Pablo Torre Finds Out — The Sporting Class: Why NFL Owners Want Private Equity Cash
August 29, 2024 | Host: Pablo Torre
Guests: John Skipper, David Samson

Episode Overview

In this episode, Pablo Torre hosts sports business insiders John Skipper (former ESPN President) and David Samson (former MLB team president) for a no-holds-barred deep dive into the NFL’s newly approved policy allowing private equity firms to purchase up to 10% minority stakes in franchises. The trio unpack the financial, social, and structural implications for the league, compare it to other sports leagues, and examine a shifting sports-media landscape. Along the way, they riff on club ownership, valuations, the National Women's Soccer League's business direction, and the turbulent fate of the Venue streaming bundle.

Key Discussion Points & Insights

1. The Meaning Behind "The Sporting Class" (00:31–02:32)

• The segment kicks off with banter about the show's name — a double entendre referencing both elite "show dog" competitions and a "class" on sports business economics, underscoring the elitist, exclusive nature of pro sports ownership.
  • John Skipper jokes about his personal love for beagles, using them as a metaphor for exclusive club membership.

2. NFL Private Equity: Why Now? (02:37–10:45)

• Context: The NFL just voted to allow private equity firms to collectively purchase up to 10% of a franchise’s equity, though owners must retain majority stakes.

  • David Samson: "Private equity money is very important as a source of capital. When you’re out of individuals [billionaires], you go to capital markets … or private equity firms who want a higher rate of return" (03:25).
  • John Skipper: Owners realize that “most of the benefits of owning a team don’t require you to own more than 50.1% … Why put in $6 billion when you can put in $3.1 billion, get all the benefits, and let someone else take the upside risk?” (05:40).

• Why the Move Now?

  • Fewer individuals can afford single-owner stakes as team valuations soar (Cowboys now worth over $10B).
  • Other leagues (NBA, MLB, NHL) have already allowed PE investment (up to 30% ownership in some cases); the NFL is "last to market" but wants to ensure it maintains exclusivity.

• On the Rising Value of Teams:

  • NFL team values grew 710% in 20 years versus 660% for the S&P 500 (08:44).
  • John Skipper: "For almost any ordinary human being, the best way to invest your money is to put it in the S&P 500 … but pro sports ownership is about the trophy, exclusivity, and fun."

3. Private Equity vs. "Cocktail Party Investors" (07:48–12:02)

• Samson explains that earlier, minority owners ("CPI: Cocktail Party Investors") bought tiny stakes for bragging rights; now only the ultra-rich can buy in.
  • "I own the Marlins! Oh, I’ve never heard of you. Yeah, I put in $250,000 just to say I’m an owner.” (08:09)
  • With team valuations soaring, even the super-wealthy are priced out; PE is the new solution.

4. Sports Valuation Demystified (12:02–13:34)

• Skipper calls valuation “no more complicated than real estate: a building is worth whatever somebody will pay for it.”
  • Scarcity (only 32 teams), prestige, and expected future returns keep prices high.
  • Examples: Dallas Cowboys and new team valuations; “You get all the fun and the benefit of being an owner … it wouldn’t have been as public [or] as exciting if you just bought index funds.” (13:34)

5. Private Equity’s Real Motives & the NFL’s Leverage (14:16–16:33)

• Private equity doesn’t want the perks, just returns.
  • “They want returns. It’s quite simple.” — John Skipper (16:13)
  • Unlike other types of PE involvement (like activist investors in public companies), here there’s “no input control”—just money in, money out.
  • Contrast with college sports: “PE in colleges makes no sense to me. … How do they expect to get a return from an athletic department?” — Skipper (17:57)

6. The "Carried Interest" Kicker (19:41–21:37)

• What’s new and shocking: The NFL is demanding a cut of the PE firm’s profits—something unprecedented.
  • Samson: "It’s socialization in a way that mind boggles me … When PE firms monetize … the NFL wants a piece of that profit. … It’s a little off the top. It’s so good. Screw them." (21:11)
  • Skipper: “The NFL believes, correctly, they have the most leverage … they feel very comfortable exerting that leverage.” (21:37)

7. Sidebar: NWSL’s European Model Pivot (22:01–30:21)

• Big Changes: The National Women’s Soccer League abolishes its draft and institutes full free agency, giving players unprecedented control (no trades without consent, etc.).

