Down to Business: Valuations are wild, returns are rocky. But women’s sports teams are in demand

Everyone loves to gawk at the price tags billionaires pay for sports teams: $250 million for Angel City FC; $110 million in expansion fees for the newest NWSL franchise in Denver; and most recently, $26.5 million paid by Alexis Ohanian for an 8 percent stake in Chelsea Women, which values the team at $326 million (£245 million).

But what really goes into valuing a sports franchise, especially in women’s sports, where the revenue playbook is still being written?

I asked a handful of bankers and experts who work closely with investors interested in entering the space, and the answer is equal parts math, real estate and a little bit of storytelling.

Welcome to the first edition of Down to Business with Asli Pelit. Every other week, I will take you through the exciting, fast-changing and sometimes confusing world of fans’ favorite growth prospect: the business of women’s soccer. I can’t think of a better place to start than the flashiest numbers on the page, club valuations.

Valuation playbook darling: Revenue multiples

Traditionally, sports teams are valued using a variety of methods, including the income approach, market approach and asset-based approach. In short, the value of a sports team is determined by its future prospects (or cash flows), its brand value and its real estate investments.

But ultimately, as one of my favorite business school professors and the founder of Galatioto Sports Partners, Sal Galatioto, told me a long time ago, the value of a sports team is determined by scarcity value and by potential investors’ willingness to pay.

“It’s not just based on valuation, it’s based on scarcity, ego gratification and just wanting that asset,” he told me. “If you grew up as a fan of your favorite team and you have one opportunity that you may never get again to buy that team, you’re going to be a very aggressive bidder. You’re not focused on the numbers. You’re focused on winning.”

Despite the scarcity value and a billionaire’s willingness to pay, experts use a variety of data to calculate the value of a team.

One metric most bankers like to throw around is the revenue multiples. If a team pulls in $10 million in revenue and the average multiple in the league is 10x, you might say it’s worth $100 million. Sounds simple? It’s not.

“Revenue multiples for leagues are informed by real-world transactions,” Sportico valuation expert Kurt Badenhausen said. “It’s not necessarily linear all the way down the line because a big-market team in a brand new stadium is different from a team that plays in a small market and needs significant investment in their facilities, but each deal creates a data point.”

The average NWSL team is now valued at $104 million, according to Sportico’s 2024 valuations, a 57 percent jump from the previous year. That figure is based on standard metrics used in soccer team transactions. It’s a combination of local and national revenues, multiplied by a team-specific revenue multiple. For NWSL franchises, those multipliers range from 5 to 10, with an average of 6.8. By comparison, the WNBA averages a slightly higher multiple at 7.3. These multipliers are calculated based on prior team sales or, if the property has been around for a while, by dividing the market value by revenue.

To make things more complicated, revenue multiples don’t capture future growth or structural issues a team might still be working through, even in a close league case such as the NWSL. This is especially true for women’s teams, where many don’t own their stadiums and don’t have the same access to sponsorship dollars as men’s teams do. This is the main reason NWSL has been prioritizing franchise bids that come with a stadium or a practice facility plan.

A stadium is not just a vanity project, it’s a value driver. The goal is to turn the team revenue positive as quickly as possible. However, there is a caveat. It only works if the real estate math makes sense in that specific market. Kansas City? Cheap land, no competition, big payoff for the local Kansas City Current’s CPKC Stadium. New York City? Not so much.

Still, across the sports landscape, owners are willing to spend not only to build stadiums but also entertainment districts around them and arenas that boast restaurants, bars, retail stores, apartments and hotels. These districts expand the reach, impact and opportunity for the stadiums, which can then be used as venues for other events such as concerts, fairs or festivals, generating additional revenue. It also gives owners access to valuable consumer data. An example of this, again, is Kansas City as the team announced in March that it will build a $1 billion project around the stadium that includes mixed-use housing, retail space and public spaces on the waterfront.

Not successful on the pitch? Not a deal breaker 

While valuing a sports franchise, bankers examine not only the sports organization’s ability to maximize its tangible assets but also evaluate the team’s brand value, including winning championships or attracting marquee players. While this rule applies to most established European sports organizations, in the United States, on-field success does not matter as much. The Dallas Cowboys are the most valuable sports franchise in the world at $10.1 billion, according to Forbes’ annual list of most valuable sports teams. They last won the Super Bowl in 1996.

Across the Atlantic, where women’s clubs are mostly bundled with the men’s side and where there is a risk of relegation, valuations get trickier.

