Mark Davis Expands His Sports Empire

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Friends,

Less than one year after his NFL franchise—formerly the Oakland Raiders—made the move east to Las Vegas, owner Mark Davis is expanding his sports empire.

Last week, Davis agreed with MGM Resorts International to purchase the WNBA’s Las Vegas Aces — a 2020 WNBA finals participant.

The purchase price?

Unknown, but the average WNBA team is worth around $14 million — compared to more than $2 billion for their NBA counterparts.

Here’s what MGM said about the sale:

As a frequent WNBA game attendee with a $500 million net worth, Mark Davis purchasing his local franchise for +/- $14 million is hardly surprising, but the real question becomes:

What’s his plan?

Today, we’ll run through it.

First, let’s set the stage.

Outside of the size of the basketball, length of the game, and minimum draft age requirements, the largest difference between the NBA and the WNBA comes via popularity and financials.

While the NBA has spent the last decade expanding its brand and multiplying its revenue — from 3.9 billion in 2010 to 8.7 billion in 2018 — the WNBA hasn’t moved the needle.

In the season before COVID-19 disrupted the entire sports ecosystem, the WNBA only generated $60 million in annual revenue, which represents less than 1% of the NBA’s total annual revenue.

The biggest difference?

TV money.

While the NBA brings in more than $2.5 billion in annual TV revenue, the WNBA generates closer to $25 million annually.

Here is a good infographic showing the key differences between the two leagues from a financial perspective.

Whether we like to admit it or not, I think most of us understand that outside of the sport they play, the WNBA and NBA are completely different businesses from a profitability standpoint.

The interesting part?

Mark Davis appears to be purchasing a team at a defining point in league history.

Before the 2020 season, the WNBA and their player’s association agreed to a new groundbreaking Collective Bargaining Agreement (CBA).

Here are a few of the highlights (Source):

• Dependent on the league achieving revenue growth targets, WNBA players will receive a 50/50 revenue split similar to NBA players — 25% will go toward salaries, and 25% will go toward a fund committed to increasing league marketing and promotional agreements.

• From rookies to veterans, average WNBA salaries increased at a blended rate of 82%.

• The league increased pregnancy benefits for their players, including 100% salary guarantees if they are unable to play due to pregnancy.

• Along with increased housing stipends, WNBA players will each get their own hotel rooms on the road and premium economy flights when traveling.

The result?

In a world with an increased focus on player benefits, treatment, and compensation, the WNBA is setting itself up to thrive.

Higher salaries not only provide tangible benefits to players financially, but the deal also keeps WNBA players from competing overseas during the offseason, which will increase the popularity and quality of play throughout the league over time.

Diverting some of the revenue toward league marketing and promotional agreements will allow the league to improve social distribution — similar to the NBA — ultimately increasing the value of media rights in the long-term.

Think about this…

In 2005, then-Deputy Commissioner Adam Silver declined to sue YouTube for copyright infringement despite NBA lawyers' recommendations.

Why?

He said, “Look, this is where the world is going. At a certain point, if we’re not there, does it mean we don’t exist to this new fan that’s growing up on YouTube?”

In reality, he understood market dynamics.

Consumers need to be provided with bits of content that give them access and entertain them, ultimately keeping them interested, bringing in new fans, and increasing league relevancy over time.

With WNBA highlights essentially non-existent on gen-z focused outlets like Instagram, YouTube, Twitter, and TikTok, the WNBA will utilize their increased marketing and promotion budget to drive global adoption through social.

A decade from now that will be their best investment.

In the end, with only $60 million in league-wide revenue annually, the WNBA has a long way to go.

My guess?

Through a combination of paying their players more to ensure they are only competing in the WNBA, increasing their marketing & promotional distribution through social, and partnering with the NBA to increase viewership — think 2020 WNBA finals when ratings were up 200% due to back-to-backs with the NBA — the WNBA is positioning themselves for financial upside.

Ultimately, Mark Davis might be buying a team at the perfect time.

Have a great day, and we’ll talk tomorrow.

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