Private equity moves on college sports with Learfield takeover
Private equity managers are going back to school.
Why it matters: The flow of TV dollars, mainly driven by college football, is widening the haves and have-nots across the NCAA, forcing schools to seek outside funding.
Driving the news: Learfield, a college sports marketing and content giant, was taken over by three investment firms Wednesday as part of a debt restructuring.
Zoom in: PE has been slowly encroaching into college sports in recent months.
- In August, Florida State reportedly tapped JP Morgan to explore fundraising options, with Sixth Street Partners showing interest.
- Florida State president Richard McCullough complained that the school's athletic department was $30 million behind in revenue compared to the SEC and Big Ten.
- "We of course are not satisfied with our current situation," he said last month.
The big picture: Sports have become a hotbed for PE investment in recent years.
- Many Premier League clubs have PE ownership, and other firms are trying to get in on TV rights for many European leagues, including Italy's Serie A and Germany's Bundesliga.
- In the U.S., the NBA, NHL, MLS and MLB allow PE firms to take out minority ownership stakes — though the NFL has remained off-limits.
- Over the last few years, funds like Arctos and Dyal that are solely used to buy minority ownership stakes have popped up.
- RedBird Capital has a joint venture with the NFL's VC arm called EverPass, an entity created to handle commercial media rights such as NFL Sunday Ticket.
Details: The Learfield agreement will reduce its debt by more than $600 million while adding $150 million in new investment and helping the company avoid bankruptcy. The three firms — Clearlake, Charlesbank and Fortress — were Learfield's top lenders.
- As part of the deal, Endeavor and its PE partner Silverlake will become minority partners.
- Learfield functions as a middleman for many schools, handling multimedia rights that include merchandise sales, stadium sponsorships, ticketing and content development.
- Some of Learfield's top clients include the University of Texas and Alabama.