The Women's Sports Market Could Be Bigger Than Men's: Kara Nortman

Key Concepts

• Monarch Collective: An investment firm exclusively focused on women's sports, aiming to invest in businesses with impact.
• Angel City Football Club (ACFC): A professional women's soccer team co-founded by Cara Nortman, Natalie Portman, and Julie Urman, known for its high valuation and community-driven approach.
• Women's Sports Market Growth: The significant and rapid expansion of the women's sports market, with projections suggesting it could eventually surpass the men's sports market.
• Community Ecosystem: The critical role of fan engagement, supporters' groups, and community building in the success of women's sports ventures.
• Revenue Streams in Women's Sports: Primarily ticketing, partnerships, and merchandise at the team level, and media rights at the league level.
• Infrastructure Investment: The consideration of investing in stadiums and training facilities as part of a broader strategy for women's sports growth.
• Asymmetric Risk Profile: The unique investment landscape in women's sports, characterized by emerging markets and the need for core infrastructure building.
• Values Alignment: The importance of partnering with investors and stakeholders who share similar values and a long-term vision for women's sports.

Journey into Women's Sports Investment

Cara Nortman, founder and managing partner of Monarch Collective, shared her journey from a career in tech and venture capital to becoming a prominent investor in women's sports. Her initial exposure and growing curiosity stemmed from attending the 2015 Women's World Cup finals with her daughters. She observed a significant disconnect between the massive viewership (around 300 million people) and the lack of accessible merchandise and content. This led her to investigate the National Women's Soccer League (NWSL) and discover its underdeveloped infrastructure.

Nortman's involvement deepened when she advised the US Women's National Team Players Union on name and likeness rights and equal pay. She highlighted the "abomination" of the pay discrepancy between male and female soccer players. Her initial engagement was driven by personal passion and a desire to see a team in her hometown, which eventually led to co-founding Angel City Football Club.

Founding and Success of Angel City Football Club

Angel City Football Club (ACFC), co-founded in 2020 by Cara Nortman, Natalie Portman, and Julie Urman, has become a landmark in women's sports. The idea originated from a conversation between Nortman and Portman, who recognized the cultural impact potential of women's soccer. Nortman leveraged her experience to secure capital and build the team, while Urman was recruited as CEO.

The club raised its first million dollars in a convertible note at a single-digit million dollar valuation just before the COVID-19 pandemic. Despite these early challenges, ACFC achieved remarkable success in its first season, generating $30 million in revenue and surpassing season ticket holders of some Los Angeles NBA and NHL teams.

Nortman attributed this success to several factors:

• Timing and Cultural Readiness: The world was becoming more receptive to women's sports.
• Social Media Impact: Platforms like Instagram facilitated community building and engagement, overcoming earlier limitations in merchandise availability.
• Mission-Driven Approach: Building the club with a strong mission at its core influenced all aspects, from sponsorships to community engagement.
• Execution Excellence: The dedication and hard work of the co-founders, particularly Julie Urman, were crucial.
• COVID-19's Unexpected Role: While initially a challenge, the pandemic fostered a sense of community and connectivity through virtual gatherings, which may have inadvertently helped ACFC build its fanbase. The pandemic also provided more time to learn, negotiate, and prepare for the inaugural season in 2022.

In 2022, ACFC sold a controlling stake to journalist Willow Bay and Disney CEO Bob Iger, valuing the team at $250 million, a record for a professional women's sports team.

Leadership Lessons and Shifting Perspectives

Nortman shared key leadership lessons learned from her transition from traditional investment to building a sports team from the ground up:

• Trusting Curiosity: Paying attention to what genuinely sparks curiosity and pursuing it, even if it deviates from a linear career path. She noted that many experienced sports professionals initially dismissed the viability of women's sports, but she and her co-founders believed in fundamental assumptions that would prove otherwise.
• Challenging Assumptions: Questioning conventional wisdom, such as the idea that Los Angeles had too many sports teams or that women's sports would never generate media revenue. Their approach was to focus on building a strong fan base ("butts in seats") as a foundation for economic success.
• First Principles Thinking: Approaching problems by breaking them down to their fundamental truths and seeking innovative solutions.

