On a Saturday in May, Women’s National Basketball Association superstars Caitlin Clark and Angel Reese went head-to-head on the court. With a peak of 3.1 million viewers, Indiana Fever’s win over the Chicago Sky made for the WNBA’s most-viewed regular season game in 25 years.
The league itself is still a tadpole compared to its male counterpart: At the end of May, the WNBA was worth $1.15 billion, a fraction of the NBA’s teams’ total of $132.5 billion, according to a PitchBook analyst note and Sportico.
For private market investors, the lower valuations relative to men’s sports, as well as a growing consumer base, make women’s professional sports leagues a fertile ground for new money. Whether the leagues can sustain this growth remains to be seen.
“The messaging amongst our clients has been ‘get in now,’” said Allison Gargano, a partner at law firm Morgan Lewis, where she advises PE sponsors across sectors, including sports.
Last year, WNBA team jerseys, sweatshirts and hats flew off the shelves as league-wide merchandise sales grew 236% year-over-year. By January, the WNBA had negotiated a new media rights agreement that will bring in $2.2 billion over the next decade, nearly six times the value of its previous agreement.
“We see women’s sports as the small caps of sports investing,” said Jason Wright, managing partner and head of investments at investment firm Ariel Investments, where he runs the women’s sports investing strategy. In January, the venture made its first investment in a National Women’s Soccer League expansion team, Denver FC, with a $110 million expansion fee.
Firms like Ariel Investments plan to improve teams’ profit margins. They ultimately make a return on their investment through operational changes like building new stadiums and practice facilities and negotiating player contracts, Wright said. In May, the city of Denver approved the women’s soccer team’s $70 million plan to build a new stadium.
Earlier, in March, WNBA team the New York Liberty announced plans to build a 75,000-square-foot practice facility in Greenpoint, Brooklyn, complete with saunas, a hyperbaric chamber, family and nursery areas and in-house hair, nail and makeup studios for players.
Sustaining the hype
Already, women’s team and league valuations are on the rise.
In May, the New York Liberty sold a stake in its club at a $450 million valuation, more than 30 times what owners Joe Tsai and Clara Wu Tsai paid for the team in 2019. Clara Wu Tsai confirmed the valuation at the Forbes Iconoclast conference in New York on Thursday.
“There’s value because the viewership is growing but the revenue hasn’t quite caught up,” Tsai said of women’s sports and the WNBA. “So there’s so much monetization that’s available. That disconnect between the growth of viewership and revenue—that’s the investment opportunity.”
Marc Lasry, co-founder of Avenue Capital and former co-owner of the Milwaukee Bucks, agreed with Tsai and said that his firm “would love” to invest in the WNBA.
“I think it’s a great investment, but you’ve got to find the right team,” Lasry said at the conference. "[The teams] are going to need to raise capital, and I think you’ll see that as everybody’s trying to upgrade their arenas and building practice facilities.”
In another example of rising valuations, The Carlyle Group made one of its first sports bets with its purchase of NWSL team Seattle Reign FC for $56.3 million, around 15 times its valuation five years prior, according to the PitchBook note.
The path forward
Now, the biggest concern for investors is whether or not those viewership stats, merchandise sales and attendance rates will continue their upward trajectory, said Bobby Sharma, founder and managing partner at Bluestone Equity Partners, a PE firm investing in sports, media and entertainment.
“At the highest tier of professional women’s sports, the question is whether or not those tailwinds are secular or transitory, and if the former, if growth can catch up to increasingly lofty valuations relative to actual revenue,” Sharma said. “Increased attendance is great, but the key to supporting those valuations is driving a media audience at scale.”
With more streaming services and channels to watch sports on the market than ever before, Sharma said that building a large and sticky fan base has become increasingly difficult.
“That has never been an easy thing to do for any sports property,” he said.
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