NWSL Board of Governors approve sale of Washington Spirit shares to Michele Kang

The NWSL Board of Governors has announced that it has unanimously approved changes to the Washington Spirit’s ownership structure, an important step towards Y. Michele Kang assuming majority ownership of the club. While today’s statement did not definitively declare Kang the team’s controlling stakeholder, it does appear that the Board of Governors — who reportedly held a meeting this week essentially to allow Kang and Steve Baldwin to make their respective cases — is not going to stand in the way.

The league’s statement is as follows:

The National Women’s Soccer League announced today that its Board of Governors has unanimously approved important changes to the structure and makeup of the Washington Soccer Properties ownership group, the entity that manages the NWSL’s Washington Spirit.

To date, the ownership of WSP has been held by three individuals, each of whom have held the entirety of WSP’s equity positions and voting membership on the team’s Board of Managers. Additionally, WSP has had a number of investors who have held non-equity and non-voting positions with the team.

The NWSL Board of Governors has, subject to the satisfaction of routine legal conditions, approved the conversion of those investors who wish to convert to full equity shareholders, and as such, voting members of the WSP Board of Managers. Additionally, the NWSL Board of Governors has approved the transfer of certain equity stakes to Y. Michele Kang, providing Kang with additional shares, though not a majority or controlling interest.

WSP will now engage in a process to determine whether Kang will receive sufficient support of its voting members, as required by the WSP bylaws, to operate the Washington Spirit as its controlling owner.

NWSL Board of Governors released the following joint statement:

“Our collective focus is to create the best environment for the Washington Spirit players, fans, and team employees, and to operate the NWSL in a manner that supports excellence on the field of play and in front offices around the league. Our priority is determining what is in the best interest of the NWSL, Washington Spirit, its players, and the D.C. soccer community. We believe Michele is fully committed to elevating this club and delivering for its players and it is now a matter for WSP shareholders to determine who holds a controlling interest. We are committed to allowing the required ownership process to be resolved in the appropriate, orderly manner. We will provide any additional updates once that process has taken place.”

Kang initially bought into the club before the 2021 season, and reportedly has had multiple bids to buy Baldwin’s stake rebuffed. The various issues with the Spirit, which extended to a workplace culture the league found to be abusive after a lengthy investigation, resulted in NWSL removing the Spirit from the Board of Governors until the situation was remedied to a degree that the Board would re-admit representatives from the Spirit.

Spirit players then took the remarkable step of uniting to post a public letter calling for Baldwin to sell to Kang:

In the meantime, Kang’s bid was reported by Sports Business Journal to value the club at $35 million, with an additional pledge to invest up to $25 million more in the club — which currently has no permanent office space or training ground — once she took control. Meanwhile, Baldwin preferred a bid from sports and entertainment investor Todd Boehly, which later expanded to include retail executive Jennifer Tepper Mackesy to such an extent that the Spirit announced they were in “exclusive negotiations” with them rather than Kang.

However, a meeting with the players was reported to have gone poorly, and the process became contentious enough that multiple Spirit investors — a group including Enlightenment Capital managing partner Devin Talbott and former Senate majority leader Tom Daschle — chose to publicly align themselves with Kang. This eventually resulted in numerous Spirit investors to convert their holdings in the club from debt holdings to equity, granting them the right to vote on club governance matters, news first reported by The Athletic.

Kang then sent the Board of Governors a letter asserting that those investors were banding together with her, and that their total stakes amounted to 52% of the club, reducing Baldwin and Spirit founding owner Bill Lynch to minority owners who could no longer block her move to become the club’s controlling partner:

This resulted in the reported hearing of the Board of Governors, in which Kang detailed her stance, while Baldwin was said to state that Kang’s move to consolidate power was not legitimate. While today’s statement from the league does not clarify how that meeting went, it does state clearly that the stakeholders can convert their notes to equity and become voting members for Washington Soccer Partners, while also saying that the league has approved of Kang obtaining more shares than she previously held (though not enough to grant her a clear majority).

While the issue of the Spirit’s ownership is not yet settled — the NWSL has effectively stated that determining that is a Washington Soccer Partners matter rather than something the league can decide — it does appear that the last major obstacle to Kang’s potentially league-changing move to take control of the club has been removed.

Note: This piece initially stated that WSP stakeholders had already converted their notes to equity. NWSL has clarified to B&RU that this has not happened yet. Yesterday’s decision from the Board approved the concept that these stakeholders can make that move if they so choose.