Another Record Deal for Women’s Sports

A pro women’s-soccer team appears headed for the Mile High City of Denver—along with a mile-high purchase price that has analysts worried about a financial bubble.

According to reports, a group of investors has agreed to pay a record $110 million to establish a new franchise in Denver, expanding the National Women’s Soccer League to 16 teams. The fee, double the previous record, is the largest amount ever paid for a women’s-soccer team in North America. Only five years ago, for instance, the going rate to establish a new franchise was between $2 million and $5 million, so this latest deal offers further evidence of the astronomical growth of women’s-sports leagues among professional investors. “Women’s sports are at the beginning of a boom cycle,” says Neil Collins, a senior client partner in the Industrial and Sports practices at Korn Ferry. He says investors are paying these prices “because they believe the value of teams and leagues is going to increase exponentially over time.”

Driving that belief is unprecedented growth in attendance, merchandise sales, and viewership for women’s sports. During its most recent season, the league’s TV ratings were up 41% and average ticket sales grew 26%, for instance. Collins says professional investors see women’s sports as capturing the zeitgeist of modern pop culture, and they are buying in now to capitalize on upcoming media-rights deals, lucrative partnerships and sponsorships with brands that want to get in on the action, and other revenue-generating opportunities. “The opportunity to build and monetize fandom around women’s sports is huge,” says Collins.

But with more money comes more pressure to generate returns, something most women’s sports teams and leagues have so far been unable to do. Garrick Yu, co-lead of the Global Sports practice at Korn Ferry, worries that outsized valuations of women’s-sports franchises could result in more risk and less control for teams and leagues. Even with the projected growth rates, achieving the traditional 7%-or-more ROI professional investors typically seek will be difficult, says Yu. “We’ve seen bubbles in sports before,” he says, citing the rapid increase and then precipitous drop in valuations in professional lacrosse and e-sports. “What happens on paper often doesn’t happen in reality.”

Part of the concern, experts say, is that investors appear to be viewing women’s sports as one homogenous whole instead of as separate and distinct leagues with different audiences and growth potential. Just as the NFL’s brand, fan base, international strategy, and audience are different from the NHL’s, so too are the various professional women’s-sports leagues from one another. Put another way, the fact that the WNBA has been able to grow on the back of Caitlin Clark’s global popularity doesn’t mean anything for the NWSL.

The fear is that financial interests will ultimately create issues between owners, athletes, and fans that could dilute competitiveness and stunt growth. There’s no guarantee, for instance, that projected increases in media-rights deals will materialize. Creating VIP experiences such as luxury suites, tickets to practices, or preseason tours can maximize revenue, but also risks alienating core fans. Similarly, without a return attached, not every owner is going to rush out to build a stadium—indeed, the new team in Denver will play in a temporary venue at first. “Owners are going to have to quickly create value in order for the prices they are paying to make sense,” says Collins. “They can’t stand still.”

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