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PE teams up with pro sports unions to maximize player revenue

Adam Lewis

Professional athletes apparently have a friend in private equity.

The NFL Players Association and MLB Players Association have partnered with growth equity firm RedBird Capital Partners to launch OneTeam Partners, a company designed to help athletes maximize revenue from their names and images.

RedBird Capital has invested $125 million for a 40% stake in the joint venture, with the respective players associations holding the other 60% in equity, according to The Wall Street Journal. The company will initially focus on managing athletes' intellectual property used in video games such as "Madden NFL" and "MLB: The Show," as well as for trading cards. OneTeam has reportedly engaged in negotiations with other players unions for US sports leagues and could eventually expand internationally, with Bloomberg reporting it hopes to eventually add the NBA to its list of partners.

A representative from RedBird did not immediately respond to a request for comment.

With headquarters in Washington, DC, and New York, OneTeam will be led by NFL Players Inc. president and founding CEO Ahmad Nassar and president Brent Stehlik, an operating partner at RedBird Capital who once worked as the chief revenue officer for the Cleveland Browns and San Diego Padres. NFLPA executive director DeMaurice Smith, MLBPA executive director Tony Clark, RedBird Capital founder Gerry Cardinale and Redbird's Alec Scheiner will serve on the company's board of directors.

Though its main focus will first be on professional sports leagues, OneTeam appears especially well-positioned to grow within college athletics. In late October, the NCAA announced it would begin exploring ways for players to make money off their names and images, which has been banned under the governing body's archaic bylaws that forbid athletes from being paid. A decision on the expected rule change is set for January 2021.

That has led to speculation that the popular "NCAA Football" video game made by EA Sports could soon return. It was discontinued five years ago, partly because the NCAA thought it threatened the league's business model. If it returns, OneTeam would theoretically be able to represent college athletes looking to make money via licensing through the game.

In a bit of a separate twist, OneTeam has also committed to launching a venture fund that will include players associations from the WNBA, US Women's National Team Players Association and MLS Players Association. The vehicle will invest in early-stage sports companies that try to benefit players and performance.

That strategy would seem to fall in line with RedBird's stated ethos, which includes "providing long-term, flexible capital that maximizes (the) ability to build companies," per its website, rather than the traditional buyout model that holds companies for five years, maximizes revenue, slashes costs, then sells.

RedBird typically makes investments of $25 million to $150 million in sectors including communications infrastructure, energy, business and financial services, media and sports. And it's been busy in 2019, with seven investments so far, after making just three last year, per PitchBook data. RedBird has a history with the NFL—it teamed with Bruin Sports Capital to invest in NFL On Location, which serves as the league's premium events and hospitality business.

Featured image via adamkaz/iStock/Getty Images Plus
 

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