Five years ago, the WNBA’s business was in a desperate place.
Fresh off a pandemic season, the effects of which reverberated well into 2021, the league needed money. Commissioner Cathy Engelbert led a capital raise that the league trumpeted as “the largest-ever” for a women’s sports property, eventually selling a 16% equity stake in the league for $75 million in February 2022. The funds were earmarked for “brand elevation, marketing, and the globalization of the WNBA,” among other infrastructure investments.
Now, a mere four years after the deal was finalized, the WNBA is exploring buying back the 16% stake, multiple sources with direct knowledge of the league’s business told Front Office Sports.
The WNBA declined to comment. Sources said the idea was still in the exploratory stages, and it’s not clear how buying back the stake would be structured or funded.
The buyers of the stake—a large group that includes several WNBA owners and Pau Gasol, Condoleezza Rice, and Nike—stand to earn back their original investment several times over.
It was widely reported at the time that the $75 million stake valued the league and its teams at $1 billion dollars. However, a source with direct knowledge of the raise told FOS the actual valuation was closer to $475 million after the influx of capital.
Team valuations have ballooned since, as the WNBA has added three new teams, with three more to come later this decade.
When the WNBA launched in 1997 every team was owned and operated by the NBA team in that market. That was the model for the WNBA’s eight original franchises, until 2002 when the NBA Board of Governors voted to restructure the league to allow independent owners to join and teams in non-NBA markets to be formed.
Since 2002, the WNBA has welcomed a handful of independent owners including the Mohegan Tribe, which bought the Orlando Miracle and relocated the team to Uncasville, Connecticut in 2003.
Prior to the capital raise, 50% of the WNBA was owned by the 30 NBA owners and the other 50% was owned by the W’s owners. The raise diluted the NBA and WNBA owners’ percentage down to 42% each. A number of investors from the capital raise are NBA and WNBA owners—including Ted Leonsis, Joe and Clara Tsai, and Herb Simon—giving them three different stakes in the league.
David Stern’s brain child has grown to become the longest-running professional women’s sports league in the United States, in part because of the NBA’s investment. However, experts believe the muddled structure is hindering the league as players and owners try to hash out a new collective bargaining agreement
“The NBA has always viewed the WNBA as a sideline,” Stanford economics professor Roger G. Noll told FOS. “They’ve never thought of it as a standalone line of business that they’re trying to maximize the value of. It was a way to use the arenas in the summer when they’re not being used. That’s always been the conceptualization.
“The question is, now that it’s clear everybody that is sentient knows women’s basketball has arrived, is it possible for the WNBA to continue to exist in that environment? Or will someone take it away from them?” ‘’
By 2030 the WNBA will be at 18 teams with the addition of five expansion teams over the next four years. The most recent expansion teams—Cleveland, Detroit, and Philadelphia—paid $250 million each to join the league. Although the exorbitant expansion fees points to the WNBA being in a more stable financial position, there are still many who believe it’s not yet able to support the gross revenue model the union is seeking because of the ownership structure.
The WNBA and WNBPA are roughly 15 months into CBA negotiations, but have reached a stalemate over how the league should share its revenue with players. In a proposal submitted by the union around Christmas, players were asking for a 30% share in gross revenue and a salary cap of $10.5 million. The league has yet to respond to that proposal, but its latest which was shared in early December featured a roughly 70% share of net revenue and a salary cap of $5 million.
