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W.N.B.A. Raises $75 Million With Hopes of Business Model Revamp

W.N.B.A. Raises $75 Million With Hopes of Business Model Revamp
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The WNBA has raised $75 million from more than two dozen investors in a bid to revamp its business model as players call for expansion, higher salaries and better benefits.

The funding includes investments from Nike, Condoleezza Rice, Laurene Powell Jobs, Pau Gasol, NBA and WNBA team owners, and other sports and business figures.

“We’re going to take a huge step forward in transforming the league and getting us an economic model that is worthy of players on the court,” WNBA Commissioner Cathy Engelbert said in an interview.

This was the first time that the WNBA raised money from investors. The league, which was founded by the NBA in 1996, held its first season in 1997. Financial struggles have been a constant, and stark disparities in revenue, media attention and player pay distinguish the women’s league from the NBA The WNBA is betting that with the right investments it can generate enough interest in its players to create a sustainable business model.

“Part of it is exposure,” Engelbert said. “It’s like pushing a boulder up a hill.”

The WNBA is currently owned half by the 30 NBA teams, and half by the 12 WNBA teams. Ownership on both sides will be diluted as part of the deal. Engelbert declined to disclose the size of the stake the new investors are taking in the company, the valuation of the deal or the league’s annual revenue.

The league has no current plans to raise further money but would consider doing so if it is “successful with deploying this capital for sustainable growth in a few years,” Engelbert said.

The league is open to ideas from the players’ union about how to use the new money, she added, but it plans to prioritize marketing and improve its digital products, including its website, app and league pass, which allows fans to watch games that are out of market and not on national television.

Revenue from these efforts could then be used to fund key requests from players, such as chartered flights, Engelbert said. Unlike in the NBA, where team members travel on private flights, WNBA players fly commercially. It’s long been a sore issue for players; on Tuesday, Elizabeth Cambage, a four-time All-Star, wrote on Twitter about having to pay “out of my own pocket” to upgrade her seats on flights to games.

When asked about Cambage’s Twitter post, Engelbert said: “People get emotional. People tweet things. We all want the best travel conditions for our players. But the reason why it’s there for the men’s league is because they get these big valuations. They get media rights of their assets.”

The WNBA began to raise money in January 2020, after it signed a new collective bargaining agreement with its players, though the latest fund-raising had been sidelined by the coronavirus pandemic. (The goal shifted to “let’s make sure we survive,” Engelbert said.) As the year edged closer to 2021, the league began to see “some growth” in sponsorship revenue and social media engagement — and began to try again.

Investors, flush with capital, have parked their money in sports teams and leagues, which have in turn looked to funds outside to stem the losses from the pandemic. Streaming wars have created new appetite for sports rights as services look for distinguishing ways to fight for eyeballs. A wave in state legalization of sports betting has created a multibillion-dollar industry.

The WNBA’s new backing could pave the way for any number of investments, spanning sports betting and online virtual experiences, Engelbert said. Top of the list of priorities: “We need more fans,” she said.

Engelbert said the fan base skews young and female, but the league’s digital strategy to connect with that group has been underfunded. Last year, the WNBA struck a multiyear deal with Google, which helped sponsor the airing of 25 regular-season games on ABC and ESPN. It also signed a multiyear streaming deal with Amazon Prime and has streamed games on Twitter over the past five seasons. But the league, which holds its season over the summer, is competing with other sports that have more and more prominent TV exposure, such as the NBA playoffs and Major League Baseball.

Engelbert said she wanted to “market players into household names” both in the United States and abroad. That could help generate revenue to increase player salaries, which, like chartered flights, have long been a source of friction.

The minimum player salary for the 2022 season is about $60,000, and the maximum is $228,094, with a team salary cap of just under $1.4 million. With just 12 roster spots on each of the league’s 12 teams, it can be difficult for even talented players to find a place in the league. But as players call for expansion, with fans eyeing Oakland, Calif., and Toronto for new teams, Engelbert has maintained that the league must increase revenue before it could expand.

Other investors include Michael Dell, the founder of Dell Inc., and his wife, Susan; Joe and Clara Tsai, who owns the WNBA’s Liberty and the NBA’s Nets; and Swin Cash, the vice president of basketball operations for the NBA’s New Orleans Pelicans.

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