MLB Raises Private Equity Ownership Limit to 20%

MLB owners recently decided to lift the private-equity ownership cap within teams from 15% to 20%, according to a source familiar with the decision. This amendment was not made public until recently. The alteration was implemented to align MLB's regulations with those of the NBA, which permits a private equity firm to own up to 20% of a franchise, barring the controlling owner's stake from exceeding 20%.

In instances where the dominant shareholder holds a percentage lower than 20%, that percentage then becomes the private equity limit. A separate MLB rule stipulates that the leading owner must hold at least 15% of the team. The NBA, NHL, and MLS similarly permit a single private equity firm to hold a maximum of 20% in a franchise.

Forbes writer Maury Brown was the first to publish the MLB rule revision on Tuesday night. The NBA also recently amended its private equity guidelines to enable a firm and its executives to invest concurrently, a move confirmed by another source. Bloomberg independently verified this change, which was also prompted by Josh Kushner’s investment firm Thrive Eternal to co-invest in the Lakers with himself.

The NFL, which introduced private equity investors one year ago, imposed a 10% cap on such investments and only sanctioned four firms to participate. Currently, seven NFL teams have incorporated private equity stakeholders, most recently the Seahawks and Falcons, though no new approved firms have been added by the league. Seven MLB teams have integrated private equity investment, and nearly 20 have some form of private equity involvement, such as the Padres, which were recently bought by Clearlake Capital cofounder.

Other teams with direct private equity investments include the Giants and A’s, the latter partnering with Mark Cuban’s Harbinger Sports Partners in July. The most recent instance is Apollo Sports Capital, which recently allocated $2.6 billion to the Yankees via a deal finalized last month. Apollo chief strategy officer Sam Porter explained to Front Office Sports that the Yankees sought the capital for potential growth, refinancing existing debt, and a comprehensive financial strategy to aid the club’s expansion.