US sports leagues need to continue increasing team debt limits to help prospective owners due to the sharp rise in valuations, according to O’Melveny Sports partner and co-chair Charles Baker.
In 2018, the NFL Finance Committee recommended a 40-per-cent increase increase in the allowed borrowing limit, from $250m to $350m, ahead of the sale of the Carolina Panthers.
While hedge-fund billionaire David Tepper spent $2.275bn in cash to purchase the Panthers, leading financial experts told today’s Sports Decision Makers Summit that potential investors will need more access to debt just to be able to purchase a minority stake in a team.
“The leagues are looking to loosen the debt restrictions – not many people can write these cheques,” said Baker, whose company helped Tepper purchase the Panthers. “Ten per cent of an NFL team now costs $250m.”
With the likes of Derek Jeter and David Beckham becoming minority owners in pro sports teams in Miami – at the Marlins and Inter Miami respectively – Baker added that former athletes are seen by owners as significant assets to help purchase teams.
He also said the prospect of relegation is “a very scary proposition and a zero-sum game” for potential US investors in football teams in Europe.