Athletes Unlimited Raises $30M on Back of League-Level Platform Approach
Athletes Unlimited (AU), a network of four professional women’s sports leagues—softball, lacrosse, indoor volleyball and basketball—recently raised $30 million. “[The capital] could be used to launch a new abbreviated season in one of the existing sports,” Jon Patricof (CEO, Athletes Unlimited) said. “It could be [invested] at the youth level or [in] a host of other initiatives around the athletes.”
Startup leagues fail more often than they succeed, so the odds of successfully building four simultaneously seem long—and that is before one considers AU has introduced a radically different competition model that prioritizes individual player performance over team success.
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But Athletes Unlimited believes its unconventional business plan played a critical role in its ability to land a multi-year, broadcast deal with ESPN and partnerships with blue-chip brands such as Nike, Gatorade, Geico and EY and has it on a path to long-term success. “Scale is important and for [us], the sustainable way of achieving scale is by operating across sports rather than overserving any one [sport] with too many franchises, too many games and too long of seasons,” Patricof said.
JWS’ Take: AU’s concept of creating a network of leagues, which share services and leverage scale to create operational and marketing efficiencies, is similar to the platform model employed by Harris Blitzer Sports & Entertainment (HBSE), Monumental Sports & Entertainment, Kroenke Sports & Entertainment and others who have clubs across various professional sports leagues.
The logic behind AU’s approach makes sense. It is difficult for a single startup league to generate a large enough fan base out of the gate to entice linear broadcasters and national advertisers. But by cobbling together the audience for several leagues across nearly half of the calendar year, AU can deliver the desired scale.
The platform model also enables AU to be efficient—for example, using the same staff across four different sport leagues—co-founder Jonathan Soros said. The efficiencies gained should in theory make each individual league less capital-intensive than it would be under another approach.
Schusterman Family Investments led AU’s first outside funding round. Soros, Kevin Durant’s Thirty Five Ventures and HBSE managing partner David Blitzer were among those who also participated. AU’s valuation was not released.
AU’s newest investors and stakeholders come from a variety of different backgrounds. While Durant and Blitzer bring player and owner experience from the big-four pro sports leagues, Schusterman and Earlystone Management’s Jane Gottesman are making their first foray into sports. Patricof believes having smart people with varied expertise sitting around the table is likely to generate “a lot of value” for the upstart network of sports leagues.
Soros is a repeat investor in this round. The JS Capital Management CEO got in on the ground floor back in 2018, and his decision at the time was largely a bet on the future of women’s sports. He also liked the pro-social element to AU and understood that being a value-driven entity would enhance the leagues’ market position. AU’s performance over the last two years has outpaced Soros’ expectations.
“You [had seen] valuations on the men’s side accelerate and were not seeing that on the women’s side, despite the fact that it is in many ways a superior product,” he said.
Soros views the ESPN deal as meaningful, as it provides the linear reach needed to expose existing fans of the various sports to AU and to grow new fans. But ESPN is not paying big dollars for the rights. AU is responsible for producing the game broadcasts and shares in the advertising revenue sold against the TV window.
However, by overseeing production, AU is able to integrate commercial partners into the game broadcast in ways many other leagues cannot. “That [opportunity] is a huge part of what we take to partners,” Patricof said.
AU, which has grown from one sport to four over the last two years, can now sell scale too. “We can offer 22 weeks of action, over 130 games, in at least four cities,” Patricof said. “That puts us at the table with a lot of partners who we wouldn’t be at the table with if we were just doing one [league].”
Soros has also been encouraged by AU’s growing TV audience (viewership of softball telecasts on ESPN networks rose +56% YoY) and the positive fan sentiment surrounding the various leagues. “We discovered we have the highest net promoter score among all of what we consider peer leagues,” he said.
AU is not cash-flow positive, but Soros never expected for it to be at this point. “One of the stumbling blocks around women’s sports in general over the years is [the idea] that every investment has to be profitable in immediate terms and that’s just not true. That’s not the way these things work,” he said.
To reach profitability, which Patricof expects will take years, AU will need its media rights to be more valuable to broadcast partners. It will also need national advertisers to value women’s sports in line with the viewership—and fan demographics—they command. “It’s starting to change, and that’s a huge part of what I think we’ll see more of in 2023,” Patricof said. Sponsorship revenue climbed 122% in 2021.
AU intends to raise additional capital and add more sports and seasons, though no new sports are planned for 2023.
However, do not expect AU to extend the length of its seasons beyond the current five weeks in an attempt to grow revenues or profit margins. The model “has proven out really well across nine seasons,” Patricof said. “The focus for us when we think about growing within our existing sports is creating new two-week seasons or different formats where we can keep [game] intensity high.”
AU reshuffles the teams within its leagues weekly and determines the season winner based on a player points leaderboard. While Patricof and Co. are convinced the next generation of fans care more about individual players than teams anyway, the model also enables the league to put forth a compelling product with fewer athletes and less overhead.
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