Cathy Engelbert

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0:32In recent years, one of the most popular new sports leagues has been the Women's National Basketball Association. I had a chance to sit down recently with Kathy Engelberg, who's the commissioner of the WNBA, to ask her how she's helped to transform the WNBA into a very popular sport. Let's talk about the WNBA as a business to make sure I understand. How many teams are there? So starting this season, there'll be 13 teams. We had 12 for a long time. 13 teams on our way to 16 or more. Who's the new team? The new team is in the Bay Area, the Golden State Valkyries. And they're going to kill it this year off the court for sure.

1:08And on the court, they'll be, they had an expansion draft. So it'll be interesting to see. So you have 13 teams. Are you planning to expand to more now? Yeah, so we've announced team 14 and 15 in Toronto and Portland. And we have a process right now for additional teams where we have a lot of demand and a lot of ownership groups around the country interested. Each team has how many players? 12? 12 players. So you've got 144 professional players. Yeah, it'll be 156 this year. 156. Yeah, 156. So today, the league is well known for having some stars like Kaitlyn Clark, among others, Angel Reese as well.

1:43Is that kind of competition between Angel Reese and Kaitlyn Clark helping your TV ratings? And has that worked out well for you to have Kaitlyn Clark in the league? You know, when I came into the league, people watched sports for three basic reasons. For rivalries, for games of consequence, and for household names, if you know the players. And we didn't have a lot of household names, even though we had amazing players back then and have amazing players beyond Kaitlyn and Angel. So rivalries are generally good for sports. In women's sports, sometimes it's complicated by the social media vitriol, which we denounce.

2:16It's terrible what some of these players have to endure. And so the hatred, the vitriol, the misogyny, the homophobia, the racism, there's no place for it in sport. And we like to be known in sport as a big uniter. So that's the negative part of that. But the positive certainly has been that people are watching. I mean, we brought tens of millions of new people into our sport last year because this rivalry came out of college. Well, take Kaitlin Clark. She was very famous at the University of Iowa. and she came into the league and she had more attention probably than anybody who came in as a rookie, rookie of the year and so forth.

2:51But it seemed as if she was getting beaten up a little bit or being treated relatively roughly. Why would the other players who would see that she's making the league more visible and more profitable, why were they kind of giving her a rough time? Yeah, I think that narrative became the narrative. But I think we have a really exciting, fast-paced physical game. The physicality, I think, surprised a lot of the new fans that came in. And the game's pretty physical in college. But then when you come to WNBA and it's all the great players from the best colleges in one place, 144 of them last year with our 12 teams were expanding now.

3:25So I think it was very physical at first for a lot of new eyes on the game. I think there were, unfortunately, some inappropriate plays that happened. But over the course of the whole season, I think Kaitlin really adjusted well. So did Angel because Angel was very physical for her at first, too. And I think all of our rookies Rekia Jackson and Cameron Brink got hurt early in the season. But, you know, they all adjusted to the physicality of our game. And I think our fans didn't adjust as quickly. And then that narrative kind of got away from us. Now, recently, Adam Silver, the head of the and the commissioner of the NBA, negotiated on behalf of the NBA and the WNBA a contract, a TV contract, for many years that was said to be worth roughly$76 billion over some period of time.

4:09And you get part of that, as I understand it. So were you happy with that arrangement? Yes, we actually negotiated our own deal, but along when you partner and what I call go-to-market with the NBA The NBA and WNBA are the only two major professional sports in the US that have essentially opposite seasons We're made October their October to June, but April is the end of their regular season So we could provide think about the disruption in the media landscape from linear to streaming to subscription models and we can we together with the NBA can provide over 320 plus days of programming so we hit all 12 months for programming for a streamer even if it's NBC and Peacock or Amazon so it was a huge advantage we're much more valuable going to market with them on this deal with NBC and ABC ESPN Disney as well as Amazon so that was a huge positive for us and we had a great deal.

5:02It's historic for women's sports. How long is the contract for? So that contract is 11 years. 11 years. And you get$2 billion to$3 billion of that, something like that? Yes, exactly. But after three years, we have an option to renegotiate around the price of that if we keep growing, because we've grown the league enormously just in a couple-year period. So we, after three years, have an option. We also have the option to enter in additional media rights deals. I call them our tranche two deals. And we're in the process of negotiating those. So you have an option after two or three years to negotiate presumably a higher price.

5:36Yes. Do they have an option to negotiate a lower price? No, I think it's an option to take a look at the growth of the league. And if we continue on the growth trajectory, it's to provide more value, especially because ultimately that value goes to the players. So today, how are your TV ratings compared to the NBA or your, I assume, a fraction of it? But how do you compare? Do you get 10 percent of what they get 20 percent 30 percent last year we had a unbelievably historic year our average was at 1.2 million huge increase over prior years million people watching watching right average average average TV linear okay we would peak in the u.s.

