Why women's sports revenue could top men's in the next 10-years

[00:05] Players and I'm really excited for my next guest cuz I love me some sports. I'm getting to love soccer football. We're in World Cup season at the time of this taping. Let's bring in Karin Norman Monarch Collective

[00:19] good to see you. They made me hold this soccer ball to bring you in. I think it's only really fitting. >> Yeah, you're doing a good job. Can you that That's like ALL THE BIG GUYS.

[00:32] THERE WE GO. >> YOU'RE VERSATILE. YOU CAN go water polo >> Look, I think we have a mutual friend in our CEO Jim Lanzone. You just tell him I'm like I'm multi-faceted {slash} management {slash} talent. You just send

[00:46] him right afterwards. >> All right. I I appreciate it. Well, it's good to connect with you. I've been following your work for for some time. but for those not familiar with what you are doing at Monarch Collective, just

[01:00] walk us through it because you have been really at the forefront of the women's >> Yeah, well so I spent most of my career initially in in tech and media and then I got bitten by football or soccer in 2015. You know, went to a World Cup game

[01:14] with my daughters, my my husband, my parents, time of my life, couldn't buy jerseys, couldn't find content for this league I didn't know existed and it sent understand how hundreds of millions of people could

[01:27] be watching women's World Cup on television and streaming, but there was nowhere to go with our demand. So that was like what got me initially. I ended Women's National Team Players Union when they were doing their pay equity and

[01:40] up co-founding Angel City Football Club with Julie Foudy and Natalie Portman. And that was like we created a model that didn't exist and I'll get into Monarch, but Monarch in a way was sort of the outgrowth of like the day-to-day

[01:54] operating and coalition building that went into starting Angel City, which we went from zero to we were women's soccer club in LA in the NWSL and we were the first ones to build a real commercial P&L and put a lot of

[02:08] 30 million in revenue, 16,000 season ticket holders the first year selling merch in 51 countries and 49 states and that was like, wow, if multiple times, but it's not going to happen by accident. So anyway, I left

[02:23] and started Monarch Collective with my co-founder Jasmine Robinson. We were the first investment vehicle to exclusively focus on women's sports teams, leagues and rights in the most mature parts of the ecosystem. We can get into it and we

[02:36] raised a $250 million fund to do premium things that required a lot of operational hands-on support and to do it in a mission-aligned way where we built the community from our investor base all the way through to fans,

[02:49] players and the like. >> What's in the fund as of today? >> So we have six positions in the fund. Again, we invest in sort of the most that are hard to get into. So we spend not months, but often years I'd say

[03:03] wasting time with the right people. So we now have five teams, two continents, business. We are investors in three NWSL soccer teams in the US, Boston Legacy, Angel City, San Diego Wave. We've done a

[03:19] fully independent women's team in Berlin called FC Victoria, which was spun out of a supporters group that started in 1889. 1889. We have just invested alongside Dan

[03:31] Gilbert as a in the W the Cleveland WNBA team were the first like fund to to to do that

[03:44] after you know, kind of spending time and building relationships to figure out the right place to to begin um, and then we've um, incubated a rights based work. So, we show up very operationally with our teams and we tend to do

[03:57] everything from like scope five or six projects, um, all the way to, you know, and recruit talent and bring in brand sponsors, all the way to in some cases we can fully operate things, but every one of the teams was

[04:11] merchandise and I mentioned up front Angel City sold in globally. We were blown away, um, and so we fully incubated a commerce rights business to super serve the women's sports fan and worked on that for about

[04:24] a year and a half quietly and just launched with the Atlanta Dream and, um, the group there in Atlanta to power their merchandise both in retail and >> There's a lot of first with you. I you seem to be have

[04:37] been very early in Spotify. I'm not or just spotting a lot of what is now happening with women's sports, but I think back to your early days incubating Tinder. Um, what do you what is your what is your investment

