Private equity billionaire Tom Gores has agreed to pay $750 million for a 27% stake in the NFL’s Los Angeles Chargers at an enterprise value of $4 billion, according to two people familiar with the matter.
According to CNBC’s official 2024 NFL team valuations, the $4 billion valuation represents a more than 30% discount to the team’s $5.83 billion valuation. Limited partners who do not control the team typically receive a discount of about 20% to 25% on these deals.
Gores will likely receive a larger discount than usual because he purchased a large portion of the Chargers’ shares — 27%, just 3% less than what is required as a controlling shareholder, although he will be a limited partner, with no interest in the shares. The running team has no say in the status of the team.
In addition to the $750 million he paid for his shares in the Chargers, Gores must also pay a 10% “flip tax” to the NFL, which will be divided equally among the league’s other 31 teams. The flip tax was an agreement the Chargers made with the league in 2015 as part of a deal to move the team to Los Angeles, much like the deal the Las Vegas Raiders made with the NFL before relocating from Oakland, Calif. .
Gores will acquire the entire 24% stake previously held by Dea Spanos Berberian, as well as 1% each of Dean, Alexis and Michael Spanos, a person familiar with the matter said.
Once the sale is complete, Dean, Alexis and Michael Spanos will own a combined 69% of the team, while Gores and his wife, Holly, will own 27%, the person said. , two long-term limited partners will retain a combined 4% stake.
Dean Spanos remains the Chargers’ controlling shareholder and chairman of the board. His father, the late Alex G. Spanos, bought the team in 1984 for $72 million.
The deal would also completely resolve all of Berberian’s legal disputes with her three siblings and the Chargers. The disputes date back to 2021, when Berberian filed suit seeking to force the sale of the franchise. Legal action and related litigation filed by Berberian and his family ultimately failed to proceed.
Gores also owns the National Basketball Association’s Detroit Pistons. In 2011, private equity founder Platinum Equity purchased the team for $325 million.
The purchase of Chargers shares was done entirely by Gores and had nothing to do with Platinum Equity. The NFL declined to comment on the deal.
While stadium economics are a big factor in determining team valuations, Gores seems to prefer being a renter rather than an operator when it comes to sports.
The Pistons play at Little Caesars Arena, home of the National Hockey League’s Detroit Red Wings. The Ilitch family, which owns the Red Wings, operates the arena, which means they get money from non-NHL and non-NBA events.
Likewise, the Chargers play at SoFi Stadium, which is also home to the Los Angeles Rams. Stan Kroenke, who owns the Rams, also owns the stadium, which is the main reason the Rams are worth $8 billion (while the Chargers are worth $5.83 billion), according to CNBC’s 2024 rankings.
But leasing has its advantages: You don’t have to pay for financing or operating the stadium, and there’s no obligation to book events.
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