Major League Baseball, like other professional sports leagues, has a small but important rule in place to preserve its staid tradition of ownership. Wealthy families, entrepreneurs, and the occasional corporation historically comprised the population of teams' controlling owners, an exclusive group that limits private equity by design. Until recently, private equity firms could not own greater than 15 percent of an individual franchise.
According to Forbes' Maury Brown, however, MLB quietly changed the rule last summer to align it "closer to what is in the NBA, where the limit is 20 percent." None of this came to light until one private equity firm was willing and able to buy more than 15 percent of a team. The historic sale, as reported by the Wall Street Journal in August, will cost Apollo Global Capital $2.6 billion for a minority stake in Yankee Global Enterprises. The New York Post reported Sunday that the deal values the Yankees at more than $12 billion — the highest valuation ever for a baseball franchise.
The Steinbrenner family will still own "a bit more than 60% of the team," according to the Post. Yankee Global Enterprises also has stakes in Legends Hospitality, the YES Network, and soccer clubs New York City FC and AC Milan. More news: Mets Make Abrupt Reversal With Surprising Manager Choice What's notable about the transaction — besides the record valuation — is the precedent it sets for other private equity firms to grab a larger slice of MLB teams in the future.
How much interest the relaxed rules will generate among private equity firms remains to be seen. Per the Post, "the impetus of the Yankees' deal with Apollo was more prosaic; a group of limited partners wanted to cash out of their investments for estate planning purposes, and Apollo was looking for an anchor investment for its newly created sports fund." More news: One MLB Stadium is About to be Renamed After 26 Years Apollo's stake in the Yankees will come to 16%, per multiple reports. Mike Ozanian of CNBC reported Monday that Apollo will pay $800 million for eight percent of YGE now and buy another eight percent over the next four years, for another $800 million total.
Apollo will also loan the Yankees $1 billion. "They're going to get well, well above $12 billion," Ozanian said. For more MLB news, visit Newsweek Sports.
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