$125M for NWSL Expansion Team in San Francisco via Sixth Street Partners

Sixth Street, a private equity firm, has signed a record $53 million contract to expand the NWSL team in the San Francisco Bay Area.

Former Facebook executive Sheryl and Rick Welts, the former president of Golden State Warriors, and four former USWNT players (Brandi Chastain and Aly Wagner, Danielle Slaton, and Leslie Osborne) are among the investors.

They plan to invest $125million in the team, which includes the expansion fee and a practice facility worth roughly $40 million. The balance of $32 million will be added to the club’s financial sheet.

According to Alan Waxman (co-founder and CEO), Sixth Street’s investment thesis was based on data about growing attendance in women’s sports, increased media access, contractually obligated revenues, social media following, and increased media accessibility.

Waxman stated that the firm had been studying the NWSL opportunity over nine months and that it found “everything that indicated something is structurally undervalued was blinking green, on all vectors.”

Waxman stated in an interview that there is a larger structural trend where economics are not keeping up with reality. “The data is just popping out of the page.”

Sixth Street will become the majority and controlling owner of the franchise. Waxman did not comment on the value of the stake or the valuations that were accompanied by other investors. In the coming months, more details will be revealed, including a team name, and home venue.

The Bay Area team will join the Utah Royals for the 2024 season. Multiple people with knowledge of the talks say that the NWSL is looking to expand and has reached an agreement with another group in Boston.

It is one of the largest investments in professional U.S women’s sports and it was made by a few prominent backers.

Sixth Street owns a majority stake at event and hospitality company Legends and has investments in the San Antonio Spurs and Real Madrid. Sandberg and Welts will be on the board. Staci Slaughter will also serve as an executive with the San Francisco Giants.

The $53 million expansion fee is a significant increase over years past and substantially more than what the Royals owners paid for the option to buy what was basically a 2 million call option. This discrepancy is due to the significant increase in league valuations over the past two years.

For example, the Washington Spirit were valued at $35million when Michele Kang acquired them in early 2022. Gotham FC was able to raise money just a few months later at an $40million valuation. Angel City is currently playing its second season in the NWSL. It has raised money at an estimated $100,000,000.

Waxman says that there is more growth to come. Sixth Street believes professional women’s soccer could reach the same level commercially as pro men’s soccer within the United States in the next decade.

This would be possible through growth and not taking money from MLS where expansion fees exceed $300 million and the average franchise worth $582million.

Waxman stated, “When I refer to that, I mean advertising sponsorships partnerships and investment dollars but also the flow through of that is valuations.” “This is not our base case. This is what we believe will happen.

While the Bay Area bid was the most prominent during the expansion sale process Sixth Street’s participation was less visible. The NWSL doesn’t have rules for institutional investors, unlike many leagues.

This expansion franchise will become the Golden State’s third NWSL team, joining Los Angeles’ Angel City FC (which joined in 2022) and San Diego Wave (which joined in 2022). The league will expand to 14 teams with the addition of the Bay Area and Utah players in 2024.

Jessica Berman, NWSL commissioner, stated in a statement that “the number of bids, as well as the rise in league expansion fees, are indicative both of the demand for women’s soccer within the professional sports landscape” and that the league has a validated growth trajectory.

Waxman stated that roughly 99% of money spent on sports (advertising and sponsorship, media dollars, etc.) is spent in men’s leagues. He said that Sixth Street and its investors would make money if this ratio shifts to even 90-10.

He said that “in five years,” people will be asking, “Why wasn’t it so obvious when it was happening?”

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