The National Football League, currently comprised of 32 teams, has stringent restrictions on team ownership. For instance, no groups with more than 24 people or publicly-traded companies are allowed ownership. The only exception is the Green Bay Packers, who are owned by Green Bay Packers, Inc. and who were grandfathered before this rule was in place.
Given the limit on the number of investors, the league has a healthy number of team owners who are wealthy individuals and who over time have brought their family members into the operations. Therefore, many of the teams are actually owned and operated as family businesses.
Based on my limited research, only four teams can date their family ownership back to the league’s early days in the 1920s and 1930s:
- The Bidwell family has owned the Arizona Cardinals (originally the Chicago Cardinals) since 1933.
- The Halas family has owned the Chicago Bears since 1921.
- The Mara family has owned the New York Giants since 1925.
- The Rooney family has owned the Pittsburgh Steelers since 1933, when it was purchased for a mere $2,500.
Research has shown that the success rate of transitioning a family business from the first to second generation is approximately 30 percent; from the second to the third generation it is only about 12 percent. Interestingly enough, these statistics seem to hold true for the NFL as well. There are only eleven teams whose ownership is in at least the second generation (34%) and just four teams whose ownership is in the third generation (12.5%).
So with all the success that the NFL has garnered over the past few decades, why are there so few multi-generational teams? Here are some common reasons:
- Family Discord - Tim Mara sold his half of the New York Giants ownership in 1991 to Bob Tisch. This sale was said to be motivated by disagreements Tim had been having with his uncle, Wellington Mara, for years.
- Shareholder Conflict - Art Modell, previous owner of the Cleveland Browns who moved the team to Baltimore in 1996, was quoted as saying, “Sometimes you get to the point where your minority partners become a burden and you have to do something about it” after selling his interest to Steve Bisciotti.
- Need for Liquidity – With the rising values of NFL franchises, selling a stake in the team can be an attractive option for families that find themselves in need of money.
- Lack of a Successor – When Buffalo Bills founder and long-time owner Ralph Wilson passed away in 2014 at the age of 95, the team was sold by his estate. Wilson had expressed no interest in leaving the team to his family (he was survived by his wife and two daughters). While we’re not sure of the exact reason for his decision, it seems safe to speculate that he didn’t feel there was someone in the family who had the desire or the ability to step into the role.
These issues won’t come as a surprise to most family-owned businesses. It seems that these businesses, regardless of the industry they’re in or the product they sell, all seem to face similar challenges. Ensuring that your family business will transition successfully from one generation to the next is hard work, but with thoughtful planning and diligent execution it is possible.
Learn how to structure a successful family transaction at our upcoming seminar on Thursday, October 12. This interactive and information program will cover an overview of transition options and the various transfer channels available, as well as how to structure and execute the transaction. Learn more and register.
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