams can and cannot do in terms of distributing digital content and making money online.

The changes may feel like small-ball in isolation, and they are in the grand scheme of the NFL’s live game rights licensing business. But if you ask any team content strategist or sponsorship sales person, and they’ll tell you the old rules held them back.

“I don’t know that there’s a bunch of home runs in this, but the hope would be that there’s a number of singles and doubles throughout that just make sense and are ways in which we’re opening up more value creation opportunity across the 32 [teams],” said NFL EVP/Media Distribution Hans Schroeder.

Detailed policies will be sent to teams in the coming weeks, but here’s some highlights Schroeder walked me through:

Preseason games: Teams will be able to sell local rights to streamers, as I reported last week. They will also be able to distribute their games to their entire primary/secondary media markets plus another 4% of the country, and for a fee, go up to 10.5%. (Prior rules permitted 1.5% of the non-market territory for free, and then up to 9% for a fee.)

Club social handles: Team social media accounts will now be treated as an extension of the team’s owned-and-operated websites, which means fewer restrictions for sponsored social content.

Highlights: Teams can now use game highlights on TikTok and Threads.

In-game promotions: Teams can now do digital programming during games to encourage a second-screen experience, such as a prediction contest on second-quarter receptions, and sell that to a sponsor, Schroeder said.

Club shows: Teams can produce and sell original content to streamers if it’s not something that would compete with an NFL Films or Skydance Sports initiative at the league level.

If the club does create its own “Hard Knocks”-style documentary, they can only appear on owned-and-operated websites or YouTube, which they can monetize. (This was technically against the old rules, but was already happening, and the league agreed that was OK.)

Chiefs President Mark Donovan, a member of the working group that studied this issue for more than two years, complimented the league’s willingness to hear teams out while still making sure the league’s big-money media partners don’t feel undermined. In some cases, he said, the old rules simply didn’t contemplate a mid-2020s era digital content and marketing operation.

“In general, it’s an understanding that we are a lot more aggressive as business operations and entertainment vehicles, so we wanted more freedom to be able to push the envelope a bit, and they were open to that,” Donovan said. “They do their job, and have to make sure there are boundaries, and they did a good job.”

In American Express, the NFL’s first new payments sponsor in 30 years, the league has found a company that matches its hunger for international expansion. In stark contrast to former category incumbent Visa, AmEx is something of an afterthought globally in the credit and debit business, and it will look to leverage the NFL to grow.

To start, AmEx cardholders will have presale access to every league-run international game, a substantial benefit considering how consistently ticket demand at NFL international games far outstrips supply. Also, said AmEx CMO Elizabeth Rutledge, it will package and promote its existing travel-related perks to drive NFL overseas business.

“We’re going to start to really rev up our focus and ambition with the NFL in terms of those international games and giving our customers sort of access to that,” Rutledge told me.

AmEx’s first NFL activations will come in April at the draft in Pittsburgh (my SBJ colleague Terry Lefton offers a good look at how Visa’s NFL relationship worked), where it will operate a card members’ lounge and priority lanes at for “NFL-operated experiences.” AmEx holders will also be eligible for stints as seat-fillers when people in the TV-visible sections leave, Rutledge said. Also, AmEx will run an activation where fans can personalize a Topps NFL card.

AmEx will also be presenting sponsor of the NFL’s Thanksgiving Weekend, and it will extend its league rights with previously disclosed deals with the Jets, Giants, Falcons and Dolphins, sponsorships that also include those teams’ venues. Adjacent to those team deals, MetLife Stadium, Mercedes Benz Stadium and Hard Rock Stadium all join the roster of American Express Venue collection, which includes full-time priority entrances and concession discounts.

AmEx’s first Super Bowl as NFL sponsor will come at SoFi Stadium, where SoFi enjoys broad financial rights and Square is the exclusive point-of-sale payments provider under normal circumstances. Of course, those sponsorships take a back seat to the NFL’s sponsors for the Super Bowl. Rutledge said she was confident they can develop a fulsome plan there alongside other financial firms, but she declined to elaborate on specifics.

From the NFL’s perspective, one of the most compelling attributes of flag football in most contexts is its low cost and light footprint. With flag, you can introduce American football to middle school girls or a foreign country with a scant whisper of the upfront infrastructure costs you’d need for tackle.