  • John Skipper: “They’re clearly trying to create a bit of a splash, saying, we’re doing things different. This will create some advantages and disadvantages.” (25:32)
  • Raises question: Is this “player empowerment” to make up for comparatively low pay and recent scandals, or does it risk creating super-teams and killing parity?

• Financial Growing Pains

  • New TV deal (four years, $240M) splits to $4M/year/team, nearly matching the league’s new salary cap—a business model without parallel in other pro sports.
    • “Can you imagine a world where your media deal … is equal to your salary cap?” — Samson (30:39)

8. Venue Streaming Bundle Lawsuit (33:57–41:58)

• Big legal news: A judge blocks the launch of Venue, Disney/Fox/Warner’s joint streaming venture, following an antitrust suit from FuboTV.
  • Analysis:
    • Injunction not a full ruling, but suggests damage could be “irreparable” to competitors.
    • “This lawsuit … is the end of the joint venture. I don’t believe Venue will ever launch.” — Samson (40:30)
    • The move to direct-to-consumer (DTC) ESPN is “imperative” due to rapid cable decline (42:42).
    • “Broadcast networks have a more robust future than was thought … Fox bet on broadcast and they were right.” — Skipper (43:53)

9. Confirmation: NFL Owners Approve PE Investment (44:35–48:07)

• During taping, news breaks: NFL owners have formalized rules, with major firms (Arctos, Ares, 6th Street, Blackstone, CVC, Dynasty Equity) approved for up to 10% stakes.

  • Samson: “These are people who’ve already negotiated the NFL’s demand for a piece of carried interest.”
  • Skipper: “It’s no feat of forecasting to suggest that NFL owners will not approve something that puts money in their pockets.”
  • Min. committed fund capital: $2B; max 20% invested per club.

• Ripple effects?

  • Will other leagues try to renegotiate PE terms to emulate the NFL’s carve-out?
  • Samson predicts MLB (and others) may want a piece, but doubts valuations will justify it.

Notable Quotes & Memorable Moments

• On why PE is entering the NFL now:
  "There aren’t enough super, super, super rich people to keep pace with the idea of a single owner of a super, super, super rich asset." — Pablo Torre (05:24)

• On owner psychology:
  "They own teams because they're the greatest trophies you can have to display your importance and your wealth—and because it’s fun." — John Skipper (06:25)

• On the NFL’s new ‘tax’ on private equity:
  "It’s socialization in a way that mind boggles me … they want a little off the top." — David Samson (21:11)

• On the precariousness of media-driven ventures:
  “This lawsuit, this is the end of the joint venture. Warner will walk away as they wanted to … I don’t believe Venue will ever launch.” — David Samson (40:30)

• On DTC streaming and media future:
  “The cable television decline is rapid enough now that [Disney] have to go [DTC] … they can’t afford not to.” — John Skipper (42:42)

Timestamps for Major Segments

• 00:31 – Origin of “The Sporting Class”; banter on dogs & club exclusivity
• 02:37 – NFL ownership rules change: why allow PE now?
• 05:24 – Bottleneck of billionaire owners; trophy value of teams
• 07:48 – From “cocktail party investors” to private equity
• 12:02 – Explaining team valuation inflation
• 14:16 – What private equity wants (cash, not control)
• 19:41 – The NFL’s unprecedented ‘carried interest’ demand from PE
• 22:01 – NWSL’s new model: no draft, full free agency, Euro parallels
• 33:57 – Venue bundle’s antitrust injunction and streaming market wars
• 44:35 – Live reaction: NFL officially approves PE investment
• 46:50 – Broader sports landscape: will other leagues follow?

Tone & Atmosphere

Breezy, irreverent, and brimming with insider snark, the conversation mixes genuine financial analysis with back-and-forth jabs, asides, and pop culture references (from “rich guy OnlyFans” to “Pretty Woman” mergers and Steve Ballmer fandom).

Final Takeaways

• The NFL opened the gates to private equity in a way that cements its image as the world’s most powerful sports league—and found a way to “tax” even its largest new investors.
• The move is likely to push valuations even higher, though whether other leagues can follow suit is in doubt.
• Concurrent financial news in women’s sports, streaming, and media tie the themes together: leagues and content providers are innovating (sometimes desperately) to stay relevant and solvent in a world of skyrocketing costs and cord-cutting.
• For now, ownership remains the ultimate trophy—just one with a higher sticker price and more institutional investors in the background.

For hardcore deal-watchers, the appendix to the new NFL private equity policy is available, with requirements such as a $2B minimum fund size and a max 20% per team investment.