NFL owners voted Tuesday to lower the minimum percentage of a team that a longstanding owner must control from 5 percent to 1 percent, a nod to skyrocketing franchise valuations and the difficulty that trend places on keeping teams in families. And in particular, teams whose core holdings are the team itself.
The new rule only applies to teams that have been owned by the same owner for at least 10 years, and those clubs must have a total of 30 percent of the franchise controlled by members of the owning family. New owners would still have to own individually at least 30 percent from the start.
“It’s a recognition of the value of these franchises. When we set the vote at 5 percent, the value of a franchise was a lot different than it is today,” said Art Rooney II, the Steelers owner and member of the finance committee. “It is just a recognition that to get the 5 percent today takes a lot more equity.”
Asked, given the runup in valuations, would the league drop the 30 percent rule, which other leagues don’t have? Rooney said no.
“It goes back to how we have wanted ownership to have meaningful (equity),” he said. “You have got to have skin in the game.”
Since the son of the late Jack Kent Cooke was unable to buy the Washington Commanders in 1999 because of price, the NFL has worked for ways to keep the teams in family hands. But with the Broncos possibly ready to sell for $5 billion, more than double the last team sale — the Panthers in 2018 for $2.275 billion — it is increasingly difficult for teams to pass from one generation to the next given the steep estate tax shadow.
Until the late 1980s, the NFL required the lead owner to have 51 percent of the club at a time when teams were worth tens of millions of dollars. By the end of the ‘80s, as prices crept up, the league dropped the minimum to 30 percent.
The league made its first move to accommodate tenured ownership families in 2004 by dropping the figure to 20 percent for the lead owner, with the remaining members owning at least 10 percent. In 2009, the Rooney family struggled to hold on to the Steelers after the league forced some members to divest because they owned racing tracks.
The league dropped that 20 percent threshold to 5 percent in 2015. At that time, the league also allowed ownership through irrevocable trusts, an estate planning vehicle that limits taxes after a death.
Now, the percentage goes down again to 1 percent.
Frank Hawkins, a former NFL finance executive, believes the recent drop is aimed, for now, at two teams: the Giants and Bears, clubs controlled by families with many siblings and looming estate-planning issues.
“Considering that it’s only for long-standing ownership families, I think that it relates to the need to give them (the Giants and Bears) structures that they’re going to be able to make work if they want to stay in the league,” he said.
The Bears are owned by Virginia McCaskey, 99, and have a board of eight, five of whom are McCaskeys. The Giants are controlled by the Mara family, which also has multiple members involved with the team (the Tisch family owns half the team, but the Maras have voting rights).
“This was driven probably by the need to do something to permit the Giants to put in place a stable ownership structure for the next generation,” he said. He stressed he was only speculating on the pressures that led to the latest changes to the NFL’s ownership rules.
Asked what teams this might benefit, Rooney declined to answer.
The trend though is clear, Hawkins said: The NFL wants to help its family owners who might need a boost.
“And they’ll keep doing a lot revolving around that sort of core principle that if an existing owner wants to stay in, he’ll be able to do so; his family will be able to do so,” Hawkins explained.
No comments yet
Sign In / Sign Up