Private equity’s impending blitzkrieg on NFL teams

In this week’s Make Me Smart newsletter, we take a look at the NFL’s decision to allow select private equity firms to invest in professional football teams, how safe big, heavy cars are, and the costs of an extremely hot summer.

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Fixing messages

Corporate Robbers meet the Las Vegas Raiders. The National Football League kicked off its new season this week with some big news on the field: A select group of private equity firms can now buy parts of professional football teams. Once considered “barbarians at the gate,” private equity firms are now welcome allies of professional sports leagues and teams. The NFL was one of the last leagues to keep the “vulture class” from buying.

Private equity investors will not be able to execute their typical plan, which involves taking control of the company, restructuring it and selling it for a profit. Under the new NFL rules, private equity can buy only small stakes, capped at 10% of the team’s total value. These investors will have few rights and little say in how the teams operate. They will also have to stay invested for at least six years.

All of this might seem like an unattractive proposition for private capital—except for the promise of huge and seemingly guaranteed profits. American sports leagues have historically generated higher returns than the S&P 500 in recent years, according to Deloitte. The average NFL team is now worth $5.7 billion.

Show me the money. As franchise values ​​rise, fewer and fewer billionaires have the desire and the money to own an NFL team. Selling to private equity gives NFL owners a way to monetize the value of their teams without having to give up control. But bringing private equity into the game could also increase pressure to extract more value by raising prices.

Can an average person invest too? With the exception of the Green Bay Packers, most NFL teams do not allow their fans to invest money in their favorite team.

Smart in one shot

Many Americans choose larger cars because they assume they will be safer in an SUV than in a lighter, smaller sedan. To some extent, this is true; heavier cars are usually safer for those who drive them.

But when The Economist crunched the numbers on 10 million two-car crashes in 14 states over the past 10 years in the US, it found that the heaviest cars on the road weren’t the safest. Vehicles weighing more than 5,000 pounds were responsible for about 26 deaths per 10,000 crashes, making them more deadly than vehicles weighing 4,500 to 5,000 pounds.

For every life saved by the heaviest 1% of SUVs and trucks, more than a dozen lives are lost, according to The Economist’s calculations. Heavy SUVs, trucks and vans are also deadlier for everyone else, including cyclists and pedestrians. But in the absence of new regulations to limit vehicle weight, the new-car market is locked in a kind of “arms race.” American consumers, eager to prioritize safety, buy bigger, heavier vehicles, manufacturers design bigger vehicles to meet demand, and the cycle repeats.

The best-selling vehicle in the U.S. last year was the Ford F-Series truck, which can weigh up to 5,740 pounds, almost twice as much as a Toyota Corolla.

the Book of Numbers

Another record-breaking summer is coming to an end. This July was the hottest on record, according to the National Oceanic and Atmospheric Administration. Let’s do the numbers.

2.7 degrees

The nonprofit Climate Central reported that between 1970 and 2022, summer nighttime temperatures rose by an average of 2.7 degrees across the continental United States. The nighttime heat can disrupt sleep and increase the risk of daytime heat because the body is not able to recover as well.

$3.6 billion

The federal government has earmarked $3.6 billion in nationwide assistance for low-income households this year. But most of that money currently goes toward heating homes in the winter, leaving Sun Belt families with little room to cool their homes.

1 billion dollars

The Center for American Progress estimates that heat costs Americans $1 billion in hospital visits and ambulance rides each summer.

2.8 billion hours

Heat makes us less productive. The Lancet Countdown research group calculated that the United States has lost 2.8 billion work hours due to heat. One billion more will be lost in 2022 than in the decade 1990-2000.

None of us are as smart as the rest of us

Tell us what makes you smarter by emailing us at [email protected]. We’d love to feature your recommendation in a future newsletter.

Preventing roof collapse

The Sammies honor those who rarely brag about their accomplishments: federal workers who make a difference behind the scenes. Host Kimberly Adams reads an editorial by Michael Lewis about one such worker, a former coal miner who spearheaded regulations to prevent cave-ins in underground mines (gift link).

Stand up for yourself

Want a dead butt? If you sit for hours a day at work, you may already have one. Writer Ellen Rolfes reads a New York Times article about dead butt syndrome, which includes tips on how to work out weak glutes (gift link).

The Argument for Stupid Things

For years, companies have tried to sell “smart” objects like Gretchen Wieners tried to make “fetch” happen. Reporter Henry Epp recommends this Bloomberg column (gift link) that argues you don’t need a remote-controlled oven, a live-streaming toothbrush, or a GPS-enabled umbrella, and Big Tech should give up on these gimmicks.

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