NFL owners have voted to raise the league’s debt limit in a move that could make it easier for new buyers to finance billion-dollar team acquisitions.
During meetings in New York City this week, the league raised the cap on debt existing owners can have against a team from $600 million to $700 million. That will also increase the amount of debt allowed for new buyers from $1.1 billion to $1.2 billion.
That new buyer limit was a central part of the back-and-forth during the recent $6.05 billion purchase of the Washington Commanders. The group led by Josh Harris reportedly offered an original proposal that included $1.1 billion of secured debt (the limit allowed) and then $1 billion of additional unsecured debt that the NFL pushed back on. While it was eventually removed from the final deal, the process left many owners wondering what might happen with the next team that hits the market.
Facing these challenges, the NFL recently created a new committee, which includes team owners like the Cleveland Browns’ Jimmy Haslam and Atlanta Falcons’ Arthur Blank, to evaluate its ownership policies.
The average NFL franchise is now worth $5.14 billion, according to Sportico’s valuations. As those numbers rise, the league has over time raised the debt limit to assist owners in financing operations and other capital expenditure projects.
In March 2015, owners raised the limit to $250 million from $200 million, and three years later it rose to $350 million. In May 2020, as the COVID pandemic threatened revenue streams, the limit was raised again to $500 million. The next year, owners introduced an extra $500 million for new buyers. The debt limit was most recently raised last October, to $600 million from $500 million.
Debt restrictions are among a handful of NFL rules that could eventually be loosened to boost club valuations and facilitate easier acquisitions. Other rules likely under evaluation include the cap on the number of minority owners in a group, the league’s prohibition of institutional investors and its requirement that new control owners hold 30% of the team. Commissioner Roger Goodell said Wednesday that the league will consider more potential ownership rule changes, including institutional investment, at the league meeting in March.
With assistance from Kurt Badenhausen.
