One of the big changes Josh Harris agreed to make in last week’s meeting with the NFL about his purchase of the Washington Commanders from Dan Snyder has to do with private equity financing for some of his limited partners.
Unlike Major League Baseball, Major League Soccer, National Basketball Association and National Hockey League, the National Football League prohibits private equity firms from owning equity in its teams. Although the private equity funds would not have directly owned equity, or loaned money to, the Commanders, the NFL was concered that the private equity financing skirted NFL rules.
The private equity financing for the $6.05 billion deal was to come from Arctos Sports Partners and and Ares Management. The Arctos loan was against Harris Blitzer Sports & Entertainment, according to two sources familiar with the negotiations and traded candor for anonimity. A spokesperson for HBSE would not comment.
It is unclear at this time how the group will replace the private equity financing. Harris, who cofounded alternative investment firm Apollo Global Management in 1990 with fellow billionaires Leon Black and Marc Rowan, has a net worth of $6.3 billion.
Harris owns 34.8 million shares of Apollo worth $2.54 billion. Bloomberg Law reported a month ago that Harris has “been offloading shares on a near-daily basis since April 17, a few days after he reached a $6 billion deal to buy the Commanders. The sales, which have happened nine separate times, total almost $106 million.”
NFL rules required the general partner—in this case, Harris—to own at least 30% of a team and not have more than $1.1 billion of debt when buying a franchise.
HBSE, founded by Harris and David Blitzer, owns the NBA’s Philadelphia 76ers and the New Jersey Devils in the NHL, also operates the Prudential Center, the hockey team’s arena. In January, Forbes ranked HBSE as the world’s 18th most valuable sports empire, worth $4.65 billion.
The Harris group consists of Josh Harris and 20 limited partners who have told the NFL they have a combined net worth of about $100 billion. Three weeks ago, I wrote that Harris’ group would have to modify its financing and it appears it is doing so, moving towards a consummation of the transaction possibly by the end of July.
The $6.05 billion purchase of the Commanders would be the most for any sports team in history and eclipse the last NFL team sale—the Denver Broncos last summer—by $1.4 billion.
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