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The Takeaway

When Clara Wu Tsai and her husband, Alibaba co-founder Joe Tsai, bought the WNBA’s New York Liberty in 2019, one of her first priorities was convincing her fellow team owners they needed to spend money to see real growth in the sport.

“For so long, we felt that the owners in the league have been operating from this scarcity mindset and just trying to save money,” Wu Tsai said earlier this week at The Information’s Women in Tech, Media and Finance conference in Yountville, Calif. “But that’s not how you grow.

“We’re spending money in order to grow,” said Wu Tsai, who is the governor of the Liberty and also co-owns the NBA’s Brooklyn Nets with her husband. “That’s a mindset.”

The latest example of the Tsais’ willingness to pump money into the Liberty is a new $80 million practice facility for the team under construction in Brooklyn’s Greenpoint neighborhood. Wu Tsai discussed that investment, the surging valuations of WNBA teams (including her own) and other topics in an interview at the WTF conference conducted by Jessica E. Lessin, the founder and editor in chief of The Information.

Here are excerpts of that interview, edited for length and clarity. The interview took place on Wednesday, ahead of Friday’s agreement between the WNBA and the players association to extend their negotiations over a new collective bargaining agreement for 30 days.

Clara Wu Tsai: Well, we’re right in the thick of it, so there’s very little that I can say. What I can say is just sort of explain what the [collective bargaining agreement] is.…It’s the framework for salaries, benefits and travel standards and basically the working conditions of all the players in the league. It’s essentially the biggest piece of the cost structure of the league. It’s very important.

If we get this right…the salaries and the benefits of the players will grow, but at the same time, we’ll be able to have a sustainable model so that teams and the league can be profitable and also scale the business in the way that we’re actually ready for it to scale right now.

First of all, it’s going to be a lot easier to get from $450 [million] to a billion than [it was to get] from zero to $450 [million].

Yeah. What it takes is just a continued trajectory of growth. We’re very positive that that’s going to happen. In fact, I actually think there might be more than one WNBA team who actually reaches a billion-dollar valuation in the next five to 10 years. It’s obviously based on revenues. We look at the trajectory of revenues, and for the last three to four years, we’ve been growing revenues on the order of 20% to 80% on all the key metrics. We fully expect all of that to continue.

What makes the WNBA exciting is there’s a lot of room for monetization because the revenues haven’t caught up with the viewership. When you look at national broadcast viewership of the WNBA, it’s about 30% that of the NBA. But when you look at the percent that the WNBA has of the media deal, we’re 2%. Even when the new deal kicks in, we’ll be 4% of it. If we grow to some sort of parity on sponsorships and media, on a per-viewer basis, we could easily double our revenues, which would also mean that we would double our valuation.

On the team level, it’s really important that we also start to price at market value. And so an example is sponsorships. We’ve now set some sponsorship floors and some minimums, and we’re just aligning with partners who have the scale and also the ambition to grow with us. We’re doing the same thing on ticketing, especially for our courtside and our premium seat holders. We’ve actually improved the entertainment a lot, and we’ve improved our [food and beverage]. But we haven’t raised prices. It’s now time to align pricing with the value that we’re providing.

In 2019, we bought the Brooklyn Nets and the Barclays Center. In 2017, the previous owner of the Liberty put it up for sale and then got a little impatient, and in 2018, [they] moved them to play at Westchester County Center from Madison Square Garden. That wasn’t a good look for the league. It made the league really nervous.

The commissioner of the NBA came to us and asked us to take a look because by that point, we’d bought the Brooklyn Nets and we had the arena. It does make sense for the owner of [the Liberty] to have an arena, because you need a big stage for these women to play. We took a look and the numbers weren’t good. I would call it a distressed asset in the pure definition of the term. But we saw some good fundamentals.

We knew that we were going to lose money because the first thing we did was move them to Barclays Center. They were playing to crowds of 2,000 in Westchester. Barclays sits 18,000. We thought, OK, we’ll lose money, but we just didn’t know for how long.

