WNBA raises $75 million in hopes of business model overhaul
The WNBA has raised $75 million from more than two dozen investors in a bid to revamp its business model as players demand expansion, higher salaries and better benefits.
The funding includes investments from Nike, Condoleezza Rice, Laurene Powell Jobs, Pau Gasol, NBA and WNBA team owners, and other sports and business figures.
“We’re going to take a big step forward in transforming the league and giving us a business model worthy of the players on the court,” WNBA commissioner Cathy Engelbert said in an interview.
It was the first time the WNBA raised funds from investors. The league, which was founded by the NBA in 1996, held its first season in 1997. Financial difficulties have been constant, and stark disparities in revenue, media attention and player compensation distinguish the NBA women’s league . The WNBA is betting that with the right investments, it can generate enough interest among its players to create a sustainable business model.
“Part of that is exposure,” Engelbert said. “It’s like pushing a rock up a hill.”
The WNBA is currently owned half by the 30 NBA teams and half by the 12 WNBA teams. Ownership of both sides will be diluted as part of the deal. Engelbert declined to disclose the size of the stake the new investors are taking in the company, the valuation of the deal or the league’s annual revenue.
The league does not currently intend to raise additional funds, but would consider doing so if it “is successful in deploying that capital for sustainable growth in a few years,” Engelbert said.
The league is open to ideas from the players’ union on how to use the new money, it added, but it plans to prioritize marketing and improving its digital products, including its site. web, its app and its league pass, which allows fans to watch games that are out of market and not on national television.
Revenue from those efforts could then be used to fund major player demands, such as charter flights, Engelbert said. Unlike the NBA, where team members travel on private flights, WNBA players fly commercially. This has long been a painful issue for gamers; On Tuesday, four-time All-Star Elizabeth Cambage wrote on Twitter that she had to pay “out of pocket” to upgrade her seats on flights to the games.
Asked about Cambage’s Twitter post, Engelbert said, “People are getting emotional. People tweet things. We all want the best travel conditions for our players. But the reason he’s there for the men’s league is because they get these big valuations. They get the media rights to their assets.
The WNBA began fundraising in January 2020, after signing a new collective bargaining agreement with its players, although the latest fundraiser was sidelined by the coronavirus pandemic. (The focus shifted to “let’s make sure we survive,” Engelbert said.) As the year edged closer to 2021, the league began to see “some growth” in sponsorship revenue and engagement. on social media – and started trying again.
Investors, hungry for capital, have increasingly poured their money into sports teams and leagues, which have in turn turned to outside funds to stem losses from the pandemic. The streaming wars have created a new appetite for sports rights as services look for distinctive ways to fight for eyeballs. A wave of state legalization of sports betting has created a multi-billion dollar industry.
The new support from the WNBA could pave the way for a number of investments, spanning sports betting and online virtual experiences, Engelbert said. Top of the priority list: “We need more fans,” she said.
Engelbert said the fanbase skews towards youth and women, but the league’s digital strategy to connect with that group has been underfunded. Last year, the WNBA struck a multi-year deal with Google, which helped sponsor 25 regular-season games to air on ABC and ESPN. He also signed a multi-year streaming deal with Amazon Prime and has streamed games on Twitter for the past five seasons. But the league, which holds its season over the summer, competes with other sports that have growing TV exposure, such as the NBA playoffs and Major League Baseball.
Engelbert said she wanted to “market actors in household names” in the United States and abroad. It could help generate revenue to boost player salaries, which, like charter flights, have long been a source of friction.
The minimum player salary for the 2022 season is around $60,000 and the maximum is $228,094, with a team salary cap of just under $1.4 million. With only 12 places in each of the 12 teams in the league, it can be difficult for even talented players to find a place in the league. But as players call for expansion, with fans eyeing Oakland, California and Toronto for new teams, Engelbert argued the league needs to increase revenue before it can expand.
Other investors include Michael Dell, the founder of Dell Inc., and his wife, Susan; Joe and Clara Tsai, owners of the WNBA’s Liberty and the NBA’s Brooklyn Nets; and Swin Cash, vice president of basketball operations for the NBA’s New Orleans Pelicans.