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WALKING THE WALK

Post by Alan Waxman, Co-Founder and CEO at Sixth Street April 4, 2023



Why Sixth Street is Making the Largest Institutional Investment to Date in a Women’s Sports Team

Sixth Street today announced the largest institutional investment ever made in a professional women’s sports franchise.

In partnership with USWNT legends Brandi Chastain, Leslie Osborne Lewis, Danielle Slaton, and the club's Co-Chair Aly Wagner, we are bringing an National Women's Soccer League expansion club to the Bay Area. Sheryl Sandberg is joining as a strategic investor and will be a member of our club’s majority-women board, which will also include NBA Hall of Famer and former President of the Golden State Warriors Rick Welts and long-time San Francisco Giants executive Staci Slaughter.

The strength of the Northern California market and its status as a soccer haven – 9 of the 26 players on the current USWNT roster have Bay Area ties – is part of the investment story.

But the bigger theme is what’s happening with global women’s sports as an ecosystem. Consider as a starting point that 99% of advertising, sponsorship, media, and investment dollars currently go to men’s sports vs. women’s. There are moments in time when, as investors, inflection points begin to take shape. Patterns start to develop, and you can almost see the trend happening in real time, even before the full economic reality catches up with the underlying data. We believe we are at one of those moments with women’s sports, and women’s soccer in particular.

Here’s why: 1. Sports businesses are unique assets. They have significant contractual cash flows, valuable live content (more on this in a bit), and are increasingly institutionalized to allow for greater capital investment. World-class franchises are also hard to create and build. Only a select few become national and global consumer brands. These factors have led to a significant run-up in valuations for men’s teams over the past decade, while women’s teams have been almost completely left out of the trend.

2. The data supporting the sustained growth of women’s soccer are compelling. Last year’s NWSL championship game ratings were almost equal to the MLS championship, and when the NWSL gets on national TV its ratings rival the U.S. men’s club games with much less marketing and media exposure. 365 million people tuned in for the 2022 European Women’s Championship. NWSL opening weekend attendance for 2023 was up 50% year-over-year: San Diego drew 30,000+ people, Angel City was sold out, and the Washington Spirit shattered its home opener record. Yet, again, in almost all sports, 99% of advertising, sponsorship, media, and investment dollars are directed to men instead of women. The more we look at the data, the less this gap makes sense. And the new evidence only continues to pile up across the women’s sports landscape (e.g., the record-setting ratings for the NCAA Women’s basketball tournament). This is trapped value waiting to be unlocked.

3. The way content has historically been delivered to consumers means that the data are lagging the sport’s real popularity. If you turned on the TV at any point over the last 30 years, men’s sports were impossible to miss. Women’s sports fans, meanwhile, have to work to find games. They aren’t watching out of convenience – they go get it. Streaming and social media have now fundamentally and forever broken down the barriers between what a sports fan is looking for and their ability to obtain it. Women’s sports also attract a demographic that skews female – highly sought after considering that over 80 percent of U.S. household purchases are made by women. We believe we’re in the early innings of advertisers, sponsors, media companies, and investors waking up to what consumers are telling them about their craving for women’s sports content. These are mostly large companies that move slowly, but in herds. Further advances in technology (e.g., virtual attendance at sporting events no matter where you are located) will only make women’s sports more accessible globally. If instead of 1%, just 10% of those advertising, sponsorship, media, and investment dollars were to go to women’s sports, that’s massive. If economic reality follows the data and growth trends, we think a 75% (men)/25% (women) split is achievable over the next decade for women’s sports in general. The move should happen even faster in U.S. women’s soccer, which ultimately should track closer to parity.

4. NWSL Commissioner Jessica Berman and the leadership at many of the clubs across the league have a plan to take this ecosystem to the next level for teams, players, and fans alike. They are institutionalizing and growing the business with a strategy rooted in investing for the future and ensuring parity with a playing schedule full of games of consequence. The league is going to take advantage of its relative youth compared to other leagues as a digital-first sports asset and next generation sports and entertainment business. Now is the time to get on board.

5. The pie is growing and soccer’s future is bright for both the women’s and men’s games in the U.S. and globally. Consider a runway that includes the 2023 Women’s World Cup this summer, the 2026 Men’s World Cup taking place in different cities across the U.S., and the 2028 Olympics in the U.S. Role models and cultural status affect consumer behavior, and the generation making the decisions today grew up with indelible moments like Brandi’s game-winning goal in 1999 as a part of their heritage. Soccer is already played by millions of young women and girls. Imagine where it can go from here.

Women’s soccer is a case study in American success and leadership. Aly, Brandi, Leslie, and Danielle have lived the triumphs and the trials. They have been part of driving this evolution. They, and other iconic trailblazers like Megan Rapinoe and Mia Hamm and Julie Foudy and a host of others, did the hard work. Now, because of their leadership and a technology evolution through streaming and social media (with VR and AI not far behind), the walls have been broken down. The data make that clear.

We have a lot of work to do to get this right. Sixth Street has deep experience in global sports – from Real Madrid C.F., FC Barcelona, and the Spurs Sports & Entertainment to our partnerships with the New York Yankees and the Dallas Cowboys through Legends – and we’re going to leverage that expertise to build this club the right way for our players, fans, business partners, and communities on and off the field.

We’re witnessing a typical pattern for growth companies at the beginning of an inflection point. All you have to believe is that economic reality eventually catches up to the data. And as it does, similar to the global men’s soccer franchises, we will start to see professional women’s teams become national and global consumer brands.

Many years from now, we believe we will look back on this period as a landmark moment in U.S. sports history and a turning point for large-scale investment in women’s sports. We are thrilled the Bay Area will be leading. We have a lot of work to do to get this right, and we’re incredibly grateful to people like Sheryl, Rick, and Staci for jumping on board to help guide this organization. Thank you to everyone – especially Aly, Brandi, Danielle, and Leslie -- who worked so hard and showed so much determination to make this happen. We’ll see you all in the Bay in 2024.

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