[04:50] philosophy? Like, how are you spotting what looks to be really undervalued assets before anybody else? >> I mean, I think it's like, you know, it's I think it's the intersection of markets that you have a strong instinct

[05:02] naturally curious about and I think this is a thing um, I do well when that's true and I'm not forcing it. Like, I can force myself like I'm likely to be better in something

[05:18] that's not like cybersecurity, which I've spent time in, but something that I'm like truly what am I reading about at 2:00 in the morning and obsessing about and I go on these multi-year journeys around it. Like, now I know

[05:32] a week, but which are the ones that stick around over months? Like, I I I >> Well, I'm going to make cybersecurity interesting. Like, check this out. So, CrowdStrike. He just won another Le Mans and And a professional race car driver.

[05:46] shouldn't have picked cybersecurity. I get I get I can nerd I can nerd out on cybersecurity. I will shock you. I can throw it around. Um but that was my old world. Um but there is a difference. Like I'm probably a like a six or seven

[06:02] out of 10 on cybersecurity, whereas like 12 out of 10 on women's sports and like the way you know is I walked away from a big paying job and I just become a here in LA and that's what I thought I wanted to do forever and took my salary

[06:17] to zero and found a co-founder and we went and did this. Or Angel City, I didn't start in I didn't start with Angel City thinking like I needed to be a co-founder of a team. I just wanted a women's soccer team to exist in LA. And

[06:30] do this?" And we had a we had a plan that didn't seemed to want to do it. And then finally she looked at me and she said, industry? Like you and I do all the work, but someone else owns it?" And I

[06:45] said, "Actually, no. You know, there's something called sweat equity in in tech land and founder land. And no one really wanted to give us a big check, which is what we knew we needed. And so we ended up raising a million-dollar at a

[06:58] six-million-dollar valuation three weeks before COVID. We knew that wasn't enough and we you know, we started owning 100% and then we owned a little bit less. But like we were looking for someone else to do it as a first option and then

[07:10] were going to stop it nothing. >> Yeah, caught up with Jason Wright, time that he was joining Ariel to lead the air women's sports opportunity was in women's sports and it was

[07:24] or laying the next round of infrastructure. But Jason was still I the space. As someone who's been doing this a while, like what does what what does the women's infrastructure women's sports infrastructure look like?

[07:37] >> Yeah. Well, so but let me back up for a second. When we started at Monarch, like into Angel City. The women's sports market was measured I think for the first year when we started Monarch. So, Deloitte has kind of become the gold

[07:50] standard in measuring the market. It was half a billion dollars, call it, when we started a little over like 3 and 1/2 years ago. Men's sports market as a comparison is estimated to be about a half a trillion, right? So, you have

[08:04] a fraction of a percent. Now, in the last 3 years, Deloitte came out with their numbers and it's probably more like 3 billion. And but I think the thing people miss is that sports is not a monolithic asset class. Sports in

[08:17] emerging sports, there are mature sports, and then with the same thing for women's sports. So, like when you talk about infrastructure, that $3 billion and it doesn't include tennis because that's been equal for a long time due to

[08:31] that happened 50 years ago. But, that $3 billion disproportionately aggregates to a couple sports in a couple countries that are hard to access and where you have to be disciplined, patient, and show up with a real value proposition.

[08:46] that's why we have the teams and the rights we have. And it's like what we don't do is as important as what we do do cuz there's huge opportunity cost to doing the wrong sport or even doing the one team versus another in a particular

[08:59] infrastructure, there's a ton of infrastructure that different question like what's the status versus what's investable and that's changed it's changed pretty dramatically. Like when we started

[09:15] having a world-class practice facility wasn't table stakes. It now is, right? Having a fan environment and a stadium environment in the right location where

[09:27] experience community experience for butts and seats is important. So, like you might not want to be in one of the major markets if you don't think you can have a player environment that attracts the best players and builds a fan

[09:41] community. And I'd say more dollars are going into infrastructure, but it's being funded all sorts of ways. Public dollars, um private dollars, and the returns profile is very, very different depending upon how you do it.

