MLB Private Equity Ownership Rules: Can PE Have Stakes in Teams?

Brendan Coffey
3 min read
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Private equity is as American as baseball and apple pie. PE as we know it developed stateside after the end of WWII and has grown to a global phenomenon with more than $3.2 trillion in assets under management, according to Bain & Co.

It’s only been in recent years that PE has developed an interest in investing into sports franchises, with the first transaction occurring in 2006 when three private equity funds bought French soccer team Paris Saint-Germain. In the year since, the industry has increasingly sought to buy into trophy sports assets, to the extent a series of sports-only private equity funds have emerged—and they want in on the world’s top leagues like Major League Baseball.

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Is private equity allowed to own MLB teams?

PE funds can’t own an MLB team outright, but they are allowed to buy minority stakes in ballclubs.

In 2019, MLB was among the first North American leagues to open its ownership ranks to institutional funds. These days MLB doesn’t allow corporate ownership–current exceptions like the Blue Jays are grandfathered in—but the league’s comfort with institutions as owners could come from its long history of corporate ownership of franchises, with the Angels, Braves, Cardinals, Cubs, Mariners and Yankees among the teams that were mostly well-run under institutional oversight.

• Under current rules as reported by Sportico, a private equity fund can own up to 15% of a franchise, with no limit to the number of clubs a fund can invest in.
• It’s not known if there is a minimum dollar investment or percentage ownership requirement for institutional investors.
• On the team side, no franchise can sell more than 30% of its equity to PE.

The appeal to allowing institutional investors to buy stakes in teams is that MLB team values have been surging over recent decades. When George Steinbrenner bought the Yankees in 1973, he paid just $10.3 million to CBS, who actually sold the club at a loss (the purchase price is equivalent to $76 million today). Now, the pinstripers are baseball’s most valuable franchise, worth nearly $8 billion according to the latest Sportico MLB rankings. The average MLB club is worth $2.64 billion—up 34% in four years, according to Sportico data.

There are only so many billionaires willing to shell out a healthy part of their fortune to own a team. It’s a lot harder to find someone willing to hand over hundreds of millions of dollars for a minority stake in a franchise when all it gets is a decent seat in the stadium and fights over parking. Allowing PE to buy makes it easier for existing owners to raise money and current limited partners to exit their stakes when needed.

What teams have private equity investors?

PE ownership doesn’t have to be disclosed—only the Atlanta Braves are publicly traded and need to disclose who major shareholders are (the Toronto Blue Jays are owned by the publicly traded Canadian media company Rogers Communications).

We do know a number of teams have private equity owners among their ranks.

• Boston Red Sox (Arctos Partners, RedBird Capital)—Arctos and RedBird are both invested in team parent Fenway Sports Group.

• Los Angeles Dodgers (Arctos)—While the majority owners call themselves Guggenheim Baseball Management, the group isn’t a vehicle of the Guggenheim PE firm in which the Dodger owners are executives.

• Chicago Cubs (Arctos)

• San Francisco Giants (Arctos)

• Houston Astros (Arctos)

• San Diego Padres (Arctos)—Another private equity firm, Ares Capital Management, owns senior secured debt in the franchise, a type of security that typically can convert to equity under specific conditions, such as payment default.

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