Tom Gores, a private equity billionaire and owner of the Detroit Pistons, is set to acquire a 27% stake in the National Football League’s Los Angeles Chargers for $750 million, giving the team an enterprise value of $4 billion. This was confirmed by two individuals familiar with the transaction, who chose to remain anonymous due to the confidential nature of the details. According to CNBC’s Official 2024 NFL Team Valuations, this valuation represents more than a 30% discount from the team’s estimated value of $5.83 billion. Typically, limited partners without control rights receive a discount of around 20% to 25% in such deals.
The substantial discount Gores secured can be attributed to the significant portion of the team he is purchasing—27%, just 3% below the threshold needed for controlling ownership. However, Gores will not have any control over the team’s operations as a limited partner. The transaction is also subject to a “flip tax,” which requires the seller to pay 10% of the sale amount. This tax will be distributed among the other 31 teams in the league. The Chargers agreed to this condition when they moved to Los Angeles in 2015, akin to a similar deal made by the Las Vegas Raiders before relocating from Oakland, California.
The acquisition includes the 24% stake previously held by Dea Spanos Berberian and 1% each from Dean, Alexis, and Michael Spanos. After the transaction concludes, Dean, Alexis, and Michael Spanos will collectively retain 69% ownership of the team, while Gores and his wife, Holly, will possess 27%, and two long-time limited partners will maintain a 4% combined stake. Dean Spanos will continue to serve as the controlling owner and chairman of the board. The late Alex G. Spanos, Dean’s father, originally purchased the team in 1984 for $72 million.
This deal will also resolve all of Berberian’s legal disputes with her siblings and the Chargers, originating from a 2021 lawsuit she filed attempting to force a sale of the franchise. These legal efforts ultimately did not succeed. Gores also owns the NBA’s Detroit Pistons, which he and his firm, Platinum Equity, acquired for $325 million in 2011. By 2015, Gores bought out Platinum’s stake, gaining full ownership of the team. However, the acquisition of the Chargers stake is a personal investment by Gores, not involving Platinum Equity. The NFL has declined to comment on the transaction.
Gores appears to favor being a renter rather than a stadium operator, as seen with his ownership of the Pistons, who play in Little Caesars Arena operated by the Ilitch family, owners of the NHL’s Detroit Red Wings. Similarly, the Chargers share SoFi Stadium with the Los Angeles Rams, owned by Stan Kroenke, which contributes to the Rams’ higher valuation of $8 billion compared to the Chargers’ $5.83 billion. Renting offers advantages, such as avoiding the financial and operational responsibilities associated with stadium ownership and event bookings.
Note: A correction has been issued clarifying that the “flip tax” of 10% in Tom Gores’ Chargers stake acquisition falls to the seller to pay, contrary to a previous mischaracterization of the tax.
