A combination of current WNBA owners, boldface-named outside investors like Laureen Jobs Powell and Condoleezza Rice and even Nike have all closed on ownership stakes in a transaction described by the WNBA as “the largest-ever capital raise for a women’s sports property”, $75 million in new funding.
This infusion of funds is designed to grow the league in a variety of ways, WNBA commissioner Cathy Engelbert said in a phone interview. Clearly, the process, which Engelbert said had taken the better part of two years, delayed by the global pandemic, left her time to develop her wishlist for spending the money.
“Deploying capital against what I’ll call broadly a digital transformation,” she said. “But to get a little more specific: WNBA.com, our app, League Pass, our other digital tools, our ability to glean data about our fans and have more consumer touch points — know where our fans want to consume our product. And our merchandise strategy — obviously, we’ve had no capital to evolve a merchandising strategy.”
The league deployed a novel strategy to raise this money, which was run by Allen and Company as financial advisor for the transaction. Rather than expand, as Major League Soccer has, with expansion fees serving as usable capital, or taking high-profile investors into teams, the investors are buying into the league itself, which previously had been owned 50% by the NBA, and 50% divided by each of the 12 WNBA owners.
Engelbert said that the new investments would not substantially complicate who owned how much, noting that in many cases, NBA/WNBA overlapping owners already had shares of the WNBA reflecting both of these holdings. Both the WNBA and NBA Board of Governors have approved this transaction.
Still, the capital raise provides additional equity in the league to Bill Cameron and Brad Hilsabeck of the Dallas Wings, Eric Holoman and Mark Walter of the Los Angeles Sparks, Ginny Gilder of the Seattle Storm, Ted Leonsis of the Washington Mystics, Herb and Steve Simon of the Indiana Fever and Joe and Clara Wu Tsai of the New York Liberty.
In addition, the league has sold equity to Nike, which now complements its existing marketing partnership with the WNBA, and the official outfitter of the players, with an ownership stake in the league itself.
“It’s doubling down on women’s sports,” Engelbert said of Nike’s role. “… I’m really proud that they’ve stepped up and proactively reached out to us and said, we’d like to invest in the WNBA more than we do in our normal marketing partnership.”
Even former WNBA and NBA players have taken part in this round of investment, from Swin Cash, a WNBA great and current New Orleans Pelicans executive, and former NBA point guard Baron Davis.
Several factors allowed for this to serve as the right time for a capital raise in Engelbert’s view. One was the collective bargaining agreement signed with the players in January 2020, giving the league both cost certainty on a labor front (the deal runs through 2027) and, she noted, some new investment promises from the league that required additional funding to fulfill.
Then there’s the upcoming end to the league’s current media rights deal with ESPN, which was extended back in 2014 until 2024, a move that has left the league miles behind many of the other agreements struck since then.
But for Engelbert, it isn’t as simple as one television agreement, though she noted that she believes investors stepping up will make it clear to those looking to participate in broadcasts during the next round of negotiations that the value of those rights has increased dramatically.
“You have to do it well in advance of your next significant media discussion,” Engelbert said. “But again, the media landscape is changing all around us. So you have to deploy it now for all of the conversations you’re having with potential media rights partners, whether that’s in the streaming area, whether it’s in the content, whatever it is, because they’re all going to come back to some model that I assure you, today undervalues us. And then tomorrow, after we deploy this capital, we’re going to get that model right.”
That newly defined model also creates new opportunities for expansion beyond the leagues current 12 teams.
“We’ll have the the ability to think through that, to make sure that we’re setting up future owners who come in with new teams with an economic model that is much better than what they’ve inherited two or three years ago before we started on this business transformation,” Engelbert said. “So yes, definitely a positive for the hopes of expansion as a result of this capital raise.”