The Exploding Women's Sports Market

Nortman provided insights into the burgeoning women's sports market:

• Market Size and Growth: The women's sports market was estimated at $0.5 billion five years prior and has since grown to approximately $3 billion, an eight-fold increase. This is still a fraction of the estimated $500 billion men's sports market.
• Demographic Advantage: Nortman provocatively suggested that the women's sports market could eventually surpass the men's market due to its younger demographic (Gen Z, Gen X, Millennials) and a more balanced gender split in viewership, particularly compared to the aging demographic of some men's sports like MLB.
• Sponsorship Opportunities: The market is attracting a diverse range of sponsors, from traditional brands like AT&T and Ally to consumer brands like Sephora, Off-White, Charlotte Tilbury, and Hello Kitty, reflecting the significant consumer spending power of women (80% of consumer spend).
• Media Rights Potential: While still in early stages compared to men's sports, media rights deals for leagues like the WNBA and NWSL are growing significantly, with the WNBA having a $2 billion, 10-year deal.

Monarch Collective's Investment Strategy

Monarch Collective, a $250 million fund, is the first and only blind pool of capital exclusively focused on women's sports. Their strategy involves:

• Focus on Mature Segments: Investing in sports with early signals of growing media revenue and strong participation.
• Infrastructure Building: Recognizing that women's sports often require core infrastructure development, including talent acquisition and strategic partnerships.
• Operational Expertise: The team comprises experienced operators from sports, tech, and media who provide day-to-day support to owners, talent, and sponsors.
• Global Brand Potential: Focusing on a very limited number of transactions with the potential to become global brands.
• Geographic and Sport Focus: Currently concentrating on soccer, basketball, golf, and tennis in the US and Europe, with an eye on future opportunities.
• Values Alignment: Partnering with control owners and family offices who are values-aligned and committed to being change agents.

Revenue Streams and Growth Potential

Nortman detailed the primary revenue streams in women's sports:

• Team Level: Ticketing, game day experience, partnerships, and merchandise. Ticketing and partnerships are the largest contributors.
• League Level: Media rights are a significant driver.

She emphasized the importance of building a sustainable P&L at the team level through controllable factors like packing stadiums, partnership activations, and in-house content creation. While media revenue is growing, team-controlled revenue is crucial for near-term financial stability.

Infrastructure and Long-Term Investment

Regarding investment in stadiums and training facilities, Nortman stated that it's a case-by-case decision based on the risk-return profile. She highlighted examples like the investment in both the team and stadium for Boston Legacy FC, emphasizing the civic and community benefits. There's also a significant effort around practice and training facilities, which can be sponsored and are attractive if located in desirable areas and offer a positive athlete experience.

External Factors and the Future of Women's Sports

Nortman acknowledged the significant impact of external factors:

• Catalytic Events: Events like the success of Angel City, the rise of Caitlin Clark, and the WNBA's media deal act as catalysts, building on foundational work and each other.
• Consistency and Execution: The long-term success relies on great owners and consistent execution.
• Movement and Community: Women's sports possess a unique movement aspect, fostering a sense of belonging and community that draws people in.

Investment Interest and Partnership Approach

Nortman confirmed that interest in investing in women's sports is high. Monarch Collective aims to be helpful to anyone values-aligned, even if they don't formally partner. They are thoughtful about who they bring into their ecosystem, seeking partners who want to innovate and have a cultural impact. They emphasize a long-term view and are willing to educate potential investors on the nuances of the market. The firm's "joyful" LP meetings and unique strategy have made them a novel and attractive option in the investment landscape.

Conclusion

Cara Nortman's insights underscore the transformative period for women's sports. The market is experiencing unprecedented growth, driven by a combination of passionate athletes, dedicated investors, engaged communities, and a shifting cultural landscape. Monarch Collective, with its focused strategy and operational expertise, is positioned to capitalize on this momentum, aiming to build sustainable businesses with significant cultural impact. The future of women's sports appears exceptionally bright, with the potential for continued exponential growth and a profound influence on the broader sports and business world.