Record investments are part of a trend that shows the growing strength of the NWSL

Angel City was valued at around $100 million before playing its first game this season.Images: getty

When WNBA legend Sue Bird and former New York Giants quarterback Eli Manning joined the NJ/NY Gotham FC cap table last month, acquiring small minority stakes at a $40 million valuation dollars, this was announced as a record price for the decade-old NWSL. .

While the deal does indeed offer the latest proof of the league’s growing strength and sophistication, the reality is that Gotham’s investment was less than half of the league’s record-breaking true deal.

In February, Angel City FC announced a Series A funding round featuring nearly 50 investors, including singer Christina Aguilera; UTA Executive Vice President of Growth and Operations Heather Brooks Karatz; Los Angeles Dodgers President of Business Operations Andrew Friedman; and actress Gabrielle Union. According to multiple sources with knowledge of the deal, that funding round actually closed in April 2021 and valued the team at around $100 million, easily a record for an NWSL franchise.

This huge rating was given before the club played a game, sold a ticket or signed a player. A source close to the team said the Serie A figure was based on the online fan community the club had built and the sponsorship revenue it had earned. Since then the club has expanded its roster of sponsors – Angel City will record sponsorship revenue of over $10m this year and have a total of $45m in sponsorship commitments – and have sold over 16,000 subscriptions. The club is averaging more than 19,000 fans per game this season at Banc of California Stadium, according to Soccer Stadium Digest, nearly 5,000 more than the next highest scoring team, the Portland Thorns. Its average ticket price is $41.

Actress Gabrielle Union joined Angel City’s list of star investors in a Series A funding round that ended in April 2021.Images: getty

The athletes’ recent investments in Gotham FC follow perhaps the league’s most significant transaction – Y. Michele Kang’s purchase of a majority stake in the Washington Spirit. The healthcare technology executive beat billionaire Dodgers co-owner Todd Boehly to a deal last winter that valued the team at $35 million.

The sudden appreciation in franchise valuations reflects a widely held belief among sophisticated investors that, thanks in part to strong and growing interest from fans, broadcasters and sponsors, the league is still early on a steep upward trajectory.

“A number of companies are ready and willing to invest in supporting women’s sports, and the ratings for some of our shows show there is a large audience,” said Portland owner Merritt Paulson. Thorns, highlighting the success. Challenge Cup broadcasts on CBS that have surpassed viewership of recent MLS matches on other broadcast networks. “Team valuations followed.”

NWSL teams selling for tens of millions of dollars were unheard of even a few years ago. In 2019, Olympique Lyonnais’ parent company OL Groupe bought 89.5% of Seattle Reign FC in a deal valuing the club at $3.51 million, one-tenth the value of the sale of Spirit in Washington, DC.

NWSL Commissioner Jessica Berman cited several factors that she believes are driving the rise in empowerment, including the societal trend toward gender equality and women’s empowerment, the short-term potential for the league to increase sponsorship and media revenue, product quality on the pitch. , and the recently concluded five-year collective agreement that guarantees social peace for the foreseeable future. In addition, sports franchises are appreciated at all levels.

“There’s a very strong desire from investors to get in early,” Berman said. “We know that using other professional sports investments as a benchmark that those assets appreciate and can appreciate quickly, especially when you have all those tailwinds behind you.”

NWSL League Sponsors

Allied Financial
Anheuser-Busch InBev
CBS Sports
Delta Airlines
National mutual insurance company.
Kronos Ultimate Group
digital travel

It’s hard to believe that some of the more recent team valuations are backed by the expectation of immediate financial return. A league source said that in a typical year, the average NWSL team loses money on about $3-4 million in revenue.

“Are these numbers supported by financial valuation analyzes and typical revenue multiples? Probably not. You can’t get there on a multiple cash flow or revenue basis,” said Chuck Baker, Sidley Austin’s co-president of sports and media practice. “It’s a question of advantage. Given the length of the holding period and the scarcity of trades from these teams, investors are betting on long-term appreciation.

Baker, who is advised on several NWSL team transactions, added that basic supply and demand – namely that there are now more potential owners interested than clubs available – is another major driver of the move. increase in values. The same dynamic explains an expected increase in league expansion fees.

Racing Louisville FC, which started play last year, joined the league for an expansion fee reported by ESPN at between $1 million and $2 million. Later expansion clubs in Kansas City, Los Angeles and San Diego paid slightly higher fees, but no ownership group paid much more than $3 million, according to a source with knowledge of those deals.

The league’s ongoing expansion cycle is expected to dwarf those numbers. The NWSL is recruiting two new owner groups, and the demand from potential bidders will far exceed the supply of teams. One of the two open slots will almost certainly be given to the owners of Major League Soccer’s Real Salt Lake, who have a contractual option to reinstate an NWSL team in Utah.

MLS commissioner Don Garber said “many” owners of his league are in contact with the NWSL about the possibility of adding a women’s team to their portfolio. He cited Orlando and Portland as examples of successful dual ownership groups. “Having teams that can have twice the inventory in their stadiums and represent professional football at the highest level in their markets is great,” Garber said.

Images: getty

The auction process, run by boutique investment bank Inner Circle Sports, is still in its infancy. Berman pointed to recent valuations as potential benchmarks, and a source with knowledge of the process said they expected the charges to be as high as $50 million. Yet, while the value of the winning bid is an important factor, the NWSL’s priority is to find the right ownership group. Berman said the main factors are the quality of the property, the facilities and the geographic market. The league aims to announce its two new expansion markets before the end of the year.

“The world has changed. Previously, we had to work to interest expansion teams, and now Jessica Berman is struggling to reduce interest from expansion teams,” Paulson said. “There is more [potential owners] interested that can launch a team.

It is hard to overstate how far the NWSL has come in this regard. When Paulson signed on to become the league’s founding owner a decade ago, her main concern wasn’t whether women’s soccer would work in Portland – the Thorns were an overnight success, turning a profit during their first season – but whether the league itself would remain viable. That was a legitimate concern, given two previous attempts at top-level professional women’s soccer in the United States, the Women’s United Soccer Association and Women’s Professional Soccer, both of which were scrapped after three seasons.

Those optimistic about the value of NWSL franchises expect the league to secure significant increases in media rights and sponsorship revenue in upcoming renewals. The league’s streaming deal with Amazon-owned Twitch expires at the end of this season, and its TV deal with CBS Sports expires at the end of next season.

Multiple sources have suggested that even greater investment could be encouraged by a growing sense of professionalism and sophistication at the league office, which will move its headquarters from Chicago to New York next month. Berman said the league is in the process of hiring executive talent who will focus on finding and creating new revenue streams. These include betting and fantasy sports, games and NFTs. Other stakeholders pointed to league-level cryptocurrency sponsorship and a development league as other revenue opportunities.

And it all falls into place during a watershed moment for women’s sport, and women’s football in particular, as witnessed recently by attendance records set at Women’s Euro 2022. “Fans and savvy investors believe the next generation of American female players is ready to overtake the legacies of the last,” Baker said. “With England also contesting this now, it’s generating viewership, tickets and sponsorship revenue.”

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