6:16a U.S. only number that's not a global number we have a lot of global fans too and that's an untapped area of growth for us. But we continue to look at a huge increase in that viewership. I mean, even our draft at peak last year, over three million people watched the WNBA draft last year. Our all-star game, over two million people. These were all-time records. And remember, we don't necessarily compare ourselves with the NBA or other men's sports. They've been around. The NBA's in their 78th year. NFL, NHL, and MLB are all over 100 years old. We're going into our 29th season this year. So these comparisons to the men's league are tough but certainly where we are today I never thought we'd have as high viewership as we had last year.

6:57It's often the case that these players have to fly commercial historically now as a result of your new arrangement you can afford to have and every team can afford to have a kind of a special jet or a charter program. So is that part of the deal now everybody gets charter? Yes it's something we've been working on since I came into the league. We've been chipping away at it. We offered it during certain games previously years ago, chipping away at it for full playoffs two years ago. And then last year, because I knew where we were tracking for the media rights, but we needed to build, David, an economic model to fund this.

7:31It wasn't just like you wave a wand and you can give a$20 to$30 million benefit to someone through charter travel. So I felt very confident, our owners felt confident that we had been building an economic model to sustain it over long term because it also can't be you just offer it for a year or two we need to think about it for decades that we're able to afford it and so i felt good about that and we did it outside of collective bargaining cycle now the nba has something called a salary cap and i guess a salary floor do you have a salary cap yes we do we have a hard cap under the current cba uh obviously that cba will be up after this year and we'll be negotiating a new deal you've done quite well but is any team profitable at this point by normal profitability standards?

8:15Yeah, I think our teams are making enormous progress towards profitability. They're just growing, but what they're doing, which we love, is because they have so much confidence in the growth trajectory. They're turning around and anything they might be making, they're investing back. We have at least six teams who are now have built or building new practice facilities. They're working on a lot of different things to invest in the player experience because our free agency has become such an important part of building a roster to win a championship. So they're all taking the upswing in attendance, gate for them, corporate partnership money for them, and they're investing it back in the business.

8:50So today, how many owners of WNBA teams are women? Well, again, we have NBA-affiliated owners, independent owners. We have an all-women ownership group, three women up in Seattle. We have diverse ownership at the minority investor level. Obviously, all the NBA teams are primarily owned by men. But we're making some progress there with diverse ownership groups. And again, as we look at expansion, we look for the diversification of that group. JOHN YANG, So in college basketball, the average game, or the game is how long in terms of length of time? ANNE RUGEN, So again, in women's, they have four quarters, 40 minutes.

9:29We play four quarters 40 minutes in professional work in professional and yeah you pay four quarters 40 minutes 40 minutes total sets each quarter is 10 minutes yes okay and today is that likely to change or the rules going to change in any way shape or form that you know yeah I don't think you know one of the things when I came in I assessed kind of the strategy and the quality of the game and the importance of the brand and the one thing that when I looked at the game There's not much to tweak about the game. I mean, pure shooting, pick and rolls, great rebounding, great play. People who we brought in, those tens of millions of new fans, love the game.

10:06So I don't think there's much to tweak in the game. Can we use more technology? Can officiating advance and evolve? Yes. But the game itself, I think the quality of the game was something, you know, it was probably the only thing we didn't need to actually pick up a stone and totally change. This is the Small Business Minute, brought to you by Amazon Ads. I'm Lisa Mateo. Credit card perks offered to small business customers include cash back and travel rewards. But the feature many business owners find the most attractive is a high credit limit. Nearly half of all the small and medium-sized businesses surveyed by payments.com and payments processor I2B said so.

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11:21Let's talk about your own background for a moment. Where are you from? I'm from Philadelphia. And you were born there? Yeah, born in Philadelphia. Grew up right across the bridge in southern New Jersey. And I'm one of eight kids. I have five brothers. I'm an only child, so I don't know what that's like. What is it like to have seven siblings? Yeah, it's crazy, especially five brothers, three older. So I was their fourth in everything from wiffle ball to soccer to street hockey to basketball. Grew up very athletic family, very competitive. Like my sister and I would compete. She and I are only 13 months apart, compete for everything, including food.

11:57And we'd hide food in our rooms because the brothers would steal all the food. So it was a fun upbringing, continues to be a very close-knit family. What did your father do to support a family of eight children? So my father worked for RCA and was an IT guy. And early, like we used to have the punch cards, he'd bring punch cards home. An early IT kind of manager, unfortunately, died young in 1987. And but my mom worked for 62 years for the same place for a pediatrician as their office manager as that business grew. So, you know, both my parents worked and and my mom, though, you know, was able to balance it all and raise eight children on the way.

