Athletes Unlimited (AU) recently raised a $30 million funding round. Harris Blitzer Sports & Entertainment co-founder David Blitzer and Kevin Durant’s 35 Ventures were among those who participated.
It was not a surprise to see either of those names in the press release, because both have an extensive portfolio of sports-related investment holdings. The same cannot be said for Schusterman Family Investments, Earlystone Management’s Jane Gottesman or film producer Sharon Harel-Cohen, all of whom made their first foray into sports with an investment in the collective of professional women’s leagues.
Athlete Unlimited’s unique capital structure—one that caps investors’ financial returns and awards any surplus to key stakeholders and the broader mission—helped open the door to a pool of new investors. “The mission equity structure was one of the factors that attracted me to invest in AU,” Gottesman said in an interview. “I believe that investors should be willing to share upside with players, employees, and other stakeholders.”
The global impact investing market now has more than $1 trillion in assets, so sports properties in need of capital may be tempted to replicate AU’s mission-centered capital structure.
But others who try are unlikely to match Athlete Unlimited’s fundraising success. Sports investors are increasingly looking for returns, as evidenced by the infusion of private equity, and AU’s connections to the finance world are virtually unmatched. As one sports financier said, “They’re not your typical startup.”
Charles Baker (co-chair, entertainment, sports & media, Sidley), who worked on the Athletes Unlimited launch, added that “most investors want to know their money is actually making an impact and driving innovation and change with the business’s excess profits. Under the AU model, those funds largely benefit the players. Of course, given what these female athletes are paid, that money would be impactful.”
JWS’ Take: Impact investing and ESG-related corporate initiatives are undoubtedly en vogue. Just a few weeks ago, Patagonia founder Yvon Chouinard announced he was giving away his company to a purpose trust that would use its profits to combat climate change.
But Chouinard is the rare exception in that he built a large company without outside capital, which allowed him to prioritize non-financial concerns with his business. Athletes Unlimited co-founder and JS Capital Management CEO Jonathan Soros believes the bulk of the estimated $1 trillion in impact investments are what he would call “mission-aligned.” While they allow investors to take positions in companies they can feel good …….