Painterly illustration of a dark boardroom table with a ring of keys at its head, a night stadium silhouette through the window, lit in violet.
MarketsNewsSports

NFL Owners Approve a General Atlantic Fund That Pays Them Carry Outside the Players’ Split

Aaron Harme

At their fall meeting in New York on Tuesday, NFL owners approved a partnership between 32 Equity, the league’s investment arm, and General Atlantic, a growth investor that manages about $130 billion, to back companies across the sports industry, General Atlantic announced. The NFL will be the general partner in the new vehicle, and both sides will put in money and raise more from outside investors, an NFL representative told Sportico. The league wouldn’t give a target size, and terms weren’t disclosed.

A general partner runs a fund on other people’s money and usually keeps a cut of the profits on it, called carry, on top of the return on its own stake. Sportico reports that carry doesn’t exist in the NFL’s $22 billion-plus business today. Profits from 32 Equity are already divided among the 32 owners outside the revenue they share with players under the salary cap.

The new vehicle is aimed at sports media, fan engagement, ticketing, hospitality, consumer products and the technology around them, a source familiar with the deal told Sports Business Journal. 32 Equity started in 2013 with $1 million from each team. Owners added $64 million in 2019 and $160 million in 2022, for $256 million committed, and SBJ, citing PitchBook, counts 42 companies in the portfolio, including Fanatics, the ID-verification company Clear and a new pro flag football league. Its exits include Appetize, a point-of-sale software company sold for $450 million in 2021, and Skillz, which went public in 2020.

The same meeting picked the ticket partners

On Wednesday, the meeting’s second day, owners kept Ticketmaster as the league’s top ticket-resale partner under a new tiered model, SBJ reported. Every NFL-authorized resale site will get full access to all 32 teams’ season-ticket resale inventory, and SeatGeek has agreed in principle to join at a lower “gold” tier, according to SBJ’s sources. Teams can’t sign their own deals for first-hand ticket sales with a company that sits outside the league’s system. “We’ve created more value through less exclusivity,” said Bobby Gallo, the NFL’s senior vice president of club business development, who expects the new package to substantially increase the league’s fee revenue over the expiring deal.

On Location and the Super Bowl tickets

The NFL founded On Location in 2015, and its core asset is a block of Super Bowl tickets the league licenses to it for luxury hospitality packages. When Endeavor bought control in 2020 for about $660 million, the league held on to a 13.5% stake plus an option to go to 32% at the 2020 price. It exercised that option for about $89.3 million in 2022 and swapped the stake for Endeavor shares, SBJ reported at the time, noting that because the NFL still controlled the Super Bowl tickets, it “was able to use that leverage to negotiate the option.” On Location is the league’s official hospitality provider through 2036, under an extension announced in 2024.

Some owners had pushed the league to invest more aggressively, SBJ reports, and General Atlantic’s money and deal team give them that. What outside investors buy into, though, is a league that hands out Super Bowl tickets, resale inventory and official status in the same categories the fund is shopping. The NFL now collects on that position twice, once on its stake and again as the manager, and the carry from it goes to 32 owners without passing through the revenue split with the players whose games make those companies worth owning.

Sources

Discover more from Bitter Fool

Subscribe to get the latest posts sent to your email.

Leave a Reply

Your email address will not be published. Required fields are marked *