A combination of current WNBA owners, boldface-name outside investors like Laurene Powell Jobs and Condoleezza Rice and even Nike have closed on ownership stakes in the league 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 long dealmaking process—which Engelbert said had taken the better part of two years, delayed by the 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.”
Both the WNBA and NBA Boards of Governors have approved the transaction.
The league deployed a novel strategy for this fundraise, which was run by Allen and Company as a financial advisor. Rather than expand—as Major League Soccer has, with expansion fees serving as usable capital—or take high-profile investors into team ownership groups, the investors are buying into the league itself, which previously had been owned 50% by the NBA and 50% by the 12 WNBA team owners.
Engelbert said that the new investment would not substantially complicate who owned how much, noting that in many cases, overlapping owners with teams in the NBA and WNBA already had shares of the league reflecting both of those holdings. 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 as 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, adding, “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.’”
Former WNBA and NBA players took part in this round of investment as well, including Swin Cash, a WNBA great and current New Orleans Pelicans executive, and former NBA point guard Baron Davis.
Several factors made this the right time for a capital raise in Engelbert’s view. One was the collective bargaining agreement signed with the players in January 2020 and running through 2027, which gave the league cost certainty on the labor front but also, Engelbert noted, included 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 agreements struck since then.
For Engelbert, it isn’t as simple as one television agreement. But she did note that having investors step forward like this should make it clear to broadcasters looking to participate in the next round of negotiations that the value of those TV 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 league’s 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.”