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    Home»Investments»Investing in women’s sports is a long-term play that’s paying off
    Investments

    Investing in women’s sports is a long-term play that’s paying off

    July 19, 2024


    Certain shortsighted business mistakes live on in jeering lore: Blockbuster rejecting Netflix comes to mind, as does Twentieth Century Fox giving up sequel rights to Star Wars. Right about now, as the WNBA counts its ratings and revenue, certain oafish sports owners occupy the same category. Let’s pick on James Dolan, as he’s demonstrative of a particular butt-headedness. This is the guy who so undersold the New York Liberty that he made them work in an arena that hosted cat shows. It now looks as if Dolan lost about $120 million when he sold the team. Who knew karma could smell so strongly of a litterbox.

    For years Dolan and other owners treated the WNBA as a misdirected little exertion that came at their personal expense. They whined interminably about having to contribute to its marketing and sabotaged it with sneers — and now they’re patting their pockets, while the league’s All-Star Game is one of the most compelling events of an Olympic summer. Dolan sold the Liberty in 2019 to Joe and Clara Tsai of the Brooklyn Nets for a reported $10 to $14 million. The Liberty is now valued at $130 million. In May, the team set a record for revenue from a single game with over $2 million when Caitlin Clark and the Indiana Fever came to town.

    Nobody has called out this blinded fiscal bungling with more glee than Alexis Ohanian, the Reddit co-founder, entrepreneur and husband of Serena Williams, who is making a mint off the fact that so many legacy male sports owners chose the condition of stupidity. “I’ve said it before, and I’ll say it again — the legacy of the underinvestment of women’s sports isn’t just blatant sexism (which it is), it’s also a lesson in gross business incompetence,” Ohanian posted on social media in 2023.

    When Ohanian became the co-founder and principal investor in Angel City in 2020, all kinds of people told him he would take a bath. “I just wonder where those people are now,” Ohanian said triumphantly on the red carpet of the ESPY’s last week, where word had leaked out of an imminent deal for Willow Bay and Bob Iger to purchase a controlling stake in Angel City at a $250 million valuation. The club has been generating about $30 million a year in revenue, highest in the nascent National Women’s Soccer League.

    “Fun-fact: when launching the team, I invested $250K separately in a trust for all of Serena and my children, which has now made our girls not just the youngest owners in pro sports — but also now multimillionaires,” Ohanian brag-posted on X. “They’re proudly holding their shares.”

    When Ohanian first looked around for an investment opportunity in women’s sports back in 2019, he had the same conversations over and over with the same type of guys: they had stakes in the WNBA or women’s soccer only because they had daughters who liked sports, and wanted to sell. They treated them like “charity-pity,” Ohanian says. They put zero marketing or energy into them as businesses. “Like, why are you surprised it’s doing poorly?” Ohanian wanted to know. They’d swear it wasn’t their languor or dismissiveness; people simply didn’t want to watch women.

    “They had created an almost kind of Stockholm syndrome of mediocrity,” Ohanian related in a video posted on Instagram. “… Like it was a haplessness and a helplessness that then got offensive, because I realized, this has been compounding for decades … And that is the part that this new generation of owners have exposed.”

    Ohanian saw what was there to be observed, by anyone with eyes that weren’t squinted by cretinization: an undervalued stock. If women’s games at big events like March Madness, the World Cup and the Olympics could command huge numbers, that meant with some real marketing those audiences could become habitual. The only reason they hadn’t so far, in Ohanian’s view, was because they were “under-resourced, under-marketed, undervalued, underappreciated, undersupported.” All of which was catnip to an investor who likes to be early.

    What a contrast with Dolan, who in 2018 moved the Liberty, who averaged almost 10,000 at Madison Square Garden, to a 2,300-seat arena in Westchester and then sold them as a failure. Now he’s crying because another thing he totally missed was the streaming revolution and viewer cord cutting. Last week Dolan raged at the NBA because its new media rights deal doesn’t protect his MSG regional sports network — as if Adam Silver can stop consumers from canceling a cable channel run by a guy who inherited his old man’s one good idea.

    The NBA has subsidized the WNBA from the outset — and as a whole the league hasn’t reached profitability yet. But commissioner David Stern saw the league not as a revenue tool but an investment in global audience growth strategy — and that has worked. The WNBA is set to bring in $2.2 billion in a new media rights deal.

    It’s hard to believe, but five of the original eight teams in the WNBA are now defunct, shut down by owners who were similarly unwilling to fund or market, or wait. When Stern preached it was a longer-term investment, they didn’t listen. As one league source told me a few years ago, they simply saw “no upside” in it. Their attitude in and of itself was the profit killer.

    Here’s what they left on the table: The consulting-audit firm Deloitte predicts that by the end of 2024, revenue generated by elite women’s sports will surpass $1 billion for the first time. That’s a 300 percent increase over its last prediction in 2021. As Ohanian has observed, “The market is speaking loud and clear, and folks catch up real quick when dollars are involved.” The market is not just speaking — it’s roaring. And laughing.





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