Women’s football brings private capital from the sidelines.
While other major US sports leagues – Major League Soccer, the National Basketball Association, Major League Baseball and the National Hockey League – have allowed private equity investors to take passive, minority stakes, only the National Women’s Soccer League has allowed these companies to take the majority control of finances.
“We really see institutional capital as a way to really inspire additional capital behind our assets,” NWSL commissioner Jessica Berman said in an interview with CNBC.
Sixth Street was the first to have a team in building San Francisco’s women’s team, Bay FC, last year. At the time, the company paid a record $54 million for the league’s 14th franchise.
The second such deal closed a few weeks ago, as Carlyle teamed up with the men’s team, Seattle Sounders FC, to buy the city’s NWSL counterpart, Reign FC. The transaction valued the Reign at $58 million – far more than the $3.5 million it sold for just five years ago.
As part of it agreement, Sounders FC owner Adrian Hanauer serves as Reign FC’s governor on the NWSL board, while Carlyle’s head of private credit Alex Popov serves as deputy governor. Popov said NWSL participation, up more than 40 percent this year, is a testament to the momentum in the sport.
“We’re seeing this turning point, we’re seeing it for the right reasons,” Popov said. “And there are many things for all of us to do to continue to grow.”
Sarah Gorden #11 of Angel City FC and Veronica Latsko #24 of OL Reign play the ball during the first half at Lumen Field on October 20, 2023 in Seattle, Washington.
Steph Chambers | Getty Images
Reign chief operating officer Maya Mendoza-Exstrom said the investment fits with the “inherent value of women’s sports.” He said Carlyle brings a depth of resources to the game and the firm can add value on the analytics side as well as share expertise from its other portfolio companies.
“So we have to make smart choices,” Mendoza-Exstrom said in an interview. “We have to run a sustainable business that is a business where we generate multiples of revenue in a very short period of time and put a better product in the field.”
This year, elite women’s sports earnings are poised to break the billion-dollar mark for the first time, according to Deloitte. Football accounts for about half of that number, Popov said.
The composition of women’s sports revenue leans more towards merchandise sales, ticket sales, partnerships and sponsorships, as opposed to men’s sports revenue, which generates more from broadcast rights. But in November, the NWSL signed a four-year, $240 million media deal – 40 times higher than the league’s previous deal, though still a fraction of what MLS brings in from broadcast rights.
Still, tailwinds in broadcasting are a key bullish thesis for many private equity managers seeking NWSL deals, including Carlyle.
Disney CEO Bob Iger and his wife, Willow Bay, are nearing a deal to acquire Angel City FC for $250 million, according to a person familiar with the matter. That valuation would break valuation records for a women’s sports franchise. The NWSL declined to comment on the potential Angel City FC deal.
As valuations continue to move higher, it is likely that private equity interest in the sport will continue. However, the league is still in trial mode.
“We are proceeding cautiously because institutional capital is very different from the types of individual owners who typically manage groups in local markets,” Commissioner Berman said. “A lot of leagues are looking to our experience to see what that’s like. And if there’s a way we can continue to moderate the way institutional capital invests in sports.”
The NBA, MLB, NHL and MLS allow private equity ownership of up to 30%. The issue is also hotly debated in the NFL. NFL commissioner Roger Goodell said in May that the league is making “real progress” on the issue and that there is a lot of interest in the venue.
