NFLPA, MLBPA Align with RedBird Capital to Form 'OneTeam Partners', Focused on Maximizing the Value of NIL

JohnWallStreet

The Wall Street Journal has reported that the National Football League Players Association, the Major League Baseball Players Association and RedBird Capital Partners have aligned on a new venture entitled ‘OneTeam Partners, LLC.’ Together they’ll focus on maximizing the value of the players’ name, image and likeness (NIL) and plan to reinvest those revenues into “sports, media and consumer-related startups that want to license player rights.”

OneTeam Partners will take control over all group licensing rights related to video games and trading cards (they'll also have the chance to explore opportunities associated with mobile gaming, digital trading cards, youth academies and esports) for the two labor organizations. RedBird, which has agreed to seed the company with a $125 million investment, will own 40% of the business; the NFLPA and the MLBPA will split the remaining 60%. NFL Players Inc. president Ahmad Nassar has been named CEO. RedBird Capital operating partner Brent Stehlik will serve as president. 

Howie Long-Short: Historically, the NIL revenues generated from video game and trading card deals (think: Electronic Arts, Sony, Panini America) have gone into the greater players association (PA) war chest (think: all licensing & marketing revenues). From there, some of the money is distributed to the members, a portion goes to covering expenses and the remainder is invested or sits on a balance sheet. 

But this deal changes that. RedBird paid the two players associations a multiple on their annual video game and trading card revenues for control over NIL marketing rights (and the corresponding revenues, which they'll reinvest) within those two categories (currently worth $120 million/year). To be clear, the players will continue to take home their cut (it will just come from the money RedBird paid up front). The PAs retain their rights to ink licensing and/or marketing agreements in categories excluded from the agreement. 

While there’s no guarantee that the value of NFLPA and MLBPA video game and trading card licensing agreements will continue to rise (or even remain flat), the presumption is that RedBird will professionalize the player associations' profit-making operations and improve deal flow. Remember, players associations exist solely to collectively bargain for their fair share - not to serve as profit centers or as private equity investors.

This particular deal is significant in that it brings together the players associations of two separate leagues and like any other business, with scale comes purchasing power. Before, the NFLPA and MLBPA were solely able to offer football players or baseball players to their respective partners. Now, OneTeam Partners can deliver both sets of athletes and there's likely to be a bigger pot to be shared amongst them as a result.

OneTeam Partners believes there is an opportunity to align with players associations in leagues across the world – and rightfully so, the labor groups affiliated with MLS, the WNBA and the USWNT have all already committed to investing in the VC fund. The NBA and NHL are taking a wait and see approach, but if the company can monetize NIL more effectively than the players associations have, it’s only a matter of time until they too are contributing rights to be sold.

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