Women’s soccer is experiencing a new wave of investment interest, particularly from private equity firms. While other major U.S. sports leagues have allowed passive investments from private equity investors, the National Women’s Soccer League (NWSL) has taken a bold step by allowing these firms to take majority control of the economics.
Changing Landscape
The traditional approach to sports ownership has been upended by the entry of private equity firms into women’s soccer. Sixth Street and Carlyle are among the firms that have paved the way by acquiring teams like the Bay FC and Reign FC, respectively, at record-breaking prices. These investments have not only injected additional capital into the assets but have also led to a surge in attendance, signaling a significant momentum in the sport.
The surge in private equity investments can be attributed to the realization of the intrinsic value of women’s sports. As women’s elite sports revenue is on track to cross the billion-dollar mark, soccer emerges as a dominant player in this growth story. The revenue streams in women’s sports, such as merchandising, ticket sales, partnerships, and sponsorships, present a lucrative opportunity for investors, especially as broadcast rights in women’s sports are also on the rise.
The NWSL recently signed a $240 million, four-year media deal, marking a significant leap from its previous agreements. This influx of media revenue, coupled with growing fan engagement, has caught the attention of private equity managers like Carlyle, who are eager to capitalize on the league’s growth potential. Notably, Disney CEO Bob Iger and his wife are reportedly in talks to acquire Angel City FC at a valuation of $250 million, setting a new benchmark for women’s sports franchise valuations.
While the influx of private equity capital bodes well for the growth of women’s soccer, it also raises challenges for the league. The shift from individual ownership to institutional ownership requires a careful approach to ensure the sustainability of the business model. Commissioner Berman emphasized the need for moderation in the way institutional capital invests in sports, reflecting the league’s cautious approach towards this new investment landscape.
Industry Comparison
In comparison to other major sports leagues, the NWSL stands out for its willingness to embrace private equity ownership and leverage it for the league’s growth. While leagues like the NBA, MLB, NHL, and MLS cap private equity ownership at 30%, the NWSL has set a new precedent by allowing these firms to take majority control. The potential entry of private equity into the NFL further underscores the shifting dynamics in sports ownership.
The rise of private equity investment in women’s soccer marks a significant milestone in the evolution of sports ownership. As institutional capital continues to flow into the NWSL, the league faces both opportunities and challenges in balancing investment interests with the integrity of the sport. The coming years will be crucial in determining how private equity partnerships shape the future of women’s soccer and pave the way for sustainable growth in the industry.