Sixth Street Partners will become the first institutional investor to hold a majority ownership position in a professional American sports club after investing $125 million to the acquisition of a new National Women's Soccer League team.
The arrangement demonstrates the push for private funding in sports management. In order to add a team to the league that is owned by everyone, a record $53 million expansion fee is included in the entire investment. It is a ten-fold increase from expansion fees paid in 2020.
In Europe and Asia, private financial institutions have a history of owning sports teams, but up until 2019, Major League Baseball was the only league to modify its ownership rules to allow it.
Many other American leagues quickly followed suit in reaction to rapidly rising club values, more lucrative broadcast rights agreements, and the beginning of the coronavirus pandemic, although private finance has mostly been confined to passive minority investors.
Jessica Berman, the commissioner of the NWSL, said that the league was "happy to pioneer this for domestic leagues in the US, since we think this is undoubtedly problems other leagues are facing."
Alan Waxman, the chief executive of Sixth Street, said the business made the investment with the goal of holding the franchise for at least ten years. Although having only been formed in 2012, the league is catching up to its male counterpart, Major League Soccer, which began play in 1996.
The NWSL will need 10 years to catch up to the MLS in every area, according to our prediction. According to Alan, it entails "team ideals, media money, and sponsorships." Sixth Street, an undisclosed organisation with a location in the San Francisco Bay Area, will purchase a NWSL team, making them the fourteenth member of the league.
Former Meta CEO Sheryl Sandberg, former Golden State Warriors and NBA executive Rick Welts, and four former US women's national team players with links to the area—Brandi Chastain, Leslie Osborne, Danielle Slaton, and Aly Wagner—are additional minority investors and board members for the squad.
Alan Waxman, a resident of the Bay Area, said that he was drawn to the concept when his wife encouraged him to meet the four former players who had been leading the charge to establish a team there. The NBA's San Antonio Spurs, Real Madrid, FC Barcelona, and other teams are long-term investments of Sixth Street. The establishment of the NWSL franchise, which will begin play in the 2024 season, will signal a significant moment for the league.
Since 2021, the NWSL has been dealing with a controversy involving systematic abuse that resulted in the resignation or termination of multiple club coaches, the removal of the former commissioner Lisa Baird, and the forced sales of the Chicago Red Stars and Portland Thorns, two current teams. The league is currently looking into potential purchasers for those two teams.
“We're not looking for the historical women's sports investor who came for a social cause or because they had a grandchild or daughter involved”, Jessica said. "This is a company. We anticipate that affluent individuals will want to invest, believe in the value offer, and use all the trends that Sixth Street has discussed as justification for the valuation of their investment.”