[09:54] >> How is women's sports trending, I guess, in the direction of making a durable, day, well, not every day, but it sure seems like the past year, there's some new story about how some men's sports team is getting sold, uh an NFL team, at

[10:08] some exorbitant valuation, and nobody really says anything about it, um and it's just widely accepted as okay. >> [clears throat] >> [laughter] >> so a couple things. Um I think um

[10:21] men's sports, if you look at the top four leagues in you in the US, and you could probably add you could add in the fifth league, the MLS now, probably as leagues over the last 30 or 40 years, they are they they they've been largely

[10:36] uncorrelated to all other parts of the asset class, and they've sort of just retain value in up markets and down markets. Now, you have a scarce asset, and so that can drive irrational behavior, or I

[10:51] shouldn't say irrational. That can just drive behavior around supply and demand. particular part of the beach in the Hamptons, things that might be different. But I'd say, the way we look at things is um

[11:08] from the fundamentals. And we're very disciplined about the fundamentals, which is like, can you build a P&L to break even or better with the revenue streams you control at the team level?

[11:20] places where media revenue is up into the right. And so, there's this asymmetric risk profile in what we do, where the downside is protected by franchise value, and the upside should look like where the NBA and NFL have

[11:35] right? You have like Joe Lacob who bought into the Warriors 15 years ago at $500 million valuation and then, you know, I mean, it's if the which they haven't in a long while, it'd probably be somewhere between 10 and 15

[11:51] billion dollars, right? And so, but that came from all sorts of things, media revenue going up, you know, excellent leadership at the league level. And I mean, even if you go way back from there, when when the Celtics were

[12:05] winning championships in like the late '70s, arenas were half empty. racism was a really big problem in the sport. Um, and they had a pioneering diversity. Uh, anyway, and it the NBA really

[12:19] started to take off with the Magic-Bird rivalry and then really when Jordan came in and they moved from tape delay. So, media revenue has a big impact and I'd say a lot of people end up investing in more participation sports where the

[12:33] revenue comes from ticketing or youth or and those are those are very different potential returns profiles. They're not good or venture-like versus what we do where like, you know, the latest NWSL team was

[12:49] in Columbus. When we came into Angel City, we paid two, but the league was near bankrupt. But, like the first transaction we did and, you know, it's publicly reported they bought their franchise 2 and 1/2

[13:03] years ago for $53 million. So, just that piece of paper is traded, you know, up as you can see over that period of time. >> WNBA valuations up about 59% in 1 year. Average valuation about $427 million. Like, when what is the first

[13:18] billion-dollar women's sports team? And what has to happen to get there? >> Well, we wanted it to be Angel City, but we're delighted when other teams beat us sort of. No, we are. >> [laughter]

[13:31] I'm betting on you. If you if you were if if your name was on Polymarket cuz you definitely want to do it. >> Oh, thank you. Thank you. valuable sports team in the world when Bob Iger and Willow Bay came in and

[13:44] bought a controlling stake um about 2 years ago. But in that period of time, we've had sort of like it just an extraordinary run in the WNBA in terms of leadership, ownership, fan base, sponsorship. So, the Valkyries, which is

[13:59] run by Jess Smith, who was our head of revenue at Angel City and is like Um that's the the first team to be been, you know, I think CNBC said they're worth a billion dollars. And

[14:13] we're their public their revenue is out there publicly, but I think it they have it at like 70 80 million dollars. So, they're still trading for in theory a lower multiple than the Lakers or Warriors. And with the WNBA,

[14:27] like the incredible strides, but they still only have like a fraction of a media contract of where it could be over time and things are being layered on. So, still early days, I think, in terms of like P&Ls being built in the WNBA. Um

[14:41] but I think you'll see it across soccer and basketball in the US and very you're just going to continue to see it. And the key is getting in in the right way with the right group and the right like execution and community strategy.