12:36You were an athlete in high school. Yes. And what sports did you play? So I actually played tennis, basketball and lacrosse in high school and I was recruited for lacrosse in college. I was a walk on for basketball. Back in the mid 80s, you could play two sports in college at a D1 level. Today you can't do that, but back then I played both lacrosse and basketball. So you were the captain of both teams? Yes. You're playing two sports and eventually you have to graduate, so you graduate, and you said, I want to be in sports or I want to be going to Deloitte? Well, actually it all dates back to sophomore year when I was a computer science major and I had to take a programming course in Fortran and I said, I have no idea what that professor's talking about.

13:17Someone said, there's this thing called the business school, Kathy. that you should transfer to it. And there's something called accounting and it's the language of business and you'll get a job because it was the big eight accounting firms back then. So I didn't know who said it was the language of business. I found out later that was Warren Buffett and you'll get a job. I got a job pretty easily back then and started with Deloitte. In those days, I can't imagine that women were being seen as potential CEOs of big accounting firms. So did you ever imagine when you started, you would be the CEO?

13:50No, because I think at the partner ranks when I started, it was probably 5 % women partners. So it was pretty new, you know, as far as the trajectory for women. Never thought that I would be the CEO. Never aspired to be the CEO, quite frankly. But your specialty was what? So my specialty back then was I worked in a variety of clients growing up, manufacturing S &Ls back during the S &L crisis bank. I settled more once I had my kids in the pharmaceutical sector as well as consumer products. But I was a derivative financial instrument specialist at the firm, which gave me tons of valuation expertise.

14:28You were the CEO of Deloitte, which is one of the largest service providers in the United States, an accounting and audit firm, among other services. And you did that quite well for quite a while. And all of a sudden, you're approached by the WNBA about being the commissioner. what made you think you would want to do that and what made them think that you could do that well it's an interesting question so it didn't seem to make a lot of sense to a lot of people unless you had come to my office at deloitte and saw basketballs all behind me so i played college basketball for now naismith hall of fame coach muffet mcgrawl went on to great success in notre dame i went to little lehigh university and my father was actually drafted into the nba in 1957 by the Detroit Pistons.

15:11So we had a lot of basketball DNA in the family. And so when I was, my term was ending at Deloitte, I really said, you know, what do I want to do next? I want to do something different, something with a broad women's leadership platform and something I had a passion for, thinking maybe it would take me to a college or university. And then someone approached me about the WNBA commissioner job. And I said, definitely is something different, broad women's leadership platform and certainly a game. I have a huge passion for the game. How long had you been the CEO of Deloitte? So I'd been at Deloitte for over three decades, 33 years, and I'd been the CEO for a little over four years, terms four years.

15:49I took over a little earlier than usual. And then your term's up, and it's time to move on, and could have stayed at Deloitte Senior Partner, but really wanted to do something in kind of a second act, and this was it. And did you stay connected to sports by playing on weekends or anything like that, or you didn't have time for that? Not really. Raising two kids, you know, having a career. I did coach my daughter's travel basketball team from middle school. During middle school, I stayed connected that way, but just a big fan of sports. So now how many years have you been the commissioner? Five and a half, so almost six now.

16:24Any regrets about taking the job? No regrets at all. This was a really good fit for me personally, professionally, and just enjoy the game so much. I could go to a game every day, and it's just been a total transformation of a league that was just surviving five, six years ago and now thriving. So what do you do outside of the job you have now? Are you any corporate boards, or this is what you're doing full-time, or do you have... No, I am on corporate boards. That was one of the things that was important to me, given my long history at Deloitte. So I'm on the board of McDonald's. And one of the reasons I wanted McDonald's was not necessarily because I love hamburgers, although I do.

17:02I want a big consumer brand because now I'm running a consumer brand called the WNBA. It's been helpful to see their digital, their consumer base, their globalization and everything. And then I'm on the board of Royalty Pharma, which is a public company as well. And then I play. My passion now is golf. So I don't play golf because it's too humiliating to me. It's a hard game. I took it up when I became the CEO of Deloitte. So I was 50 when I took it up. And it was because I would be in CEOs' offices and they would be talking golf or they'd have golf decorations in their office. I'd ask them about it.

17:36Do you play? I played a little bit and then started playing a lot and got pretty good at it and got invited to the AT &T Pebble Beach Pro-Am and the American Express. And now I just love being in that environment with all my former CEO colleagues. And it's a lot of fun now. But it is a great and I tell a lot of women take up golf You know, it's a great way to build relationships in the corporate world recently in spring training I went into a batting cage and they found a pitcher who could throw the ball between three and four miles an hour As slow as possible and I actually hit a couple ground balls to everybody's amazement Do you ever go on the court and say well look I played at Lehigh I was a star there Let's have a little shoot around you ever do that all the time I I passed by in the practice facilities or as I'm walking in arena the rack of basketballs, and I'm like, and I usually have heels on, so it's a little challenging, but I'll always take a ball and shoot a few.

