Podcast Summary
First women's soccer team in NWSL with institutional investors as majority owners: Retired women's pro players formed Bay FC with institutional investors for financial stability and potential profit, aiming to avoid past issues of lack of funding and media attention in women's soccer teams
The new Bay Football Club (Bay FC) in the National Women's Soccer League (NWSL) is making history by having institutional investors as the majority owners, as opposed to individuals who love women's sports but didn't see it as a profitable investment. This approach is inspired by the failures of previous women's teams in the San Francisco Bay Area due to lack of funding and media attention. The founders, all retired women's pro players, aim to avoid these issues by treating the team as a business with potential for return on investment. This new approach could potentially lead to more financial stability and success for women's professional soccer teams in the US.
Private Equity's Impact on Women's Soccer in the US: Private equity firms are entering the US women's soccer market, inspired by high demand and global success, aiming to replicate the success of international men's teams.
Private equity investment is poised to reshape professional sports in the United States, starting with women's soccer teams like Bay FC in the Bay Area. This model, while untested in the US, is common in global sports landscapes and has shown success. Co-founder Ali Wagner was inspired by the launch of Angel City FC in Los Angeles during the pandemic and saw the high demand for women's soccer with attendance and viewership numbers surpassing those of the NBA and NHL. However, investment dollars have not yet matched this demand. Private equity firms, which have been major players in international sports teams, are now looking to make their mark in the US market. Bay FC, led by Leslie Osborne, aims to be a trailblazer in this new trend and potentially replicate the success of global men's teams.
Securing Funding for a Women's Professional Sports Team: Joining a professional women's soccer league like the NWSL requires a large initial investment, including an expansion fee of $53 million, hiring players and coaches, building facilities, and marketing. Finding a lead investor with the required 30% stake and sufficient capital remains a challenge for many teams.
Developing a successful women's professional sports team, such as a new National Women's Soccer League (NWSL) team, requires significant funding. The expansion fee for joining the NWSL is $53 million, and additional expenses include hiring players and coaches, building stadiums and training facilities, designing jerseys and logos, and marketing. The team in question went through funding rounds, but had not yet found a lead investor with the required 30% stake and sufficient capital. The challenges of funding professional sports teams in the US extend beyond just the team itself, as ownership involves a fraction of the wider sports industry pie, which has grown in value due to media deals and ticket sales. Historically, sports team ownership has been dominated by wealthy families, but the increasing wealth of the sports industry has made it a more attractive investment for a wider pool of potential investors. The search for this investment remains ongoing for the team in question, as they strive to join the ranks of iconic sports brands and shift the landscape of women's sports.
Institutional investors view sports as attractive investment opportunities: Institutional investors are increasingly investing in sports teams due to their financial viability and potential returns, surpassing those of men's sports in some cases.
The landscape of sports team ownership is evolving, with institutional investors increasingly viewing professional sports as attractive investment opportunities. In the US, Major League Baseball paved the way for this trend by allowing institutional investors to hold small stakes in teams since 2019. However, the recent entry of private capital into women's professional soccer team Bay FC as a majority owner marks a significant shift. This investment interest is driven by the growing financial viability of women's sports, with returns on women's sports sometimes exceeding those of men's sports. Meanwhile, in Europe, sovereign wealth funds have long held stakes in major football clubs. The shift towards institutional ownership in sports reflects the increasing recognition of sports teams as valuable assets rather than mere sources of entertainment. Despite the challenges posed by the pandemic, the resilience of sports teams has further solidified their appeal as investment opportunities.
Private investment in sports team ownership: Opportunities and challenges: Private capital firms bring resources and liquidity, but their short-term investment horizon may conflict with the long-term nature of sports team ownership.
The involvement of private capital firms in team ownership presents both opportunities and challenges. On the positive side, private investment can bring increased liquidity and resources for team growth. However, private equity firms typically operate with a short-term investment horizon, which contrasts with the long-term nature of sports team ownership. This clash could potentially impact the overall sports ecosystem. Regarding the specific case of Ali Wagner and AFC, she successfully found a lead investor in Alan Waxman from 6th Street Partners. Although 6th Street had previously invested in sports teams, they had never been the lead investor. Ali had to convince Waxman to take a chance on this new investment type. After conducting thorough research, 6th Street recognized the potential value and committed $125 million as the lead investor. However, the length of 6th Street's investment in AFC remains uncertain, adding to the uncertainty of how this short-term investment philosophy will impact the long-term nature of sports team ownership.
Long-term commitment from 6th Street as lead investor and majority owner of Bay FC: 6th Street's investment in Bay FC is a long-term commitment, providing stability and comfort to the team as they work to establish the company within an 11-month timeline.
6th Street's investment in Bay FC is not a traditional private equity play with a quick turnaround, but rather a long-term commitment as the lead investor and majority owner for at least a decade. This stability provides comfort to the team, despite the challenges of standing up a company in a condensed timeframe. The toughest part, according to Ali, is yet to come as they work to establish the company within an 11-month timeline. Despite the challenges, Ali is excited for the emotional moment when Bay FC takes the field in their new stadium, knowing they've created an environment for athletes and potentially changing the narrative of investing in women's sports.
Exploring the World of 'Behind the Money' and Connecting with the Team: Learn about various industries, discover fun facts, and access free articles through 'Behind the Money' podcast. UnitedHealthcare offers flexible short-term health insurance plans, and 1-800-Flowers.com is more than just a gift-giving destination.
There are various ways to connect with the team behind the "Behind the Money" podcast and access related articles for free. Hosted by Michele Tendera, the show offers insights from different industries and guests. You can reach out to them through the contact information provided in the show notes. Additionally, if you're interested in reading more about the topics discussed in the episode, there are free articles linked in the show notes. Furthermore, there were a few interesting tidbits shared during the episode. For instance, did you know that a crocodile can't stick its tongue out? It's a fun fact shared during the episode. Another topic touched upon was short-term health insurance. UnitedHealthcare offers flexible and budget-friendly plans underwritten by Golden Rule Insurance Company, allowing you to have coverage for a month or just under a year in some states. Lastly, 1-800-Flowers.com was highlighted as more than just a gift-giving destination. They put their hearts into everything they do, from their farmers and bakers to their florists and makers, ensuring that every product is made with love to help you celebrate all life's special occasions. So, whether you're looking for insights into various industries, interesting facts, or high-quality gifts, "Behind the Money" and the mentioned companies have got you covered.