[14:55] >> What what was that day like when uh you got that Bob Iger and Willow Bay know, I'll find. And to be clear, if I was talking to them both in right now, I work with a powerhouse like you. So, this is not like a one-sided thing. But

[15:08] like what was it like for you to get that get that investment? >> It was I I honestly think so Willow has been a friend of mine for a long while. connection to Angel City, she she she was an investor in Monarch. So, we've

[15:21] been friends and collaborators for a long time, but I There were a lot of people in our process, and it was a full board decision around who to work with. I only I think I I mean I I think I I fell to the ground in tears the day it

[15:35] fell to the ground in tears the day it closed to know that we had partners who lived in our city, shared our values, and were excellent, you know, across all the things that you look for in sports and media, etc.

[15:49] underestimated how powerful it would feel to me in the world. Um and I'm just really grateful that, you know, we get to build this this chapter with them. don't tend to feel things while I'm in them. I have to force it. They

[16:02] self-disclose down and [laughter] then I occasionally cry. >> [laughter] >> that trait. We're just always on to the trying to build the next big thing. >> I mean, if you saw my desk, the amount

[16:15] >> I mean, if you saw my desk, the amount of coffee and LaCroix's I have, to slow down, but it felt pretty wonderful when I allowed myself to feel >> I knew I was going to like talking to you. Um what is it like, you know, it's

[16:28] that is building a new sporting franchise? And you mentioned Cleveland before. Take us through the logistics of what it is like to launch a new team. because um we now have the we have the experience

[16:44] in different roles, founder then funder, Angel City, Boston Legacy, where I you done with the founding group there, Jennifer Epstein and Amy Danoff and Stephanie Covington, and then all the way to Cleveland, which is

[16:59] the latest one. Each one's a little different, but I think like the way I think about it is like 70 to 80% of what we're what we're doing or the control practice.

[17:11] And it's about like understanding what in like the NBA is such a delight, right? Because they've had Timbo, and which is their internal consulting organization, and just sort of this long history of like, how do we all work

[17:24] together collectively to share best practices and build excellent teams? And women's side in a way that's very compelling. But so 70-80% of it is sort of best practices. It's that 20 to 30%

[17:37] of best practices. It's that 20 to 30% that's different for each control owner, each syndicate, each president, each city, where like, I think the real magic happens. And it's everything from how do you get your first fan, and who

[17:51] are they? How do you build, you know, like, the supporters group in a way where you don't, you know, if it's soccer, but I love the idea of culture coming into basketball and other sports, too. I think sports can learn

[18:03] from each other. How do you build that in a way where it's not just like, I need 2,000 people, and we're going to give them free gifts, and they're going that might feel a little slow in the beginning, but really authentic, you

[18:16] think it was Chris Dixon, um, from Andreessen who talked about the magic of the first thousand, um, and I think you can't kind of force that. So, going on an organic journey to how to understand like, how do you build that

[18:31] community organically? Do you get them involved in the brand? Do you ask their them, which you're inevitably going to do, cuz you can't make decisions as a collective? I love it. Like, working with Cleveland right now,

[18:46] fun, cuz I think I'm finally like fully comfortable and like, oh, I know this is going to be extraordinary, and like, let's have fun, like, God, I'll just write like brand

[18:59] documents or observations from a trip on an airplane and send it to, gang over there, and I'm like, take it or leave it, and I'm here to to to talk from that to like okay, how do we support this team uniquely? Where did

[19:15] Where do they want us to help? Do they want brand sponsor introductions? Do different way? Do they want to look at activations that could be unique to their market? And then how do we learn like boots on the ground and really show

[19:28] up and listen? Like that that it always a different kind of amalgamation. >> When you were starting Monarch, were there people that said, "What the hell work." And if that was the case, how did you deal with no?

