Key Takeaways
- • The NFL is launching a new investment fund with private equity firm General Atlantic, which would give league owners a revenue stream that sits outside the CBA's revenue-sharing requirements, according to Joe Pompliano's Huddle Up newsletter.
- • The NFL's existing investment vehicle, 32 Equity, was launched in 2013 with $32 million ($1 million per owner) and has grown to $256 million in total capital after owners added $2 million each in 2018 and $5 million each in 2022, equal to $8 million per owner.
- • General Atlantic, with $130 billion in assets under management, would supply capital and operational resources that the NFL lacks for institutional-scale investing.
- • Portfolio examples cited include Fanatics, where the NFL invested $95 million for a 3% stake in 2017 at a $3.17 billion valuation, and On Location, which Endeavor acquired in 2020 at a $660 million valuation.
- • The arrangement lets the NFL earn 2-and-20 style economics on managed capital, and the CBA excludes 32 Equity investments from the roughly 50/50 revenue split with players.
Summary
The NFL is launching a new investment fund with General Atlantic, a move that Pompliano describes as a way for league owners to generate potentially hundreds of millions of dollars in long-term profits that do not have to be shared with players under the collective bargaining agreement. The vehicle builds on 32 Equity, an investment fund the NFL launched in 2013 with $1 million from each owner, totaling $32 million. Owners later raised the fund's capital, adding $2 million each in 2018 and $5 million each in 2022, bringing total invested capital to $256 million, or $8 million per owner.
32 Equity's model is to invest in businesses across sports, content and fan experiences, using the league's platform to give those companies advantages such as access, data and sponsorship placement. The NFL can then capture upside through a sale, merger or other liquidity event. Pompliano cites several examples: the NFL invested $95 million for a 3% stake in Fanatics in 2017, when the company was valued at $3.17 billion, and that stake has since grown in value to more than $30 billion. The league also invested roughly $90 million to increase its stake in On Location, a hospitality business whose revenue grew from $20 million to $600 million after private equity partners came in during 2015. Endeavor acquired a majority stake in 2020 at a $660 million valuation, and SEC filings indicate the NFL received about $250 million in cash and Endeavor equity. Additional investments include CLEAR, Hyperice (a $47.8 million Series A at a $700 million valuation), and NOBULL, along with operational partnerships with Genius Sports, EverPass and Appetize, which sold for $415 million.
Pompliano argues that the NFL is handing off the operational burden to General Atlantic, which manages $130 billion in assets and can contribute significant capital and handle investment sourcing, due diligence and legal work. He notes the economics of a general partner: a 2% annual management fee and 20% carried interest. In a hypothetical scenario in which General Atlantic invests $320 million and the fund doubles, the NFL would receive $64 million in carry and $6.4 million in annual management fees, though he expects the terms to be split and possibly more favorable to the NFL. The final point is that the CBA excludes 32 Equity investments from the revenue sharing applied to media rights, tickets, concessions, sponsorships and licensing, which are split roughly 50/50 between the league and players.
32 Equity's model is to invest in businesses across sports, content and fan experiences, using the league's platform to give those companies advantages such as access, data and sponsorship placement. The NFL can then capture upside through a sale, merger or other liquidity event. Pompliano cites several examples: the NFL invested $95 million for a 3% stake in Fanatics in 2017, when the company was valued at $3.17 billion, and that stake has since grown in value to more than $30 billion. The league also invested roughly $90 million to increase its stake in On Location, a hospitality business whose revenue grew from $20 million to $600 million after private equity partners came in during 2015. Endeavor acquired a majority stake in 2020 at a $660 million valuation, and SEC filings indicate the NFL received about $250 million in cash and Endeavor equity. Additional investments include CLEAR, Hyperice (a $47.8 million Series A at a $700 million valuation), and NOBULL, along with operational partnerships with Genius Sports, EverPass and Appetize, which sold for $415 million.
Pompliano argues that the NFL is handing off the operational burden to General Atlantic, which manages $130 billion in assets and can contribute significant capital and handle investment sourcing, due diligence and legal work. He notes the economics of a general partner: a 2% annual management fee and 20% carried interest. In a hypothetical scenario in which General Atlantic invests $320 million and the fund doubles, the NFL would receive $64 million in carry and $6.4 million in annual management fees, though he expects the terms to be split and possibly more favorable to the NFL. The final point is that the CBA excludes 32 Equity investments from the revenue sharing applied to media rights, tickets, concessions, sponsorships and licensing, which are split roughly 50/50 between the league and players.
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