Private-equity firms are showing interest in women's soccer as team valuations continue to rise.

• Unlike other U.S. professional sports leagues, the National Women's Soccer League permits private equity firms to hold a majority stake in franchise teams.
• Deals have been struck at soaring team valuations by both Sixth Street and Carlyle.
• Jessica Berman, commissioner of the NWSL, stated in an interview with CNBC that institutional capital is a crucial way to add more capital to support the league's assets.

Women's soccer is bringing private equity off the sidelines.

The National Women's Soccer League is the only major U.S. sports league that allows private equity investors to take majority control of the economics.

Jessica Berman, commissioner of the NWSL, stated in an interview with CNBC that institutional capital is a crucial way to add more capital to support the league's assets.

Last year, Bay FC, the San Francisco women's team, was first owned by Sixth Street, who paid a record $54 million for the league's 14th franchise.

A few weeks ago, Carlyle Group closed its second-ever deal by partnering with the Seattle Sounders FC to purchase the city's NWSL team, the Reign FC, for $58 million, significantly more than the $3.5 million it sold for just five years ago.

As part of the agreement, Adrian Hanauer, owner of Sounders FC, serves as governor of Reign FC on the NWSL Board, while Alex Popov, head of private credit at Carlyle, serves as an alternate governor. Popov stated that the more than 40% increase in NWSL attendance this year demonstrates the sport's growing momentum.

"Popov stated, "We see the inflection point and understand the reasons behind it. There are many opportunities for growth that we must seize.""

Maya Mendoza-Exstrom, the chief business officer of the Reign, stated that the investment from Carlyle is in line with the "intrinsic value of women's sports." She emphasized that Carlyle's resources and expertise can add value to the game, particularly in the areas of analytics and sharing knowledge from its other portfolio companies.

"Mendoza-Exstrom stated in an interview that in order to succeed, we must make wise decisions. This involves operating a profitable business that produces significant revenue growth in a short amount of time while also delivering a superior product."

According to Deloitte, women's elite sports revenue is projected to surpass one billion dollars for the first time this year, with soccer accounting for approximately half of that amount, as stated by Popov.

While women's sports revenue is primarily generated from merchandising sales, ticket sales, partnerships, and sponsorships, men's sports revenue is mostly driven by broadcast rights. However, in November, the NWSL secured a $240 million, four-year media deal, which was 40 times higher than its previous deal, although still significantly lower than the MLS's broadcast rights revenue.

Private-equity managers, including Carlyle, view the tailwinds in broadcast as a key bullish thesis for inking deals in NWSL.

Bob Iger and his wife, Willow Bay, are close to acquiring Angel City FC at a valuation of $250 million, which would break the record for a women's sports franchise. The NWSL did not comment on the potential deal.

The private-equity interest in the sport is likely to persist as valuations continue to rise, but the league is still in the try-out phase.

"Commissioner Berman stated that institutional capital is different from individual owners who have traditionally managed teams in local markets. He explained that many leagues are seeking our expertise to determine how to regulate institutional capital's investment in sports."

The NBA, MLB, NHL, and MLS have private equity ownership limits of up to 30%, while the NFL is also debating the issue. Commissioner Roger Goodell stated in May that the league is making progress and there is a lot of interest in private equity ownership.