Men Love Investing In Men's Sports

By: David Berri

The WNBA could use just a bit more investment.  Currently, maximum salaries are less than $120,000 per year.  The league's MVP in 2018 -- Breanna Stewart -- was reportedly paid just $56,793 last year. Where NBA players receive about 50% of league revenue, WNBA players only receive about 20% of what the WNBA takes in.

(Photo by Christian Petersen/Getty Images)

(Photo by Christian Petersen/Getty Images)

The relatively low pay in the WNBA has likely been a factor in Liz Cambage wondering if she will play in 2019 and stars like Diana Taurasi and Angel McCoughtry skipping entire seasons in the past. Losing stars such as these is certainly bad news for a young league like the WNBA.  The good news, though, is that it wouldn't take much investment for the WNBA to close the gender wage gap. It would likely take less than $20 million to ensure the WNBA players are paid 50% of league revenue.  Such a move could move the maximum salaries past the $500,000 mark and that would likely keep star players in the league. 

Of course, finding someone to invest in a young sports league is difficult.

Right?  

The NBA -- the WNBA's partner -- recently announced it is going to launch a new pro league in Africa. In announcing the plan to invest in a new 12-team league in Africa, Adam Silver -- the NBA's commissioner -- said “Africa has a huge economic engine,” Silver said.

It certainly is true that Africa's economy is growing. But would an investment in such a league likely payoff? 

Perhaps the experience of the Euroleague can give us some insight.  The Euroleague is arguably the top European league for men's basketball.  Last year the league announced record-setting attendance of 8,864 fans per game. Yep, that's the record. The Euroleague has been around since 1958 and still, attendance isn't much higher than the WNBA's attendance after just 22 seasons.

The problem for the Euroleague is likely the same problem that will face the NBA's African league.  The top players in the world are going to play in the NBA.  This means the other leagues -- whether in Europe, China, or Africa -- are best classified as "minor-league" basketball.  And there generally is a limit to how far one can get with a minor professional sports league. 

Of course, these limits don't stop men from investing in these leagues. Just a few days after the NBA announced a plan to invest in minor league basketball in Africa, Tom Dundon announced he would invest $250 million in the Alliance of American Football league. The AAF is very much minor league football. And as we see with minor league basketball leagues, it is not reasonable to think the AAF is going to be hugely profitable anytime soon. In fact, Sports Business Daily recently reported that Dundon is going to be evaluating his investment "on a week-to-week basis."  This report suggests that Dundon doesn't think the AAF is a sure investment.  Nevertheless, it didn't stop him from offering $250 million to support the league. 

Minor league basketball and football are not the only sports attracting investors.  Although the MLS is referred to a "Major League Soccer", British sports economics researcher Rob Simmons disagrees.  According to Simmons, the MLS is "...certainly not Premier and its not Championship League.  It is mostly likely somewhere between League 1 and Championship League." Bernd Frick -- a German sports economist -- appears to concur with Simmons' assessment.  According to Frick, the MLS might be equivalent to the second division of German professional soccer. Despite the minor league status of the MLS, various government entities have invested nearly $850 million in sports subsidies in this league. 

Yes, the MLS was not built solely by the owners of this league.  The MLS has thrived because of hundreds of millions in public investment. 

Such subsidies are common when we look at men's sports.  The NBA, NFL, NHL, and Major League Baseball have received billions in subsidies. This sort of public investment, though, isn't seen in women's sports. 

In fact, it is hard to find private entities to invest in women's sports. Once again, it would only take a $20 million investment per season to close the gender-wage gap in the WNBA.  The NBA -- again, one of the principal owners of the WNBA -- often argues the WNBA has yet to be profitable.  This attitude suggests the NBA is probably not willing to spend more money on the WNBA. 

So let's put this picture together.  Men -- both in the private and public sector -- are willing to spend millions on minor league sports leagues. But they are not willing to spend what appears to be much smaller amounts to make a women's sports league better.  

Often it appears that spending on women is often seen as a cost while spending on men is an investment.  And men are willing to invest in men even if there is little chance that investment will pay off in the future. 

All of this highlights one of the real constraints facing women's sports.  Currently when we look at women's sports leagues -- like the WNBA, NWSL, NWHL, and NPF -- we see leagues that are quite young.  We know from the history of the top men's sports leagues -- like the NBA and MLB -- that young leagues frequently struggle.  But if investment continues eventually there is a huge payoff. 

Will we see such a payoff in women's team sports?  We know that women's sports can sell.  We see this in the careers of individual athletes like Serena Williams, Ronda Rousey, and the television ratings for the U.S. Women's soccer team. Women's sports have demonstrated they can draw an audience.  It is not unreasonable to think the top women's sports leagues -- once they are established -- will do quite well.

As the history of the top men's sports leagues demonstrates, though, it takes decades for a league to create a substantial fan base. But unlike what we see with strictly minor league sports -- or leagues designed to develop talent for someone else -- it definitely can happen. 

Despite this history, though, men keep throwing large sums of money at men's minor league sports.  Unfortunately, there isn't much evidence of any minor league men's sports league becoming hugely successful. This leads one to conclude that investments in sports are not being driven strictly by the prospects of profit.  Investments are partially being driven by the gender of the athletes playing the sport. And this means that women's sports aren't be held back by lack of profitability, but an inability of men to look past gender in making their investment decision.