Women's football is taking private capital out of banking.
While other major U.S. 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 majority control of the economy.
“We really see institutional capital as a way to infuse additional capital behind our assets,” Jessica Berman, commissioner of the NWSL, told CNBC in an interview.
Sixth Street became the first to have its own team last year when it created the San Francisco women's team, Bay FC. At the time, the firm paid a record $54 million for the league's 14th franchise.
The second such deal closed a few weeks ago, when Carlyle partnered with Seattle Sounders FC men's team to buy that city's NWSL counterpart, Reign FC. The transaction valued Reign at $58 million, up from the $3.5 million it sold for just five years ago.
As part of the agreement, Sounders FC owner Adrian Hanauer serves as a Reign FC governor on the NWSL Board of Directors, while Carlyle Private Credit Director Alex Popov serves as an alternate governor. Popov said NWSL attendance, which is up more than 40% this year, is a testament to the momentum the sport is seeing.
“We're seeing that turning point and we're seeing it for the right reasons,” Popov said. “And there are a lot of things that we all need 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
Maya Mendoza-Exstrom, chief commercial officer at Reign, said the investment matches the “intrinsic value of women’s sports.” She said Carlyle brings a wealth of resources to the sport and the firm can add value on the analytics side, as well as sharing expertise from other companies in its portfolio.
“We have to make smart decisions,” Mendoza-Exstrom said in an interview. “We have to run a sustainable business that allows us to generate multiple revenues in a very short period of time and deliver a better product on the farm.”
This year, revenues from elite women's sport are on track to break the $1 billion mark for the first time, according to Deloitte. Football accounts for about half of that figure, Popov said.
The revenue composition of women’s sports is skewed more toward merchandising sales, ticket sales, partnerships and sponsorships, in contrast to revenue from men’s sports, which generate more revenue from broadcast rights. However, in November, the NWSL signed a four-year media deal worth $240 million — 40 times more than the league’s previous deal, though still a fraction of what MLS makes from broadcast rights.
Still, broadcast tailwinds are a key bullish thesis for many private equity managers looking to close deals in the NWSL, including Carlyle.
Disney CEO Bob Iger and his wife, Willow Bay, are close to reaching an agreement to acquire Angel City FC for a valuation of $250 million, according to a person familiar with the matter. That valuation would break valuation records for a women’s sports franchise. NWSL declined to comment on the potential Angel City FC deal.
As valuations continue to rise, private equity interest in the sport is likely to persist. However, the league is still in testing mode.
“We're proceeding with caution because institutional capital is very different from the types of individual owners who have typically run teams in local markets,” Commissioner Berman said. “A lot of leagues are looking at our experience to see how that's going and whether there's a way to continue to moderate the way institutional capital invests in sports.”
The NBA, MLB, NHL and MLS all allow private equity participation of up to 30%. The issue is also being 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 space.
