The Chicago Sky's 'Self-Dealing' Suit: A Reminder of WNBA's Troubled Past
The legal battle between Chicago Sky majority owner Michael Alter and one of the team's original investors, Steven Rogers, has brought to light the WNBA's history of financial struggles and the challenges faced by its teams. The lawsuit, filed in January, accuses Alter of engaging in 'self-dealing' practices that allegedly reduced the value of minority investors' stakes.
The Chicago Sky's journey began in 2005 when Alter, along with a group of investors, paid a $10 million expansion fee. The original investor list, which included notable figures like singer Michelle Williams and Michael Jordan's ex-wife, Juanita Vanoy Jordan, was not fully disclosed. Despite the initial investment, the league faced significant financial challenges, with nine franchises folding or relocating between 2002 and 2009.
Alter's commitment to keeping the team afloat is evident, as he is estimated to have invested tens of millions of dollars over the 20-year history of the franchise. However, the lawsuit suggests that Alter's actions may have impacted minority investors' stakes. The details of the alleged 'self-dealing' remain unclear due to redactions in the suit, but it is believed to involve a conversion of debt into equity, which expanded Alter's ownership control.
The WNBA's financial landscape has been volatile, with rising valuations and uncertainty. In 2022, a 16% stake in the league was sold for $75 million, a valuation that now appears undervalued. Alter's successful pursuit of new capital in 2023, resulting in a 10% stake sale at an $85 million valuation, raised concerns among some investors about the potential impact on their stakes.
The Chicago Sky's championship in 2021 brought increased ticket sales and business opportunities, but it also sparked discussions about the team's future. The mass exodus of key players from the championship-winning roster in 2023, including Candace Parker and Courtney Vandersloot, raised questions about the franchise's stability. The team's efforts to maintain facilities and infrastructure, such as the practice facility near Midway Airport, have also been met with scrutiny.
The lawsuit highlights the complex relationship between ownership, financial management, and the challenges of maintaining a successful WNBA franchise. As the legal proceedings unfold, the WNBA and its teams navigate a path toward a brighter future, learning from the past and striving for long-term sustainability.
