From Andrew Ross Sorkin (CNBC, NYT Deal Book) on "Can the W.N.B.A make money"

[grandhavendiddy]

Can the W.N.B.A. make money?​

After the Indiana Fever made Caitlin Clark the W.N.B.A.’s No. 1 draft pick this week, the team’s ticket prices soared. The basketball star’s long-distance shots and huge following have landed her on “Saturday Night Live,” attracted interest from sponsors like Nike and sold out jerseys at a rapid pace.

In exchange for Clark’s once-in-a-generation talent, the W.N.B.A. will pay her … $76,535.

News of the paltry first-year salary has ignited a countrywide debate that even President Biden weighed in on, commenting that “even if you’re the best, women are not paid their fair share.”

It also highlighted a hard truth that largely goes unspoken about the W.N.B.A. and many women’s sports leagues: They aren’t profitable.

The simplest reason the W.N.B.A. isn’t paying Clark more is that the league brings in just $200 million annually and relies on the N.B.A. for some of its funding. The N.B.A., by contrast, brings in about $10 billion.

When the N.B.A. and its commissioner at the time, David Stern, founded the W.N.B.A. in 1996, return on their investment wasn’t their immediate focus. As Stern later recounted, he wanted “to develop new fans, more programming, have arena content outside the N.B.A. season, give more girls an incentive to play basketball.”

And, he added, “we knew it was going to be a long haul.”

Indeed, many argue that the W.N.B.A. simply needs more time: The N.B.A. had a 50-year head start, and stars like Larry Bird, Magic Johnson and Michael Jordan helped lift it up in the 1980s and ’90s.


The question now is whether Caitlin Clark is the W.N.B.A.’s own Larry Bird or Magic Johnson, a huge star coming at exactly the right time to raise interest across the sport. Or is she more like the league’s Tiger Woods: a talent whose popularity as a prodigy has yet to be replicated?

The W.N.B.A.’s profitability hinges on media rights. The league’s $60 million annual deal is up for renewal in 2025, and several trends are working in its favor, including a race among streamers to collect rights to live sports and a rise in legalized gambling that leaves bettors eager to expand their outlets.

College stars like Clark, Cameron Brink, Angel Reese, Alissa Pili and Aaliyah Edwards, who are joining the W.N.B.A. in fashionable style, bring an additional jolt to the league. Their collective drawing power during the N.C.A.A. tournament helped deliver a television audience for the women’s championship game that topped viewership for the men’s final for the first time.

“We’re way undervalued today,” Cathy Engelbert, the commissioner of the W.N.B.A., told DealBook.

Stars have powered viewership peaks in women’s sports. In a 2018-19 survey by researchers at Ohio State University, only 3 percent of respondents said women’s sports constituted all or almost all of their sports consumption, and 10 percent said half or most of it. But viewers will show up in hordes, particularly when those matches are being played on a big global stage.

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Serena Williams’s final match of the 2022 U.S. Open brought in between 4.8 million and 6.9 million views, the most for a tennis match in ESPN’s history A record 6.43 million viewers tuned in to watch the women’s U.S. soccer team, which included Alex Morgan and Megan Rapinoe, play in the World Cup last year. Clark’s final college game, a loss in the N.C.A.A. championship game, drew 18.87 million viewers on ABC and ESPN, about four million more than the men’s championship game.

Alex Michael, a managing director at the investment bank LionTree, said the value of stars might be increasing as media consumption continued to shift away from broadcast television. “It’s not only the live games, but just their lives — whether it’s social media or other facets of storytelling,” he said.

The chicken-or-the-egg problem. While more viewers translate to more money for the league, it takes money to find new viewers. In 2022, the W.N.B.A. raised $75 million from an investor group that includes Nike, Condoleezza Rice, Laurene Powell Jobs and Michael Dell. The league is also planning multiple expansion teams that it hopes will bring in more money.

The 2022 funding has gone into marketing, ad campaigns, influencer marketing and live events, Engelbert said. And some of those efforts may be paying off: This past season, the league averaged 627,000 viewers per game on ABC — still a fraction of the 1.09 million for N.B.A. games, but its most-viewed regular season in more than a decade.

“The seeds were sown over the last five years for this monumental growth,” Chiney Ogwumike, a host for ESPN who was the W.N.B.A.’s first overall draft pick in 2014, told DealBook.

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As evidence of ESPN’s role in that progress, she cited pregame shows for the W.N.B.A. and an increasing number of shows about women’s college basketball.

Some industry executives say it’s especially hard to ignore this stat. More than 2.4 million people tuned in to the W.N.B.A. draft, beating the previous record by more than 300 percent.

Bobby Sharma, the founder of Bluestone Equity Partners, who previously worked as a senior legal executive in the N.B.A. office, told DealBook that he was one of the many viewers who had tuned in for the first time.

“There is a real possibility we may be witnessing a transformational moment for the W.N.B.A., for the sport of basketball, and maybe even a cultural and economic shift for women’s sports in America,” he said. — Lauren Hirsch and Tania Ganguli

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[grandhavendiddy]

A good read. It all comes down the $60M/year media deal. Their fixed costs should not move much. This is now about marginal revenue. If that media deal comes in at, say, $180M or other and if that incremental revenue is shared at the NBA rates, of 50%, that is $120M of new revenue.

Divided by 50% that is $60M. Take 12 teams and 10 players (using simple math), that is 120 players. That is an increase of $500K/per player. Not bad. Not Viktor, but $500K/year for someone in their 20s is an excellent salary. And that is BEFORE endorsements, etc. (side note: if you look at CEOs, their base pay is often pretty modest, just to pay quarterly estimated taxes probably, and the rest is all performance. Cathy E. made this point on CNBC)

Now, the question of that average salary and wage pool, how does that get distributed.

The NBA (LeBron) talks at length about income inequality, but you have the NBA with what 70%+ African American and within the salaries you have....wait for it....income inequality as owners pay, outsized amounts, for what they hope will be incremental improvement versus other player options.

 

[Mdfgator]

The push to a genderless society marches on.