- The National Women's Soccer League differs from other professional sports leagues in that it allows private equity firms to acquire majority control of its franchises.
- Sixth Street and Carlisle each struck deals with skyrocketing team valuations.
- “We really look at institutional capital as a way to inject additional capital into our assets,” NWSL chair Jessica Berman said in an interview with CNBC.
Women's soccer is pulling private equity off the sidelines.
While the other major U.S. sports leagues – Major League Soccer, the National Basketball Association, Major League Baseball and the National Hockey League – allow private equity investors to take passive minority stakes, only the National Women's Soccer League gives these companies majority financial control.
“We really look at institutional capital as a way to inject additional capital into our assets,” NWSL chair Jessica Berman said in an interview with CNBC.
Sixth Street took ownership of its first team last year with the creation of San Francisco women's team, Bay FC, when it paid a record $54 million for the league's 14th franchise.
A few weeks ago, Carlisle partnered with Seattle Sounders FC to acquire the city's NWSL team, Reign FC, in a second deal ever, valuing the club at $58 million, significantly more than the $3.5 million it was sold for just five years ago.
As part of the deal, Sounders FC owner Adrian Hanauer will serve as a Reign FC director on the NWSL Board of Governors, with Carlyle head of private credit Alex Popov serving as alternate director. Popov said NWSL attendance this year has increased by more than 40 percent as evidence of the sport's momentum.
“We're at a turning point right now for the right reasons,” Popov said. “We all have a lot of work to do to continue to grow.”
Rains Chief Operating Officer Maya Mendoza Ekstrom said the investment was in keeping with the “intrinsic value of women's sports.” She said Carlyle brings deep resources to the sports world, allowing the company to add value on the analytical side as well as share expertise from its other portfolio companies.
“So we have to make smart choices,” Mendoza Ekstrom said in an interview. “We have to run a sustainable business, one that generates many times its revenue in a very short time and brings better products to market.”
This year, revenue from elite women's sports is on track to surpass the $1 billion mark for the first time, according to Deloitte, and Popov said soccer will account for roughly half of that figure.
The women's sport's revenue mix is biased toward merchandise, ticket sales, partnerships and sponsorships, in contrast to the men's sport, which gets most of its revenue from broadcast rights, but in November the NWSL signed a four-year media deal worth $240 million, 40 times the league's previous deal but still a fraction of what MLS makes from broadcast rights.
Still, the broadcasting industry tailwinds are a key bullish argument for many of the private equity managers exploring a deal with the NWSL, including Carlyle.
Disney CEO Bob Iger and his wife, Willow Bay, are close to a deal to buy Angel City FC for $250 million, a price that would break the record for the purchase of a women's sports team, according to a person familiar with the matter. The NWSL declined to comment on the potential deal with Angel City FC.
Private equity interest in the sport is likely to continue as valuations continue to rise, but the league is still in the trial phase.
“We're proceeding cautiously because institutional capital is very different than the types of individual owners that have assumed control of teams in local markets,” Berman said. “A lot of leagues are looking at our experience and seeing how that's going and whether there are ways to continue to constrain how institutional investors invest in sports.”
The NBA, MLB, NHL and MLS all allow private equity to own up to 30% of their leagues. The issue has also been hotly debated in the NFL, where Commissioner Roger Goodell said in May that the league had made “substantial progress” on the issue and that there was significant interest in the area.
