Private equity firms Fortress, Charlesbank, and Clearlake have taken over Learfield, the pre-eminent US college sports marketing group, under new terms of a debt restructuring.
The deal reduces Learfield’s overall debt by more than $600mn, injects $150mn in new equity investment, and transfers ownership to the three private equity firms, its largest lenders.
Hollywood entertainment group Endeavor and its private equity partner Silver Lake, which have controlled Learfield since 2018, will become minority partners under the restructuring terms. Learfield is the product of a $2bn merger in 2018 between two of the largest multimedia sports marketing groups in college sports.
Photo by Muyuan Ma
Learfield operates in the middle of the business of college sports as they become an increasingly important source of revenue for campuses.
The company handles multimedia deals for universities, controlling much of their merchandise sales, stadium sponsorships, ticketing, and content development. The company’s clients include university teams such as the Texas Longhorns and Alabama Crimson Tide.
The deal reflects how private equity has sought to gain broad exposure to the sports world, taking ownership stakes in clubs and leagues and financing media platforms, new stadium projects, and broad ecommerce efforts.
It also comes at a precarious time in college sports, with student athletes since 2021 earning the right to receive sponsorships and regional leagues reconstituting themselves amid a rush for broadcast revenues.
Fortress, Charlesbank, and Clearlake will form a steering committee to form a new board of Learfield. Cole Gahagan, the President & Chief Executive Officer of Learfield, told the Financial Times that the company was able to renegotiate terms of five significant college sports contracts to stave off a potential Chapter 11 bankruptcy filing and secure the debt restructuring with the previous lenders turned equity holders.
Learfield’s financial position was exacerbated by the Covid-19 pandemic, which led to multimillion-dollar annual losses.
However, the company will be focused on content and media strategy in the era of name, image, and likeness (NIL), as more student athletes seek brand deals with schools and brand partners. This is the company’s largest growth initiative and is expected to drive innovation and growth for Learfield.
The three private equity firms, which have over $100bn in assets under management, will take on the challenge of growing the multimedia rights business of Learfield.
The three firms involved in the takeover are Clearlake Capital Group, L.P., Charlesbank Capital Partners, and Fortress Investment Group LLC.
In summary, the takeover of Learfield by private equity firms reflects the growing interest of institutional capital in the $14bn university sports industry. The restructuring provides Learfield with a new financial position to drive innovation and growth, particularly in the era of name, image, and likeness, where content and media strategy has become Learfield’s largest growth initiative.
