Assessing the worth of women's football clubs: Insights from Alexis Ohanian and Chelsea...
Informal Rewrite:
Let's talk 'bout Alexis Ohanian, the Reddit founder, and his recent investment in Chelsea Women. He dropped £20m for an 8-10% share in the WSL champions, which, get this, values Chelsea Women at a whopping £200m!
Now, you might be thinking, "How in the world did they arrive at that insane valuation?" Well, according to Dr. Christina Philippou, an Associate Professor in Accounting and Sport Finance, they used the same method as men's football clubs – revenue multiples. But since women's clubs ain't normally profitable, they can't use profit multiples, and the balance sheet value doesn't reflect player value.
Chelsea Women brought home £11m in revenue during the 2023-24 season, and they got sold for £200m. That puts their revenue multiple at over 18 – way higher than what's typical in men's football. But, Dr. Philippou points out that other sports, like cricket, are also seeing bigger valuations due to growth potential.
She also notes that the lack of transaction data makes valuing women's football teams a real challenge. "With men's football, we've got plenty of historical transactions to work with," she says. "But women's football is still fairly new territory, so it's tough to judge what's reasonable."
Danielle Sharkey, a Senior Associate at Charles Russell Speechlys, believes the sustained on-field success of Chelsea Women played a crucial role in their valuation.
Football finance expert Dr. Tom Markham, creator of an influential multivariate model for valuing men's teams, agrees that women's football has growth potential but admits there are challenges. He points out that comparing women's football teams to NWSL sides might not be the best approach, especially since US leagues are structured differently.
Markham shares concerns about the length of WSL's media rights contracts, which were signed last year. He fears that the high valuations could lead to overvaluation at the start and undervaluation at the end, like what's happened in the US.
But, by Markham's calculations, the highest valuation he could reach for Chelsea Women was just under £64m. "To get to £200m," he says, "you’re treating it like almost a tech investment."
Ohanian isn't new to investing in women's football. He was the largest shareholder in NWSL side Angel City FC until it was sold in 2024. At the time, Angel City was valued at $250m, making it the highest women's football club valuation until Chelsea's £200m price tag. However, Markham suggests that using US sports leagues as a benchmark for Europe might not be the best idea, given their different structures.
In summary, valuing women's football teams is a complex process influenced by factors like revenue growth, innovative business models, strategic ownership, and growing market demand. While the high valuations are exciting, there are challenges to be addressed, like the lack of historical transaction data and potential overvaluation.
Enrichment Insights:
- Revenue growth, innovative revenue models, strategic ownership, and growing market demand significantly impact valuations in women's football.
- The value of clubs like Angel City FC is driven by unique revenue models, such as player-driven content creation tied to ticket revenues.
- Expansion in leagues, like the NWSL and WSL, contributes to higher valuations due to increased demand for women's football.
- visionary ownership and strong fan support significantly boost team value, like with Kansas City Current FC.
- Investing in dedicated stadiums and state-of-the-art facilities enhances a team's value, providing a better spectator experience and increasing revenue potential.
- Despite the high valuation of Chelsea Women at £200m, football finance expert Dr. Tom Markham suggests that the method used might be more akin to tech investments, similar to Alexis Ohanian's investment approach in the past with Angel City FC.
- In order to assess the value of women's football clubs like Chelsea Women and Angel City FC, revenue growth, innovative business models, strategic ownership, and increasing market demand play significant roles.
- Beyond the football pitch, sports investments like Alexis Ohanian's in football clubs can impact various other industries, such as sports analytics, sports marketing, and sports media, offering additional avenues for revenue generation.
