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RedBird founder Gerry Cardinale invested in OneTeam in 2019. Wall Street bankers are floating its corporate value up to $ 2 billion. The Athletic initially reported that the company was looking to sell.
Two of the people who discussed the matter believe the $ 2 billion figure is undervalued, but if correct, RedBird’s stake has grown to around $ 800 million in less than two years. The gossip in the sports business community suggests that the company has exceeded its target and is ready to cash in. OneTeam started with $ 125 million in funding, according to Crunchbase.
But potential buyers of RedBird’s stake should keep in mind that OneTeam is a risky business filled with union politics.
The 33rd team in the NFL?
It was founded by the NFLPA and the Major League Baseball Players Association, launched in 2019, and now oversees licensing agreements with leading companies including Electronic Arts, maker of the Madden video game franchise, Take-Two. Interactive and Sony. Businesses need unions and pay fees for their products. Video games, sportswear, trading cards, and merchandise have historically been the top four drivers of sports licensing.
RedBird’s role in the partnership includes negotiating terms for OneTeam, seeking new collective rights opportunities and growing value. It makes a percentage of the income return. The company is betting the NIL space will explode with the college going live, and believes non-fungible tokens (NFTs) will play a role. Add in the built-in licensing agreements from the aforementioned companies, and it sees value with OneTeam.
Sports bankers call OneTeam the 33rd team in the NFL, which means it’s valuable to unions, especially in football, as it allows them to share a portion of the league’s revenue equally.
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He doesn’t have the NBA players union
The NBA is the most internationally marketable organization of the Big Four American sports leagues. NBA players are more recognizable, have prominent social media followers, and have better national and global appeal. This allows companies to activate better referrals and take advantage of licensing agreements. The league also has a younger fan base and is ahead in the NFT space, which has cooled.
But the NBPA runs its licensing division in-house and doesn’t need OneTeam. But, OneTeam could thrive if it ends up capturing both the NBA and the hockey unions. And the popularity of women’s sports is also on the rise, which can help boost revenues if these leagues grow.
For now, however, the NFL and MLB are OneTeam’s main unions. Baseball players have shown little interest in improving their market value. And in football, making deals with the NFL and the players’ union can be costly for businesses, as the league is driving top dollar.
Additionally, getting star NFL players to activate partnerships is a challenge, according to people familiar with NFLPA operations. Generating future revenue around NFLPA and MLBPA licenses alone, and NIL, will be difficult for OneTeam.
The firm has interesting projects around the esports space. But he also needs NBA players and global football unions.
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Navigating union politics is tricky
In the NFLPA, the future of executive director DeMaurice Smith, who helped form OneTeam and holds a board seat, remains unclear. Some players are still unhappy with the new 10-year collective agreement and may be looking to replace it.
On the MLBPA side, their collective agreement with team owners is set to expire on December 1 and a lockout will hurt baseball. It’s unclear what will happen with OneTeam with MLB games beyond 2021 at risk and if Smith is replaced. And it follows a major restructuring of licensing agreements due to the pandemic, which has killed sports-related revenue.
RedBird’s ties to MLB are also of concern.
In March, RedBird took a minority stake in Fenway Sports Group, owner of the Boston Red Sox. That deal included NBA star LeBron James. It’s an uncontrolled issue, but given the turbulent history of MLB players and owners, double-deduction in the baseball business is tricky.
RedBird is now technically a team owner and is interested in player business with OneTeam. People familiar with the matter told CNBC that RedBird was under no obligation to sell its position in OneTeam due to concerns over ownership of the MLB team. But that puts MLBPA executive director Tony Clark, who also sits on OneTeam’s board, in a sticky position.
MLB, NFLPA and RedBird did not respond to CNBC’s requests for comment.
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Is the timing right for RedBird?
It’s all about fiat capital, and during the NBA private equity discussion, a Wall Street CEO noted that companies like RedBird don’t make money in fiat money until they sell something. . Cardinale’s transaction history includes the sale of RedBird’s stake in On Location Experiences to Endeavor in 2020. It was a combined $ 70 million investment made in 2015, and it brought in over $ 600 million. dollars, according to Bloomberg.
So Cardinale has a habit of cashing in when the time is right. But it’s unclear whether RedBird will get nearly $ 800 million for OneTeam’s stake, even with its track record.
But maybe another investment firm like BlackRock Capital, which some sources have touted as a potential buyer, sees the same potential as RedBird. But no matter which company buys it, the company will have to be prepared to manage risks within unions and sports leagues.