But that’s not the operating ethos you’ll see with the professional flag league announced this week by the NFL and TMRW Sports, set to launch in the coming years. Operators and investors see this as a chance to elevate flag football to a premium experience for spectators and participants by leveraging technology, a blank canvas and capital.

They’ll have $192M with which to start. The NFL and TMRW raised $160M from the blue-chip external investors announced Monday, sources said, to combine with the NFL’s already committed $32M.

The $160M funding round included $15M each from the lead funders: Ariel Investments, Bessemer Venture Partners, Blue Pool Capital, Dynasty Equity, Silver Lake and Sixth Street, sources said, with the other institutional investors and prominent individuals filling out the rest. The N.Y. Times first reported the total size of the round.

They also expect further funding rounds as the business matures and plans develop; demand from investors far outstripped the NFL and TMRW’s goals, sources said.

Officials were non-committal on most details of how the league will go to market, offering no specifics on how many teams would be formed by the single-entity league, venue locations or when exactly play would start.

But one idea on the table, said Peter O’Reilly, NFL EVP/Club Business, International & League Events, is a portable, tech-forward venue.

“One of the things we’re exploring is: Could you build a modular venue that pops up in a location, is a smaller venue, but has the ability to move with the league?” O’Reilly said.

One of TMRW’s key selling points in its bid to become the NFL’s operating partner was the SoFi Center, the custom-built venue for TGL in Palm Beach Gardens, Fla. “That’s a fixed venue, but here’s a lot of really smart work going into the technology there, the creation of that venue and making it intimate,” O’Reilly said.

For instance, O’Reilly posited the idea of sensors in all flags connected to in-venue video boards, so fans would get an instant alert when a defender successfully stops the runner. “It’s about this technology overlay, it takes a sport that hasn’t evolved that much … since gym class flag, and using this as a chance to incubate these ideas,” O’Reilly said.

The brain trust behind the pro flag league acknowledges the speculative nature of their investment, with nobody willing to publicly posit a goal or expectation for live or TV audiences, and by extension, the revenue potential.

“I don’t think we know enough at this point to really gauge how big the crowds are going to be, or what the number of eyeballs will be on TV,” said Chiefs owner and NFL Finance Committee Chairman Clark Hunt. “That’s something we’ll learn.”

The Fanatics Flag Football Classic on March 21 drew 650,000 viewers on Fox, but data suggested wider reach on social media. The flag version of the Pro Bowl drew 1.9 million viewers in February.

Hunt said he’s confident the league will be good for the NFL “long term” by providing another platform for women in the sport and converting flag participants into core NFL fans. But it’s not viewed as merely a marketing/sport development expense.

“There’s a business plan and it’s being refined,” he said. “There’s an economic rationale for our investment, as well as the investment with other partners in the sport. So we do believe it has a positive ROI beyond just growing the fan base.”

That uncertain economic future is unusual territory for the NFL, but that’s why the league needed risk-tolerant investment firms involved, said 49ers owner Jed York.

“There’s definitely high upside, but any startup league is going to be difficult, and you have to make sure you’ve got the right investors for those types of things,” York said. For instance, 62% of Bessemer’s portfolio companies were pre-revenue when they first invested, according to the fund’s website. Bessemer partner Byron Deeter is a limited partner in the 49ers.

“You need people with a venture style mindset who can help build and grow a league. Capital’s not capital,” York said. “VCs understand the nature of growth, the nature of the risk I’m taking here, and a startup league is venture capital, and you need those types of people who will invest in it. If you have the right investors, and product I think is a pretty cool product, I think you have a good chance of success.”

The broad cap table spreads the risk too, sources noted, allowing a wide range of firms the prestige and strategic upside of working with the NFL without overindexing on the unproven commercial potential of flag.

The other institutional investors include: 776/Alexis Ohanian, APEX Capital, Arctos Partners, Bolt Ventures, Next Legacy Partners, Trenches Capital and Trybe Ventures. Individuals investing are: Pro Football HOFers Peyton Manning, Joe Montana, Steve Young and Larry Fitzgerald, former NFLers Tom Brady, Eli Manning, Justin Tuck, Ryan Nece and Dhani Jones, and current players Arik Armstead, Bobby Wagner, and Russell Wilson. From outside football, Billie Jean King, Ilana Kloss, Alex Morgan and Serena Williams have invested.

