FIFA World Cup subsidiary tests limits of private equity in sports

Global soccer may be finding the limits to private equity’s stampede into sports.

A plan by FIFA to sell a minority stake in a new subsidiary — FIFA Forward Enterprises, or FFE — that would control the business side of the World Cup has faced swift backlash. UEFA, the governing organization of European soccer, and Concacaf, the organization controlling North American soccer, have both rejected the proposal out of concern for outside influence.

FIFA said earlier this week it plans to raise $4.2 billion from third parties, valuing FFE at about $20 billion. Thrive Capital, a private equity firm led by Joshua Kushner, has already backed the plan.

But on Thursday, UEFA threatened to boycott FIFA competitions and the World Cup if the plan moves forward.

“The World Cup cannot be treated as an investment product,” UEFA said in a statement. “No part of it should ever be surrendered to private investors. The World Cup is not for sale.”

FIFA defended the proposal late Thursday night, saying it would move forward with a vote among its member associations despite mounting criticism. UEFA and Concacaf together represent 96 of the 211 members of FIFA.

“We respect the feedback and concern aired in public and reaffirm our commitment to an open and democratic consultation,” its statement read. “No single entity can claim to represent all 211 member associations around the world.”

FIFA blamed “incorrect media reports” for the negative response to the plan and said that without the support of a majority of the member associations, its commercial activities would remain unchanged and FFE would not move forward.

Carlos Cordeiro, a senior advisor to FIFA President Gianni Infantino, announced his immediate resignation in protest of the plan.

“Let me be clear: I had no involvement in this proposal, and I oppose it unequivocally. It is a bad deal for FIFA’s Member Associations, a bad deal for football, and a bad deal for the long-term future of the game,” Cordeiro said in a statement posted to LinkedIn Friday.

While there’s no certainty that bringing on institutional capital would affect FIFA operations, it opens the door to outside influence driven by financial gain. While neither UEFA or Concacaf specifically brought up FIFA’s past ties to alleged bribery, UEFA did cite the soft pressure of shareholder influence as one of the reasons for its rejection of FIFA’s plan.

“Football’s future cannot be dictated by the expectations of those whose first duty is to maximise financial return,” UEFA said. “The moment external investors acquire ownership interests in FIFA competitions, football changes forever. Commercial return becomes a permanent obligation. Investor expectations become a daily pressure.”

FIFA pushed back on the characterization of its plan as “selling” the World Cup.

“Nobody is selling football,” FIFA said in a statement. “This is not something FIFA would ever entertain.”

Private equity has increasingly pushed the envelope to securitize sports. Investors are attracted to their steady cash flows and growth opportunities in part as an anti-artificial intelligence bet.

“I think anywhere where there’s a product that people are turning up for that’s entertainment, and it’s creating an economic environment, I think it’s possible that [private equity investment] will happen,” Apollo Sports Capital Chief Strategy Officer Sam Porter said during a Wall Street Journal Sports conference earlier this month.

Still, the sports world has set limits around private equity’s involvement. While minority stakes often come with limited to no governance, taking on private capital definitionally involves a new incentive — increasing the value of that investment.

The NFL began allowing sales of up to 10% of teams to select private equity firms in 2024. MLB allows a single fund to own up to 15% of a club with total private equity ownership of up to 30%. The NBA and NHL have the same 30% aggregate maximum, but they have even higher individual fund thresholds, capping what any one fund can own at 20%.

The next frontier for private equity may be in college sports, including the potential for investing directly in teams. This hasn’t happened yet, in large part because of a general uneasiness at the collegiate level about the ramifications of taking on private money.

But as more investors pile into sports and drive valuations for major leagues higher, would-be stakeholders have been looking for new ventures.

“People view that sports is pure,” said Marc Lasry, co-founder of private equity firm Avenue Capital Group, in an interview with CNBC Sport last year. “The hurdle is, at the end of the day, always, no one wants to be first.”

— CNBC’s Jessica Golden contributed to this report.