The NWSL board voted Saturday to allow Washington Spirit debt holders to convert their notes to equity, a move that could pave the way for co-owner Y. Michele Kang to purchase the franchise at a league-record $35 million valuation.
At a previously unscheduled meeting, the board made two decisions that could have major ramifications for the future of the franchise. In addition to allowing the team’s dozens of debt holders to convert notes to voting shares in the team, the board also approved Kang’s recent deal to acquire and convert some of those shares herself.
That means Kang, who has been trying to purchase the team for $35 million, is now the team’s largest equity holder, though she still has less than half of the total shares. If she can convince enough of those debt holders to convert to equity and vote alongside her (which she says she can), that could result in Kang taking full control of the franchise.
“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,” the board said in a statement. “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.”
A representative for Kang declined to comment.
It’s the latest surprise in what has been a long, complicated sale process that dates back to the NWSL’s wide-reaching abuse scandal, which rocked the league in the middle of last season. A Spirit coach was among the people implicated in that scandal, and in the aftermath, the league told the team’s three owners—Kang, Steve Baldwin, Bill Lynch—that it wanted them all to sell.
While Baldwin, the controlling owner, said that he would search for a buyer, Kang made it clear that she wanted to purchase the team herself. She drew support from Spirit players, and when it went public that Baldwin was in exclusive talks to sell the team to a group led by Los Angeles Dodgers co-owner Todd Boehly for $25 million, Kang upped her offer to $35 million. That brought the team’s 30+ debt holders—including Chelsea Clinton, Jenna Bush Hager, Brianna Scurry and Tom Daschle—into the mix. A number of those investors wrote to Baldwin backing the higher offer.
Earlier this month Kang, founder and CEO of healthcare tech firm Cognosante, made one more move. She agreed to buy notes from one of those debt holders, Devin Talbott, with the intention to convert those shares to equity and improve her voting position. Once that happened, Boehly’s group stepped away from talks until the ownership situation became clearer.
Now the team’s owners and debt holders must sort out who controls what voting shares, and who is going along with Kang’s bid to take over.