USA Law and Practice Contributed by: Irwin A. Kishner, Daniel A. Etna, Joel Wagman and Barry Werbin, Herrick, Feinstein LLP
These governance codes must be updated to address ever-changing matters, such as laws governing online gambling, the ongoing debate over compensation for college athletes, and the increasing number of substances banned for use by athletes. In the USA, sports leagues are most often gov - erned according to rules and internal regula - tory procedures set forth in league organising documents. Most typically, these consist of league constitutions and by-laws and agree - ments between the sports league and mem - ber teams. The acquisition of and transfers of ownership interests in teams, with or with - out changes in control, are often scrutinised, requiring prior approval. This process will often involve the examination of affiliate relations. In many cases, these documents establish a board of governors comprising team owners or their representatives. These documents provide for establishing and managing league governance and regulatory policies and typically provide for appointing a league commissioner. The league commissioner serves as a chief executive officer and is typically responsible for overseeing the day-to-day league operations. League organi - sational documents and collective bargaining agreements (CBAs) set forth player and coach codes of conduct. 4.3 Funding of Sport Federal agencies and state and local govern - ments often turn to public-private partnerships to structure and execute the development of sta - diums and other sports-related facilities. Often this is done in conjunction with redevelopment of real estate located in areas qualifying for tax status as a Qualified Opportunity Business Zone with special tax-advantaged attributes.
Stable revenue streams are of paramount impor - tance to funding transactions. Sports fan con - sumer spending from product to experience is increasing and expected to be robust in the medium to long term. 4.4 Recent Deals/Trends US leagues have been modifying ownership reg - ulations to allow new investment opportunities for funds to acquire minority interests in multiple clubs. The impact of those rule changes appears to be receiving close scrutiny. As many sports properties confront long-term cash flow and capital shortfalls, new variations on investment funds are likely to continue to develop. In 2024, the National Football League owners voted to allow private equity funds to own up to 10% of a team, without voting power. In addition, private equity funds are obligated to hold their invest - ment for at least six years before they sell. Upon sale, the NFL will share in any institutional prof - its derived from that sale, and the league can force a sale. The NFL had been the last major North American sports league that barred private equity investment in team ownership. In addition, sports and entertainment venues have, in recent years, paired with and become integral components of mixed-use development projects. These projects often take the form of public-private partnerships revitalising down - town areas and have resulted in the rehabilitation or creation of entertainment spaces, hospitality ventures (including hotels, bars and restaurants), residential projects (including affordable hous - ing), and office and innovation workplace lab spaces, tailored for changing modern workplace norms. While diminishing as a tax benefit incen - tive, many urban projects were subject to special federal income tax benefits if the projects were located within qualified opportunity zones, often associated with urban renewal projects. This
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