CNBC Sport: A responsible look at women’s sports exuberance

A version of this article first appeared in the CNBC Sport newsletter with Alex Sherman, which brings you the biggest news and exclusive interviews from the worlds of sports business and media. Sign up to receive future editions, straight to your inbox.

Last week, when I spoke to media executive-turned-investor Jeff Zucker, he said the biggest story in sports business right now is the growth of women’s sports. (Spoiler alert: This week’s guest for The Four Questions, Endeavor Executive Chairman Patrick Whitesell, says the same). 

“In women’s sports, we have seen record-setting levels of interest in the WNBA, NWSL, and women’s college basketball, and I expect women’s sports to continue to grow as top female athletes continue to break through culture,” Zucker told me.

Followers of women’s athletics already know some of the highlights: The NCAA women’s basketball finals had higher ratings than the men’s final this year. Late last year, the National Women’s Soccer League agreed to new domestic rights deals worth $240 million with Amazon, CBS, ESPN and Scripps – a 40-fold increase over the league’s previous deal.

The WNBA struck a new media rights deal of its own in July for $2.2 billion over 11 years, with a reevaluation after 2028 that could lead to even higher fees. That’s a significant increase over the $60 million per year the league made in its previous rights deal, but it’s still a far cry from the $7 billion per year the NBA will bring in, illustrating how much room there’s still to run.

The WNBA has been the flag bearer for women’s sports as a growth play and an investment opportunity in all facets: team ownership, merchandising, sponsorship and expansion. The regular season ended Sept. 19, and the ratings statistics are staggering. 

It was the most-watched WNBA regular season ever across ESPN platforms, up 170% from last year with an average of 1.2 million viewers per game.

The WNBA had its highest total attendance in 22 years, up 48% from last season.

WNBA merchandise sales from the league’s online store and in-person New York City location were up a combined 601% from 2023, according to a league spokesperson. 

If you didn’t think there was general exuberance around the WNBA, the legendary CBS newsmagazine show “60 Minutes” just dropped a 13-minute segment on the league’s rise this past Sunday. 

But whenever it feels like everyone is piling in one side of a trade, I believe it’s CNBC’s job to look at the other side. Every investment opportunity comes with risk. So, what’s the bear case for women’s athletics?

I asked LionTree media banker Alex Michael to give me a bear-case scenario as a part of this thought exercise. While he’s also excited about the growth in this space, here are three things to consider across the media and sports landscape:

1. Media landscape shifts

Most of the value in professional sports is propelled by media rights deals, and we’re in an unusual sweet spot right now for sports. Linear TV networks like CBS, Fox and NBC (CNBC’s parent company) are paying huge increases to keep sports to maintain relevance. 

Meanwhile, streaming services backed by huge technology companies such as Amazon, Apple and Google have started to bid on sports as a way to entice new subscribers. 

That’s a concoction that’s led to many buyers for scarce content – a boon for sports rights. 

But now most rights are locked up for a while, and there’s likely to be consolidation among some of the buyers in the years to come. If linear TV continues to morph into streaming, the desperation among legacy networks to own sports may diminish or simply end.

And if streamers end up taking over for broadcast networks as the major buyers of rights, they may strike deals for women’s sports similar to Apple’s deal with the MLS, Michael said. That deal is predicated on the MLS reaching certain subscriber goals to get paid more by Apple. 

That’s not a great model for any sport outside of football and basketball, he said.

“Less established sports that may not be able to deliver the types of subscriber numbers across a national platform may suffer when they’re told the money is no longer guaranteed,” he said.

2. Expansion risks

Not all cities are created equal. Not all stadiums are created equal. Not all teams are created equal.

The WNBA plans to expand to 15 teams by 2026.

There’s no guarantee the league will be able to fill up stadiums in new locations, especially if the Caitlin Clark effect starts to wear off in the years to come. The ratings for Clark games vs. non-Clark games have been startling. Clark’s nationally televised appearances averaged 1.18 million viewers per game, while all other WNBA outings drew a relatively subdued 394,000, according to Sportico.

“The success of leagues and attendances are not spread equally,” said Michael. “Will new locations generate fervent women’s sports fan bases, or not?” 

3. End of pandemic bounce

More broadly, it’s also possible live events are still experiencing some irrational exuberance as a pandemic hangover effect, Michael said.

“Real life entertainment is still on a high from the pandemic,” said Michael. 

Simply attending any live event is still fun for a great deal of people after years of avoiding it. But in terms of an investment, it matters significantly if women’s sports turns into something that weathers all cycles — leagues that build die-hard fan bases while still regularly attracting significant casual fandom.

None of these obstacles will likely stop the massive inflow of cash ticketed for women’s sports in the coming years. But for anyone thinking about return on investment, it’s worth considering the market dynamics. 

A couple of news & notes:

• We told you it was coming last week, and now it’s official: Upstart professional wrestling league AEW has renewed its media rights deal with Warner Bros. Discovery. The all-in multiyear deal, which includes marketing considerations and promotional opportunities, is worth $170 million, I’m told.

  I caught up with AEW CEO Tony Khan — he told me he’d circled Oct. 2 as the day he wanted to announce the deal for months. 

  “TNT and TBS really wanted to keep this partnership together,” Khan said. 

  The deal is for AEW’s signature franchises “AEW Dynamite” and “AEW Collision.” It doesn’t appear to prevent AEW from inventing new events or series and selling them to a different media partner. Khan declined to comment on that prospect.

  Warner Bros. Discovery Chairman and CEO of US Networks Kathleen Finch told me the deal’s big selling point is bringing AEW to Max, WBD’s streaming service. That hasn’t been the case up until now, where matches have just lived on cable TV.

  Still, keeping the matches on TNT and TBS is also important because it’s a way to bring an 18-to-49 audience to cable TV, which is getting harder and harder by the year. 

  “That’s about as tough of a demographic to reach as possible,” Finch said.

• A pretty bizarre scene Wednesday when bankrupt Diamond Sports Group told the U.S. Bankruptcy Court for the Southern District of Texas that it will stop carrying all but one of the 12 Major League Baseball teams it televised this past season. Only the Atlanta Braves will stick with Diamond.

  The news caught MLB off guard, and MLB declined to comment beyond the league’s lawyer telling the court that the league was “sandbagged by the news.”

  Still, gaining access to 11 teams’ media rights is probably in the league’s long-run best interest. MLB commissioner Rob Manfred has been outspoken about wanting to rethink the regional sports media model, which doesn’t easily translate to a post-pay TV world. CNBC’s Lillian Rizzo has more details here.