Women's Sports Becoming Bigger Business, Better Investment

Women's soccer, tennis and basketball have recently seen an influx of capital and more is likely coming.

“I am strong, I am invincible. I am woman,” the star singer Helen Reddy crooned in 1971.

Plenty of investors agree, as they’re ploughing money into women’s sports amid the sports’ growing popularity. And that trend will continue, experts say. 

“Fan demand is growing for women’s sports content in all its forms. That makes me think investment will grow too,” Chrissy Franklin, executive vice president at sports agency Octagon  (IPG) - Get Free Report, told TheStreet.com.

Recent investments include the National Women’s Soccer League announcement last week that an investment group would pay $53 million to form a team in the San Francisco Bay Area. The majority investor is Sixth Street, a global investment firm with $65 billion of assets under management.

Other investors include former Meta Platforms Chief Operating Officer Sheryl Sandberg and retired U.S. soccer stars Brandi Chastain, Leslie Osborne, Danielle Slaton, and Aly Wagner.

The $53 million price tag for the team was a far cry from the $2 million that could have bought you a team a year ago.

“The number is eye-popping, but the NWSL is the first women’s sports league that will be strong and sustainable without a subsidy,” Marc Ganis, president of sports-business consultant Sportscorp, told TheStreet.com. “The price may be an outlier today, but over time, I think it will be viewed as a good investment.”

Sixth Street is a serious investor, notes Kurt Badenhausen, a reporter for sports business publication Sportico. “This isn’t a vanity play,” he told TheStreet.com. “It’s an investment firm whose purpose is to make money for shareholders. They’ve run the numbers and feel it’s good for shareholders.”

NWSL's Big Potential; Other Investments in Leagues

Ganis sees the NWSL with the best potential for success among women’s pro sports. He’s highly impressed with the league’s management and thinks soccer has a leg up, given all the girls and women who have played it. “The single biggest factor of being a fan is whether you played the sport as a child,” he said.

Badenhausen said the NWSL has an opportunity to be the best women’s soccer league in the world in quality of play, if it’s not already. That puts it far ahead of the men’s U.S. Major League Soccer.

Looking at other recent investments in women’s sports, CVC Capital Partners, a major investment firm, agreed in March to a $150 million investment in a partnership with the Women’s Tennis Association. Tennis ranks as the most financially successful women’s pro sport of the past 50 years.

Meanwhile, the Women's National Basketball Association last year received a $75 million commitment from an investor group. The investors included Laurene Powell Jobs, president of Emerson Collective, a social reform group; Mark Walter, chief executive of investment firm Guggenheim Partners; and Karen Finerman, chief executive of hedge fund manager Metropolitan Capital Advisors.

The WNBA has struggled to succeed without assistance from the National Basketball Association, its counterpart for men. But the new investment is significant and team values are rising, Badenhausen said.

In February, the Seattle Storm said it sold minority stakes in the team that value it at $151 million, about 15 times the recent sales price of other WNBA teams, according to The Wall Street Journal.

Another positive sign for women’s basketball was the record TV viewership and attendance for its NCAA tournament in March-April.

On the corporate side, numerous major companies are sponsoring women’s sports. That includes Alphabet  (GOOGL) - Get Free Report, Delta Air Lines  (DAL) - Get Free Report, Mastercard  (MA) - Get Free Report and Nike  (NKE) - Get Free Report. The only barrier now is “a lack of inventory for some of these brands to do what they want,” such as certain advertising, said Octagon’s Franklin.

Women’s Sports Benefit From Social Movement

The increased focus on women’s issues in light of the me-too movement and the 2020 murder of George Floyd has contributed to the increased interest and investment in women’s sports, experts say.

“The investment is part of a broad social movement,” said Steve Gans, a lawyer involved with sports business at Prince Lobel Tye in Boston. “There’s an unbridled focus on women’s sports assets. Some of it is mission-based.”

It helps that money managers have increased their focus on social issues generally in recent years.

Looking forward, the opportunities are huge. Women’s sports have traditionally received just 1% to 2% of total sports investment, according to Badenhausen.

Other women’s sports that could see more investment are golf, softball, volleyball, track and field, flag football and surfing, experts say. 

“Golf is a sleeping giant,” Ganis said. “So many women are playing it, and it’s an affluent sport. But it hasn’t taken off on social media yet.”

The structure of investment in women’s sports will likely change from traditional models, Franklin said. And change in women’s sports may come more quickly than it has in men’s sports because the women's leagues are at earlier stages of development.

One possibility is that fans, such as season-ticket holders, will gain ownership stakes in teams, Franklin said.

A recent innovation is two sponsors of the Angel City FC soccer team in Los Angeles are putting 10% of their sponsorship dollars into the community. For example, they are giving to a program that enables 400 girls and nonbinary youth to play soccer for free.

Meanwhile, the Kansas City Current is building a new soccer stadium that will be the first one owned by an NWSL team. That setup is common in Major League Soccer and will likely turn into a trend, Franklin said.

In addition, media content related to women’s sports will grow, she said, with only 4% of sports media currently focused on women. 

Beyond broadcasting games, “it’s about telling women athletes’ stories,” Franklin said.

Looking in the broadest sense, “women’s sports are having their moment,” Badenhausen said. And the moment is likely to last.

The author of this story owns shares of Alphabet, Mastercard and Nike.