The NFL's Owners Want to Let Private Investors Buy Stakes in Teams. Does That Mean You Can Too?

These days, investors can buy stakes in just about anything, from mineral commodities to publicly traded stocks to an NFT bone for your dog. 

But the one entity whose ownership has eluded investors since its founding is also the one whose surging valuation may just rewrite the rules on who can invest in it -- the National Football League (NFL). 

According to a story published by Bloomberg, numerous NFL owners have expressed interest in allowing private equity firms and institutional investors to buy stakes in their teams. This would join the NFL -- whose teams have some of the highest valuations in sports -- with other major professional sports leagues who allow private investors to buy shares in teams, including Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL). 

But the road to passing such a measure is long, and even if it came about, not every investor would be invited to the trading floor. Let's take a look at the NFL's current policy and see who might be eligible to invest in football teams. 

Who owns NFL teams now? 

The NFL has strict requirements for who can own shares of its teams. Unless you have hundreds of millions of cash on hand you're likely ineligible for ownership. 

Prospective buyers and partners must be ready to buy a minimum 30% stake in a team. To put that into perspective, Forbes reported that the NFL team with the lowest valuation is the 2022 Cincinnati Bengals, at $3 billion. To own a stake in the 2022 Bengals, you would have had to put down $900 million in cash. 

For the most expensive team -- the 2022 Dallas Cowboys at $8 billion -- you would have had to pay $2.4 billion to own a portion of the team. 

Things get even more restrictive when we consider where that money can come from. The NFL limits prospective buyers to borrow no more than $1 billion. So, to buy a share in the Dallas Cowboys, you would need at least $1.4 billion in cash, if you were planning to borrow money. 

But the NFL is even more restrictive than this. Private equity investors, public companies, sovereign wealth funds, and ownership groups with more than 25 people are all off the table. The buying group has to be small -- and very, very wealthy. 

For example, the last team to be sold was the Denver Broncos in 2022 for $4.65 billion -- the highest sticker price ever paid for a franchise in the world of sports. There were four buyers: Rob Walton (son of Walmart's founder, Sam Walton), Lewis Halton (Formula One world champion), Condolezza Rice (former U.S. Secretary of State), and Starbucks board chair Mellody Hobson. 

Dropping $4.65 billion on a sports team is one thing. But for many NFL owners, the bigger issue is the return on investment. Like owning a house, NFL owners can't capitalize on rising valuations unless they sell ownership of their teams. But the NFL's rules make it difficult to find buyers, which is why some NFL owners want to rewrite the criteria. 

How could the NFL's rules change?

If Bloomberg is correct in its reporting, then it seems certain NFL owners are interested in dropping the league's strict requirements and allowing more private investors to buy stakes in NFL teams. 

But that doesn't mean every investor can become an NFL owner, at least not in the way you buy stocks in your brokerage account. 

More than likely, the NFL would open the trading floor to private equity firms and institutional investors. These entities are big groups who pool massive amounts of money in order to buy large stakes in extremely expensive assets. 

The good news is that many institutional investors are behind ETFs and mutual funds. That means, if the NFL relaxes its rule, you might be able to passively own an NFL team if a mutual fund or ETF company owns a stake in it.