Professional soccer in the U.S. has had a checkered history. While the U.S. has proven capable of drawing generational talents to ply their trade on its soil, financial stability for a number of leagues has proven more challenging. But that appears to be changing, and Denver will soon host its second professional soccer team.
The team will be joining the National Women’s Soccer League, which was founded in 2012 and will start its 2025 season with 14 teams. 2026 will bring it to 16, with Denver and Boston officially set to join the fold.
The deal’s announcement on Feb. 6 was years in the making, and a legal team from Hogan Lovells worked to make it happen.
“It obviously took quite a bit of time to get to the point where we are now, so it’s not been a short process,” Kohli said.
Alec Kohli, a law clerk at Hogan Lovells, noted that a key factor in the firm being brought onto the deal was a combination of the firm’s local and national presence. “Having the touchpoints both nationally and then locally are what drove the work for us and allowed us to take this opportunity on,” Kohli said.
These opportunities do not come frequently. Of the five most profitable sports leagues in the country, only two have welcomed expansion teams in the past two decades, the National Hockey League and Major League Soccer.
The NWSL, while growing rapidly in comparison to those leagues, has still only greenlit eight expansions in its 13 years in operation.
Russell Hedman, a partner at Hogan Lovells, said that expansion deals represent very special opportunities for a league to expand its profile and for new owners to enter the arena.
“The NWSL has been something of a rocket ship in the sports world, and the world is opening its eyes to how much demand there is for women’s sports content at the highest level, and soccer is on a breakaway,” Hedman said.
He noted that while the firm has worked on other expansions and the establishment of new leagues, the opportunity presented by the NWSL is far and away one of the most exciting.
“It is a really competitive process. The NWSL is in a strong position, where they can evaluate [almost] any geography in the country as potential expansion territory,” Hedman said. “Working with them to pull Colorado to the top of the list is something we’re really proud of.”
Bringing a sports team to a city also presents a whole host of legal issues, far beyond the accreditation of hot dog and beer vendors.
Kohli explained that at its core, the sports, media and entertainment practice at Hogan Lovells, which worked on the deal, is a multidisciplinary one, and deal work is its crown jewel.
He told Law Week that the firm often handles M&A transactions, and that sports investments can be thought of as another asset class. “It’s an investment opportunity for individuals, institutional investors, private equity funds,” Kohli said.
Kohli noted that an expansion opportunity, as an investment, functions similarly to a private equity investment or acquisition. He mentioned that one of the challenges with these deals was in the context of valuation.
“There has been this vast appreciation in valuations of these assets, but then also significant increase in the potential layers in this space, the universe of potential investors,” Kohli said. “Because of that, one of the challenges that arises is just how you manage all of that change and that fluctuation and valuation, which has been a remarkably impressive upward trajectory over the last few years.”
Hedman said that sports have arrived as an asset class — and it’s a dynamic one.
“The valuations have caused people to look much more closely at terms and their investment appetite,” Hedman said. “And that’s the role that lawyers really serve in this process, both as investment counsel, but also as a guide to entering this exciting asset world.”
According to Sportico, the expansion fee for the Denver franchise ended up at $110 million. That was more than double than the fee agreed on by the two previous expansion fees in 2023, and almost 50 times more than the reported expansion fees from the three teams that joined the league in 2020, 2021 and 2022.
That rise in valuation mirrors the growth of interest and attendance in the league. Its 2024 attendance saw the league surpass 2 million in regular season attendance, with 89 matches seeing more than 10,000 fans in attendance, according to the NWSL.
The NWSL’s press release about the expansion noted that the ownership group includes Rob Cohen; a subsidiary of Ariel Investments led by Mellody Hobson and Jason Wright; Neelima Joshi and Dhiren Jhaveri; and Molly Coors. Cohen will be the club’s controlling owner and governor and Hobson will serve as Denver NWSL’s alternate governor.
Hedman said that bringing an ownership team together for this type of deal involved both coming to an agreement on the valuation of the deal and finding the right people to create the sophistication, financial wherewithal and enthusiasm that you need to launch a team. “It’s been a real pleasure to put the ownership group around Rob Cohen in this deal,” Hedman said.
All of the work came together for Hedman when he received the go-ahead for the deal, which he told Law Week was one of the high points of the whole process for him.
“Nothing beats getting the call,” Hedman said. “Knowing that we worked extremely hard through the end of the year, a lot of long weekends and overnights. And one day, you get a call from the [the league], and they say, ‘Alright, it’s yours if you can get it finished.’ And from there it’s a race to the finish line as fast as you can. It’s pretty exhilarating to get that call.”
Kohli echoed the joy of receiving the phone call, and he added that the public announcement of the deal, where members of the community and the ownership showed up to celebrate, was also a great moment.
“Those are the times when you really see how your work has taken shape and taken form, and this is something that will live on for not only one, two, but potentially 20, 100 years to come,” Kohli said Being able to be a part of that, and playing a very, very small role in making that happen, was an incredible honor.”