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Behind the unusually high sale price of D.C.'s women's soccer team


Washington, D.C.'s women's soccer team, the Spirit, is hot - on the field and on the open market. Last season, they won their first-ever championship. They signed a huge contract for a star player, and last week, the team officially sold for the highest valuation ever for a women's soccer team. Emma Peaslee from our Planet Money podcast reports on what's behind the unusually high dollar amount.

EMMA PEASLEE, BYLINE: It sounds a little weird to say, but the high sale price traces back to turmoil off the field. Let's start with the coach. Last fall, after an investigation into accusations of verbal and emotional abuse, the league fired the Spirit's head coach, Richie Burke. That led to an ownership fight.

Spirit players and fans called on majority owner Steve Baldwin to sell his stake. They wanted him to sell to one of the other co-owners of the team, Michele Kang. They wanted female leadership, but Baldwin resisted. Claire Shipman is a minority investor in the team.

CLAIRE SHIPMAN: I just felt for a couple of months it was like edge of your seat, no idea where all this is headed.

PEASLEE: She watched as Baldwin refused bid after bid from Kang. Kang, a health care technology CEO, had criticized Baldwin over the team culture. And this back-and-forth began to drive up the price. Baldwin seemed determined to move forward with another outside investment group for $25 million, even after Kang offered 35 million.

SHIPMAN: There was just a kind of cognitive dissonance that didn't make sense to a lot of us as investors, right? Why would we not be giving this female investor a shot?

PEASLEE: Eventually, Baldwin did relent and sell to Kang. Spirit investor and former U.S. Senator Tom Daschle says it's a historic sale.

TOM DASCHLE: It was just an unprecedented offer. Nothing like this has been offered in women's soccer in all of history.

PEASLEE: But from a business perspective, it's probably way more than the team is worth. So why did Kang pay it? First, sports teams, in general, follow a special logic when up for sale. It has to do with the difference between valuation, like how you assess an investment, and price, what you pay for a thing you use or consume. NYU finance professor Aswath Damodaran says sports teams are priced, not valued.

ASWATH DAMODARAN: Value is driven by what kind of business do you run, how much money do you make? And none of these teams can justify the pricing, but their price - price is driven by demand and supply.

PEASLEE: Basically, there are more rich people who want to buy sports teams than there are sports teams, and you can probably sell to another rich person later.

DAMODARAN: As long as there are more billionaires being minted out, if you want to get out, it's not like you sell at a discount.

PEASLEE: Sports teams are what are called trophy assets, worth more to the owner for their status and perks than revenue. Damodaran says take former Microsoft CEO Steve Ballmer.

DAMODARAN: Steve Ballmer didn't pay for the Clippers because he thought they were a good business. He paid for it because it gave him bragging rights and seats on the courtside and tickets he could hand out to his friends.

PEASLEE: But he says women's sports teams haven't traditionally been trophy assets. Often you can just buy courtside tickets online, which makes the Washington Spirit sale especially noteworthy. In this case, the price may be the point. Kang's making a statement about the future of the team and the sport.

DAMODARAN: Maybe she's going to use this as an opening to change women's sports, which is - it's an opening volley in a much bigger battle about making women's sports more visible, more noticed and more sustainable.

PEASLEE: Next up for Kang, getting a permanent training facility for the team and securing some national sponsorships. She says she plans to make this the best sports team in the world, period.

Emma Peaslee, NPR News.

(SOUNDBITE OF MARY J BLIGE SONG, "FAMILY AFFAIR") Transcript provided by NPR, Copyright NPR.

Emma Peaslee is a 2020-21 Kroc Fellow. Before coming to NPR, she reported for Atlanta's member station, WABE. She covered public forums about toxic chemicals leaking into neighborhoods, the world's largest 10K race, and the federal government's plan to resume executions. Peaslee has a master's degree in journalism from the University of North Carolina at Chapel Hill where her work received the 2020 Edward R. Murrow Award for best student newscast. She is a Minnesota native.