The NFL is without an official sportsbook sponsor for the first time since putting the category out for bid in 2021.

The final league option on deals with FanDuel, DraftKings and Caesars expired at midnight with none of them renewing, a surprising turn considering the estimated $30B in betting volume the NFL generated last season. Negotiations are ongoing, NFL EVP Renie Anderson said at league meetings Tuesday.

The sticking point for FanDuel and DraftKings, sources familiar with the negotiations said, stemmed from an increase in the price of official streaming data from Genius, the NFL’s exclusive distributor. Without a deal for official data, sportsbooks are ineligible to sponsor the league or its teams or advertise during games.

The NFL is Genius’ largest shareholder, with a stake of nearly 9%. In June, it renewed Genius as its exclusive official data distributor through the 2029 season. The NFL and Genius declined comment on the impact of data prices on sponsor negotiations.

Caesars was unlikely to return regardless of the data rates, at least under the structure of the previous deal, which bundled rights to promote both online and retail sports betting and included substantial committed advertising spends. Since dialing back an initially robust national ad campaign in 2022, Caesars CEO Tom Reeg has told analysts to expect those expenses to roll off the books as deals expired.

An NFL spokesman said the league is open to “various league partnership structures.”

Caesars had a casino sponsorship deal before signing on in the newly created sportsbook category in 2021, promoting extensively around Super Bowl LVIII in Las Vegas. The league announced this week that it plans to return the game to Vegas in 2029.

The NFL is now shopping the category in a dramatically different climate than the one it encountered in 2021. Along with a herd of suitors thinned by consolidation and cutbacks, leagues must consider the impact of the recent emergence of prediction market operators such as Kalshi and Polymarket, flush with cash and eager for broader acceptance.

Facing a stack of lawsuits from state regulators and attorneys general, those also face an uncertain future unlikely to be resolved before the start of the next NFL season.

“Five years ago, all the leverage was sitting with the leagues and the media companies, because there were so many operators active with deep pockets and high, oversized share prices,” said Eric Foote of sports betting consultancy VIG Partners, a former PointsBet executive who struck deals with the NFL and NBC. “They knew the money was there. Spin it forward five years, and share prices have tanked, there aren’t as many operators, most states are live that are going to be live and most markets are mature. Supply-demand has completely flipped. So who is in the driver’s seat? It’s the operators. It’s not the NFL.”

The rise of prediction markets inevitably will muddy the waters. Kalshi and Polymarket have signed NHL sponsorships. Polymarket recently signed an exclusive deal with MLB. FanDuel and DraftKings have their own prediction market offerings.

“[Sports betting] definitely is a softer market, but the NFL will do what it has always done -- sit back and wait,” said Jason Miller, EVP/Commercial Revenue and Head of Properties at Excel Sports Management. “And generally, they win.”

Staff writer Terry Lefton contributed to this report.

• NFL Commissioner Roger Goodell said Tuesday the league’s Rooney Rule requiring teams to interview minorities for vacant coaching and executive positions will continue despite legal pressure from Florida.
• Fanatics and the Bills struck a deal allowing the sports merchandise giant to operate e-commerce globally for the team, replacing Legends. It’s Fanatics’ 29th NFL team deal.
• NFL owners on Tuesday approved a deal giving Silver Lake co-CEO and Managing Partner Egon Durban the right of first refusal on a controlling stake of the Las Vegas Raiders if owner Mark Davis ever sells.
• NFL owners voted to award the 2029 Super Bowl to Las Vegas, which will be the second time in five years the city has hosted the game after being off the radar for decades before sports gambling was legalized.
• The NFL hired Claudia Teran, a former in-house lawyer for Snap and the Fox Corp., as its new deputy general counsel and SVP.
• A number of NFL Network employees are now under the ESPN umbrella, with a host of promotions and other executive movement in the ranks, notes SBJ’s Austin Karp.
• Topps returned to the NFL memorabilia market as the exclusive trading card licensee of the league and the players union after a 10-year absence, reports SBJ’s Na’Andre Emerson.