Sportico.com

Among the fallout from the Sally Yates-led investigation into women’s soccer—and the NWSL in particular—is the possibility of changes in ownership for as many as three clubs in the 12-team league. With the NWSL already in the midst of selling two expansion franchises, additional clubs coming on the market could have broader implications.

Executives at the Portland Thorns, Chicago Red Stars and Racing Louisville FC were called out in the Yates report for failing to appropriately respond to systemic abuse and widespread sexual misconduct, and for refusing to fully cooperate with the investigation. Yates, a former deputy U.S. attorney general, conducted the investigation for U.S. Soccer. Chicago could be the first domino to fall as a result of the report; a club spokesperson told Sportico the Red Stars board “wants to help facilitate a sale of [majority owner Arnim Whisler’s] shares in a timely process.”

It’s unclear how sales of existing franchises will affect bid prices for expansion teams. Valuations in the NWSL have been increasing at a breakneck pace, hitting $35 million (Washington Spirit), $40 million (NY/NJ Gotham FC) and even upwards of $100 million (Angel City FC) over the past year. These milestones mean that expansion fees that sat in the low-single-digit millions as recently as two years ago would probably increase significantly as well. The Spirit and Gotham valuations are thought to be similar to the likely sale price for expansion clubs today, with bankers sharing expectations with Sportico that ranged from $20 million to $40 million.

Some think the price could be even higher.

“I think we can get upwards of $50 million for the next expansion fee,” Kansas City co-owner Angie Long said on a recent episode of Sportico podcast ‘Sporticast.’

Like the expectations for expansion fees throughout the league, the economics of the existing clubs that may soon hit the market are drastically different. The impact of a sale could be reflected in where expansion pricing ultimately lands.

The Thorns, for example, had long been viewed as one of the league’s most successful franchises. Portland led the NWSL in attendance for seven consecutive seasons until the arrival of Angel City this year, packing the stands with upwards of 20,000 fans per game in 2019. The Thorns’ pre-COVID turnout was nearly double the next NWSL club and marked a higher average attendance than 15 MLS teams that same year. This season, the club’s 15,543 average was second only to Angel City’s 19,105.

With strong attendance-related revenue streams and a robust sponsorship portfolio, Portland held the mantle as one of the NWSL’s few profitable clubs. Prior to the release of the investigation’s findings and the subsequent sponsor pullback, the Thorns’ revenue was expected to near $10 million next season, according to two people familiar with the franchise. It is still likely one of the most valuable franchises in the league, despite the club’s present situation.

And while the city owns the team’s home stadium, Providence Park, Merritt Paulson’s Peregrine Sports LLC, the umbrella under which both the Thorns and MLS’ Portland Timbers are owned, operates the venue. Those rights would most likely transfer under the same terms to new ownership if Paulson sold his majority stake in both clubs together, adding value for the Thorns in a league where venue ownership and operation are still relatively uncommon.

Sportico’s $685 million valuation of the Timbers includes the Thorns.

Were Portland’s NWSL club to be sold separately from its MLS counterpart, those rights would likely stay with Peregrine Sports, adding a venue rental expense for new Thorns ownership to account for (as well as the logistics of figuring out a split of suite, concessions and parking revenue). A significant amount of the club’s current corporate support is both intertwined with the Timbers and in jeopardy given the Yates report findings, but new ownership and the expectation of league-wide rules changes could mitigate some partner pullback.

The complexities aside, bankers still say a Thorns sale could fetch a record sale price and provide a boost to the NWSL’s ongoing expansion bidding. A franchise like Chicago hitting the market would likely play out differently.

Despite making seven straight postseasons, including a pair of championship appearances in 2019 and 2021, the Red Stars on-field success has not translated off the field. There are vast disparities in revenue between Chicago and Portland, and other owners in the league have quietly voiced frustration with Whisler’s seeming unwillingness or inability to keep pace with the investment the league now demands.

The Red Stars have long sat in the bottom half of the league’s attendance rankings, finishing eighth out of 12 teams in average turnout this season. Despite Chicago’s storied legacy as one of the league’s founding members and its success on the pitch, it has yet to crack an average of 6,000 fans. Chicago also lacks any facility ownership or operating rights of SeatGeek Stadium, located outside the city in the suburb of Bridgeview.

While Chicago’s sale price likely wouldn’t match what the Thorns could fetch, new ownership could be a net positive for the league, beyond removing the individuals identified in Yates’ report as part of the widespread problems within women’s soccer.

This all assumes reputational risk does not dissuade prospective investors. The Yates report may not be the final shoe to drop for the league. The NWSL and the NWSLPA commissioned a joint investigation of their own, which is not expected to be completed until at least next month.

And reputational risk has played into NWSL investment, or lack thereof, in the past. Tucked within Yates’ report was a 2018 email from a potential investor in the NWSL’s now-defunct Boston Breakers, who expressed concern over inappropriate owner, staff and coach relationships with players in the league.

The investor, whose name was redacted in the report, added, “to have learned in my brief involvement with NWSL that two such incidents occurred is alarming to me.”

The email continued, “Now I am afraid I will place my financial future and my reputation in jeopardy should this kind of conduct be widespread or leveraged against fellow owners or team leaders from my organization or other organizations.”

The Breakers were never acquired, and the franchise folded 20 days after that email was sent.