18:29And the players, I think it does give you a little cred that you played the game, not at the level they're playing at, but playing for Muffet McGraw, Naismith Hall of Famer. My dad played for Jack Ramsey, Dr. Jack, who was a Naismith Hall of Famer. So just having a little bit of that basketball DNA is helpful. In the NBA, many of the stars now, not all, but many of the stars come from Europe or other places outside the United States. Do you have many players coming from outside the United States? We've got players from Germany, Canada, Australia, France, Spain, Africa. Yeah, so we're starting to globalize our ranks, but they're not quite where the NBA has been.

19:03Again, the NBA being 50-plus years older than us, but it's starting to increase. And I think the U.S.'s dominance in the Olympics, the women just won their eighth consecutive gold medal in basketball in the Paris Olympics. And I think that dominance has helped lift other programs around the world, such that France almost, they only lost by two to the U.S. So a lot of these programs around the world have invested in their grassroots and youth basketball, such that they're getting really good. And today, when you were trying to get sponsors, is it much different for the teams to get sponsored much easier than it used to be?

19:40Or did the league negotiate sponsor deals, or each team does its own sponsor deal? Both. We have national league-sponsored deals, we have global deals, and then there's local deals for teams to negotiate, as long as it doesn't block a category at the national level. And so one of the things that's so interesting to me when I came in the league, and I didn't know this because I was off at Deloitte in a very different industry, is that someone told me my first day on the job that less than 1 % of all corporate partnership money spent on sports is women's sports. And my first question, David, as a good prior accountant was, what's the denominator?

20:15Because if we were to move that a couple hundred basis points, how much do we have to move the numerator? And I would say we've moved that significantly up, probably to 10 percent or so. But the denominator's huge. Obviously, it's multiple, multiple tens of billions of dollars. Women's sports are the two biggest known or best known women's sports, I would guess, in the United States in terms of professional leagues are soccer, or what's called football outside the United States, and basketball. Yes. Is there a third that's coming up? Is it softball? Yeah, well, certainly the WNBA, we're the longest-tenured women's professional sports league at 29 years now, double any other, so, and part of that's due to our big brother, the NBA, and everything they've done for us.

20:56And then it's soccer, and then the PWHL is a new hockey league that has emerged. And they've had a lot, the hockey's had a lot of fits and starts, has had soccer. we're blessed to have had continuity over 29 years. But I think there's some emerging sports like volleyball. But the problem is there's four professional volleyball leagues, so they probably need some consolidation. If you look back on what you've achieved today, what are you most proud of having achieved today? Definitely the growth, you know, the, you know, getting through the pandemic. I mean, it was pretty existential for us during the pandemic.

21:31We hadn't started our season yet, because remember, pandemic was March when Adam Silver shut down the sports world by shutting down the NBA play, then the NCAA shut down. So getting through that pandemic year, I'm probably most proud of it. It was like working on an IPO for a couple of weeks because I had just come in the league. I didn't have a lot of relationships. We had to convince the players to play, that we would keep them safe. We were at a time of racial crisis in America with the George Floyd situation. We got thrown in the middle of a political battle in the state of Georgia with one of our owners.

22:02So there was so much going on in that 2020 year. So I think I'm proud of the way we emerged from that, such that just a year later in February of 22, we were the first women's sports property to raise capital at scale, $75 million. We probably could have raised more. What do you consider the biggest single challenge for the WNBA going forward? I would say, you know, we have several challenges and several opportunities. One of our biggest challenges is certainly how do we globalize this game? There's a lot of opportunity outside the United States to build fandom, to build viewership, to make our players global stars.

22:35We continue to be challenged by being a women's league and, therefore, a diverse one. So therefore, we continue to be challenged around the vitriol in social media against our players and the league. So we're working on a four-pronged strategy on that around a technology solution to help with the social media side, monitoring physical safety and mental health. So that's another challenge. but enormous opportunity as well in the league around so many areas. Expansion would be one of those. A lot of capital inflows coming into the league, finding places to invest that. JOHN YANG, Ph.D.: So, if somebody said to me, you have a chance to invest in a women's NBA team, a WNBA team, new one, should I take that chance, or should it still a risky investment?

23:19RACHEL GARCIA, Ph.D.: No, I think, as you look at our new media deal, you look at the growth, You look at the quality of the game, the strength of the brand, what it represents. I wish three, four years ago I had invested, but obviously I couldn't as the commissioner. But yes, that's why we raised that capital three, four years ago. Those people who invested in us back then were believers in the future. And I think they're all going to be pretty happy. So yes, I would invest. Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.