We started to invest in facilities and in player health. And then when the biggest free agent became available in 2023, I went to Turkey to talk to Breanna Stewart. I basically told her that in order for the league to grow in New York, it needed New York to be a strong franchise. I wanted her to join me to just elevate the standards of the league. It worked. She joined us. She brought a couple other stars with her. In four years, we went to the finals for the first time in 20 years, and then in the fifth year, we actually won a championship.

Wu Tsai: I haven’t quite seen [NBA broadcasts from] NBC yet. I’ve been really impressed with the game presentation that I’ve seen from Amazon Prime Video, who is one of the new media partners in the new media deal.

A little bit less than half of all sports viewership is actually through streaming right now. That’s just streaming on a TV screen. If you actually add streaming on a mobile device or a laptop, the share is even more than that. This is where the next generation of fans lives. The second key piece of information is that streaming has very much closely reached broadcast scale.

If you look at football, for example, like Thursday night football on Amazon Prime this year, they set a brand-new record in viewership for a regular season game. They had 18 million viewers on average. When you look at the viewership of NFL games in a regular season for a linear network like a CBS or a Fox, it’s 21 million. It’s very, very close. I think you can say that streaming is not really complementary at this point. It’s a premier destination. It’s at broadcast scale and it has global reach. Just to see the way that Amazon has approached game presentation, they’ve made quite an investment, they paid quite a lot for the rights.

There are some interesting tech-enabled elements that make the experience more interactive and also more educational. They have an LED regulation half court, and they have former star players like Dirk Nowitzki and Steve Nash and Udonis Haslem and a few others actually go. They’ll break down defensive plays on this LED court…that’s, like, really bringing you on the inside. The game analysis is really good. They’re layering data and odds for sports betting…on their broadcast as well.

In the arena, for sure. When you think about what the future is of sports and entertainment, it’s definitely a friction-free experience. That means biometric entry. It means mobile ordering. It means more personalization. It means real-time data loops and feedback. We implemented face authentication for faster entry, and we’ve upgraded audio and lighting. We introduced haptic devices for the blind.

From your perspective, is there too much capital chasing women’s sports? Is there not enough capital chasing women’s sports?

There is so much investor demand for women’s sports, but in particular for the WNBA. I think it’s because it’s the most mature women’s professional league right now. It has the best infrastructure, it has great talent, it has a pipeline of talent coming up. People probably see this gap, this monetization potential between the viewership and the revenue.

There’s a lot of people who want to get into the league and think of it as a good investment. There will also be scarcity. We’re going to add two teams this year and two more teams after that. By 2030, there’ll be 18 teams in the league. It’ll be kept at that for a little bit because we need to sort of absorb all of that. But as a result of that scarcity, there are a lot of people who want to be in it.

Definitely. Maybe two-thirds of the NBA teams have some bit of private equity in it. On the WNBA side, I know there were private equity companies that were part of the expansion bids.

I think that private equity has really been transformational for all sports team owners. Because it allows for liquidity…without owners having to relinquish control. Previously, it was really media rights that were propping up valuations in the league. It’s really now private equity that’s…going to cause valuations to stay healthy.

That will always depend on how long your postseason is. We had a bit of an early exit [this season]. This is the thing—the profitability is very fragile. And again, as I said earlier, it’s investment-led growth…the capital investments, like we just announced, building an $80 million, 75,000-square-foot practice facility in Greenpoint. Why? It’s going to be incredible. Why? Because the players deserve it.

This is a place where we’re going to fit it out with biomechanics labs. We’re at that point—speaking of AI—where if a player said, ‘I really wanna be known for my hang time, or I wanna dunk, or whatever,’ we could figure out with all the motion capture and AI…and biomechanical data from the video. We could…

If someone said that’s what they wanted to do, we could tell that person what exercises or what muscles they needed to work in order to actually achieve their goal.