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RedBird Capital wants to sell its stake in NFL, MLB players' union firm – a risky business worth up to $2 billion

RedBird Capital wants to sell its stake in $2 billion NFL, MLB players union business

6/16/2021 7:54:00 PM

RedBird Capital wants to sell its stake in $2 billion NFL, MLB players union business

The private investment firm owns 40% of OneTeam Partners, which leverages pro football and baseball players' name, image and likeness.

. Companies need unions and pay a rights fee for their products. Video games, sports apparel, trading cards, and merchandise are historically the top four drivers in sports licensing.RedBird's role in the partnership includes negotiating terms for OneTeam, finding new collective rights opportunities and growing value. It makes a percentage of the return from revenue. The firm is betting the NIL space will explode with colleges coming online, and thinks non-fungible tokens (NFTs) will play a factor. Add in the built-in licensing deals from the aforementioned companies, and it sees value with OneTeam.

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Sports bankers call OneTeam the 33rd NFL team – meaning it holds value for unions, especially in football because it allows them to share equally in a portion ofleague revenues.Chris Paul #3 of the Phoenix Suns looks on during the game against the Oklahoma City Thunder on January 27, 2021 at Talking Stick Resort Arena in Phoenix, Arizona.

Barry Gossage | National Basketball Association | Getty ImagesIt doesn't have the NBA players unionOneTeam's assets, including the Major League Soccer and Women's National Basketball Association players' unions, look good on paper. But it's missing an essential asset – the NBA players association.

The NBA is the most internationally marketable organization of the four major U.S. sports leagues. NBA players are more recognizable, have prominent social media followings and have better national and global appeal. That allows companies to activate better sponsorships and leverage licensing deals. The league also has a younger fanbase and is ahead in the NFT space, which has cooled off.

But the NBPA operates itslicensing division internallyand doesn't need OneTeam. But, OneTeam could thrive should it eventually capture both NBA and hockey unions. And popularity around women's sports is also on the rise, which can help increase revenue if those leagues grow.

For now, though, NFL and MLB are the core unions at OneTeam. Baseball players have shown little interest inenhancing their marketability. And in football, striking deals with both the NFL and the players union can be expensive for companies, since the league commands top dollar.

In addition, getting star NFL players to activate partnerships is a challenge, according to people familiar with NFLPA operations. Generating future revenue around just NFLPA and MLBPA licensing, and NIL, will be difficult for OneTeam.The firm has interesting plans around the

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esports space. But it needs the NBA players and global soccer unions, too.DeMaurice Smith the Executive Director of the National Football League Players Association speaks during the NFLPA press conference on January 30, 2020 at the Miami Beach Convention Center in Miami Beack, FL.

Rich Graessle | Icon Sportswire | Getty ImagesNavigating union politics is trickyPotential buyers may also need to brace for more tension inside the unions.In the NFLPA, the future of executive director DeMaurice Smith, who helped form OneTeam and holds a board seat,

remains blurry. Some players are still unhappy about the new 10-year collective bargaining agreement and could look to replace him.On the MLBPA's front, their collective bargaining agreement with team owners is set to expire on Dec. 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 this comes following a major restructuring of licensing deals due to the pandemic, which killed sports-related revenues.

There's also a concern around RedBird's ties to the MLB.In March, RedBird took a minority share in Fenway Sports Group, which owns the Boston Red Sox. Thatdeal includedNBA star, LeBron James. It's a non-controlling stake, but considering the rocky history of MLB players and owners, double-dipping in the baseball business is tricky.

RedBird is technically a team owner now and has an interest in player affairs with OneTeam. Individuals familiar with the matter told CNBC RedBird isn't being forced to sell its position in OneTeam due to concerns about MLB team ownership. But it puts MLBPA executive director Tony Clark, who also has a board seat with OneTeam, in an awkward position.

MLB, NFLPA and RedBird did not respond to CNBC's requests for comment.Gerry Cardinale, chief executive officer of Redbird Capital Partners LLC, stands for a photograph next to a 10-foot-tall statue of the Incredible Hulk in New York, U.S., on Wednesday, Nov. 14, 2018.

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Griselda San Martin | Bloomberg | Getty ImagesIs the timing right for RedBird?In sports business circles, the timing and valuation of RedBird's stake in OneTeam is questionable. If the future is so bright, why is RedBird looking to sell? Read more: CNBC »

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