LAFC won its first MLS Cup last season. The club is worth $900 million, according to Sportico’s valuations, the most in MLS.
MadaLuxe Group CEO Adam Freede has purchased a minority stake in LAFC, the latest local entrepreneur to buy into Major League Soccer’s most valuable club.
Freede is purchasing from a pool of equity created last year when LAFC bought out at least a half dozen minority partners. At that time, sources say the defending champions were raising money at a valuation just under $900 million, which would be among the highest prices ever paid for an MLS team in a transaction.
A Southern California native, Freede said in a phone interview that he’s long viewed soccer as a growth opportunity in the U.S. As proof of concept, he cited MLS’s recent transfer spending, its emphasis on youth academies, expansion and an influx of new ownership.
“LAFC has built the first—and if not the first, one of the first—global brands in MLS,” he said in a phone interview. “The club has really embodied the world’s game in the world’s city, and it’s a special environment and group of people to be involved with.”
Freede, who was advised by LionTree on the investment, declined to comment on the size of his stake, or the valuation of the team. An LAFC spokesman also declined to provide financial specifics.
Freede is co-founder and CEO of MadaLuxe Group, which markets, manufactures and distributes luxury clothing and accessories from well-known fashion houses. Its website says it is North America’s largest distributor of luxury fashion. Freede is also an early-stage investor in fashion tech and consumer goods, like alcohol and tequila.
Freede joins a long list of LAFC limited partners with business expertise in sports-adjacent areas such as technology, media, investing and e-commerce. The franchise’s investors include former YouTube CEO Chad Hurley, actor Will Ferrell, Phoenix Holdings chairman Henry Nguyen, Fanatics chief strategy and growth officer Tucker Kain, Endeavor president Mark Shapiro and Joe Tsai, co-founder of Alibaba and owner of the Brooklyn Nets.
LAFC often leans on those LPs—and their rolodexes—if needed, and Freede offers experience as an operator, plus knowledge at the increasing intersection of sports and high-end fashion. He can also learn personally from that same group of fellow owners.
“For me, coming mainly from the fashion space, it’s an opportunity to step outside my routine and be around some of the best minds from different sectors,” he said. “You never know what might come from those conversations. Forget a specific need or ask—just being around such smart, ambitious, well-aligned people is always a great place to be.”
Freede’s investment comes at a time of change at LAFC. The club entered the 2022 season with the league’s largest cap table, and many around both the franchise and league believed that it needed to be trimmed before others could be added. In addition to buying out existing LPs, the club also has a new lead owner. Bennett Rosenthal, co-founder of private equity firm Ares Management, took over that position from Larry Berg in January. The team also recently signed a new 10-year, $100 million stadium naming rights deal with BMO Financial.
Rosenthal told Sportico earlier this year that the club was entering a new “growth phase,” transitioning from MLS newcomer to one of the league’s flagship franchises. It is one of just two MLS teams projected to pass $100 million in revenue this year, per Sportico‘s numbers.
“I’ve spent my life going to sporting events, from NBA finals games to NHL and World Series games, in L.A. and away. I don’t ever remember being at a stadium environment like [LAFC’s] during the playoffs and especially the MLS Cup,” Freede said. “It’s hard to explain without seeing it firsthand.”
LAFC isn’t the only club whose valuation is rapidly rising. The average MLS club is now worth $582 million, per Sportico‘s numbers, up from $185 million 2016, according to Forbes. The 2023 season, which started last week, is the league’s first under its new 10-year partnership with Apple (Nasdaq: AAPL), which will pay at least $2.5 billion.
LAFC’s three managing owners are Rosenthal, Berg and Riot Games co-founder Brandon Beck, who will take over for Rosenthal in four years. Golden State Warriors co-owner Peter Guber is the executive chairman. Other minority partners include former Lakers star Magic Johnson, soccer star Mia Hamm and baseball player Nomar Garciaparra.