Earlier this year, Mark Davis, the owner of the Las Vegas Raiders, and Tom Brady reached an agreement for Tom Brady to purchase stock in the NFL team.
New information explains why there is so much opposition to the deal in the midst of the NFL owners’ vehement objections.
Brady, who previously acquired a stake in the WNBA’s Las Vegas Aces from Davis, set his sights on owning an NFL franchise earlier this year.
The future Hall of Fame quarterback had enough money to purchase a minority interest in a team even though he couldn’t afford a team on his own.
$333 million in earnings over Tom Brady’s career.
Related: Las Vegas Raiders ownership stake purchase by Tom Brady in jeopardy.
In May, Brady and Davis intensified their discussions, and soon after, they reached an agreement.
On the other hand, 24-of-32 owners must consent to every sale involving a team stake.
Las Vegas clearly lacks that support, as was evident both before and after this week’s NFL owners’ meetings.
According to Mark Maske and Nicki Jhabvala of The Washington Post, Davis has agreed to sell a 10% stake in the Raiders for less than $200 million.
Jim Irsay of the Colts explained to Ben Volin of the Boston Globe what he and his fellow NFL owners want to see Brady pay because the majority of them are against the deal.
“We’re attempting to solve the problem. The only requirement is that Tom’s purchase price be within a reasonable range.
You cannot pay $175 million if reasonable value indicates that 10% should be $525 million.
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Jim Irsay comments on Tom Brady’s agreement to purchase a stake in the Las Vegas Raiders.
Franchise value of the Las Vegas Raiders: $6.22 billion (according to Forbes).
Irsay’s justification for opposing the deal is probably shared by many of his contemporaries. Brady joining the NFL is not a problem for the owners; in fact, it might be good for the league in the long run.
The agreement’s specific financial provisions, however, present a serious issue.
The issue is entirely a financial one.
Brady would have paid less than others would have paid to purchase the franchise outright, even if he paid $525 million for a 10% stake in it.
The Washington Commanders recently sold for a record-breaking $6 billion, so it makes sense to assume Las Vegas’s NFL team would fetch a price in line with the Raiders’ estimated $6 billion valuation.
However, Davis is offering Brady a 10% ownership stake in the Raiders even though Davis claims the team is only worth $200 million.
At a time when NFL revenue is increasing annually and is at record highs, approving that deal would have repercussions for the league.
NFL owners don’t want to set a precedent by letting Brady purchase any interest in a team at a significant discount; after all, this is business, and their objective is to increase franchise value and yearly revenue.
Brady will need to significantly raise his offer in order for the league to accept it if he wants to own the NFL.