[19:42] people said that to us when we were starting Angel City. With Monarch, I got more of the like there's nothing there's nothing to role model yourself off of, but you do have

[19:56] like a track record now of building something the world can look at. But I sort of view it this way is like I'm in the business of no's. gave us capital and like we thought

[20:09] and we ended up raising and putting a hard cap on it 250. And we want to raise just the right amount to be able to invest in premium teams and wait, right? And show and do things that are going to drive

[20:21] are going to drive extreme upside and cultural impact. And a year because we can't get to the right terms or the right pricing, we won't do it. We really look at opportunity cost. But I think

[20:34] Monarch is I don't No one likes rejection. It's not like oh, I'm in the no business and so fun. Like I really don't like rejection. I'm really competitive. I'm also really collaborative and will help anyone who

[20:47] we share values. I think it's more like somehow I >> [laughter] >> People are like like we raised Monarch people are like oh, women's sports, how exotic, you know? Um but also in a

[21:02] market where no venture funds or private equity funds were like like really be a growth equity funds were really being raised. And I think I just keep my eye on the prize and I let our constraints be our opportunity. And honestly, we

[21:16] ended up bringing in some extraordinary people and families, you know, names that you would know like Pivotal and Melinda Gates, you know, others you might know not know, but they're like the great men of tech and

[21:28] private equity who also care about like, you know, care about returns and and making. But we ended up, you know, bringing people in who wrote us 20, 30, bringing people in who wrote us 20, 30, 40 million dollar kinds of checks and it

[21:42] often were people that we just helped before we like look at women's sports before we knew we were even going to raise a fund. So, I think there is like transactional, we build for the long term, and I just kind of pushed out the

[21:56] were doing. >> I I dig that and I certainly can relate. The last one for you, your biggest prediction for women's sports >> Ooh. Um

[22:10] I think that um I mean, I'll give you like a boring one will come to me in the process. >> Fire [laughter] away. >> I think the market is going to grow the way tech grew in the early days. Like it

[22:24] won't get as big as tech, but like when I started in tech at, you know, better Ventures um late '90s, early 2000s, it was a backwater industry. And sometimes Future II cuz it's like if you're focused and you're disciplined and you

[22:39] do this in in a very, you know, organized way, you know what's going to happen. And so, yeah, we're $3 billion market today, it could be you know, we wouldn't put this in a deck. Uh it could be 20, 30, 40, 50

[22:51] billion dollars, but it's going to disproportionately aggregate to the places where people want to show up, put butts in seats, do it repeatedly, watch where you deliver against the world-class player and fan experience.

[23:04] So, I think market size growing faster than we expect, but on and and and like the Amazons and Googles and Anthropic and OpenAIs, they will take a majority of that share and a lot of the stuff on the margin is

[23:19] not, you know, will be fun but won't drive that market size. So, I don't prediction. What's the fun one? Um, I think we'll have more soccer and more, you know, like there's this model in Europe of like women's teams kind of

[23:35] taking capital for the first time in minority transactions. I think you're going to see a lot of European men's teams sell control in their women's team because they realize that dedicated

[23:48] board, dedicated focus, team like the best talent wants to work with people the best sponsors. So, I think you're going to see a wave of like both leagues and teams figure out a unique model as to how they work with the men's team and

[24:02] the brand for these 100-plus year-old kind of teams, but like actually become more and more independent. Um, and I think that women's sports will in my lifetime, you know, maybe it'll be bigger than men's sports cuz we drive

[24:16] 80% of consumer spend and you're seeing completely new categories of sponsors provocative comment. I might just have to live to be 200. this was going to be a masterclass on women's sports investing. I was not

[24:29] disappointed. Kara, good to uh meet you. Keep posting everything you're working kicking major ass. >> Thank you for having me. This was so >> Of course. I'll talk to you soon. That's it for the latest episode of Power

[24:41] it for the latest episode of Power Players.