Chelsea untangled its women’s side and sold it to another intra-group company, Blueco 22 Properties Limited, in 2022-23 at a £200 million valuation. The most successful women’s soccer team in England certainly shows on-pitch success, most recently capturing a treble of trophies with the Women’s Super League, League Cup and FA Cup titles. However, financially, it has not been easy to calculate what it can bring to the balance sheet.

But brand value is brand value, and Chelsea has that.

Since Behdad Eghbali’s Clearlake Capital and prominent investor Todd Boehly bought the club in May 2022, the men’s side has not won anything, but it is still the world’s 10th most valuable club at $3.5 billion, according to Sportico.

“The odds are much greater that the New York Yankees will be here in 100 years than Apple will be here in 100 years,” Galatioto said.

No wonder so many venture capitalists are buying sports properties.

“They’re a little late. I’ve been preaching this for 30 years,” Galatioto said. “Nobody listened for the first 20, but they finally caught on.”

Expansion fees aren’t team valuations 

When it comes to valuations, much of the confusion stems from people mistaking expansion fees for what a team is actually worth. An expansion fee is not the valuation of the team, it’s just the price of entry. While the expansion fee plays a small role in the valuation, what really matters is what you build after you’re in. How do you convert your investment into a team with a loyal and (hopefully) global fan base, secure sponsorship deals and have the infrastructure to support both?

Denver paid $110 million in expansion fees but committed to building a soccer-specific stadium and a high-end training facility, thinking long term and aiming for a valuable franchise in a decade from now. The Current, which joined the NWSL in 2021, paid a $5 million expansion fee when it relocated from Utah in 2020. And after four seasons, the team is worth $182 million, up 141 percent from the year before, because it opened its stadium and has the highest revenue in the league ($36.3 million), according to Sportico’s valuations.

“Not all franchises are created equal,” Badenhausen said. “Certain franchises in the NWSL have struggled to maximize their business opportunities, which is no different than any young sports league, and the same dynamics play out in mature sports leagues, such as the Athletics and Rays in baseball over the past decade or Arizona’s NHL franchise.”

Small clubs + big stars = No problem

When valuing a sports team, star power isn’t just a footnote, it is a multiplier. Celebrities such as Ryan Reynolds, Natalie Portman, Serena Williams and Alex Morgan don’t just bring capital, they bring media attention, sponsorship opportunities and built-in global audiences.

Their involvement generates headlines, draws fans who might never have cared about the sport and opens doors to partnerships traditional owners don’t have access to. Star power can elevate a team’s valuation beyond the balance sheet because fame, when leveraged well, turns attention into revenue.

Is $1 billion valuation around the corner? 

That’s the million, sorry, billion-dollar question.

The real value of a women’s soccer team today is a cocktail of the right market, real estate value, brand potential and celebrity influence. Of course, star talent that brings eyeballs and social media followers isn’t bad, either. Revenue multiples are useful, but they can’t tell the whole story because the story is still being written.

Since Michele Kang reset the bar in NWSL by paying $35 million for the Washington Spirit, women’s soccer has bolstered growing momentum with no sign of slowing down. Following Kang’s (at the time) record-breaking investment, NWSL’s team sales and franchise fees skyrocketed by double digits and, most recently, to triple digits.

Investors are not hesitating to open their checkbooks, and early investors are happy their bet on the league is paying back. Last year, Ron Burkle sold the San Diego Wave for $120 million to the Levine Leichtman family. Burkle paid a $2 million expansion fee for the Wave to join the NWSL for the 2022 season, similar to Angel City FC, which sold for $250 million to journalist Willow Bay and her husband, Disney CEO Bob Iger.

With the right investors and operators, a path to a billion-dollar valuation seems plausible.

“I don’t think it’s out of the question by any means,” one banker, who wished to remain anonymous because they are actively working on deals in women’s soccer, told me. “It will take time, investment, and execution from strong operators and investors, but I think there’s certainly a pathway there.”

As Galatioto puts it, sometimes all it takes is one billionaire who wants it badly enough.

(Top photo: Justin Tallis / AFP via Getty Images)

Asli Pelit is a journalist at The Athletic covering the NWSL, the U.S. women's national team and the business of women's soccer. She has reported on the global game since 2013, for TRT Sport, USA Today Sports, VICE, Forbes, and most recently was a staff writer at Sportico. Pelit holds a B.A. in Journalism from New York University, an MBA from Columbia Business School and was a 2020-2021 Knight-Bagehot Fellow. Follow Asli on Twitter @asli_pelit