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Private equity firms Fortress, Charlesbank and Clearlake will take over the pre-eminent US college sports marketing group, Learfield, under new terms of a debt restructuring, extending the reach of institutional capital into the domain of the $14bn university sports industry.
Learfield operates in the middle of the business of college sports as they become an increasing 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 restructuring, to be announced on Wednesday, will reduce Learfield’s overall debt burden by more than $600mn, inject $150mn in new equity investment and transfer its 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.
Earlier this year, Endeavor disclosed to shareholders it had fully written down its investment in Learfield after recording tens of millions of dollars in impairments in 2022.
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.
The restructuring for Learfield 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, whose clients include university teams such as the Texas Longhorns and Alabama Crimson Tide, which squared off on the football field at the weekend.
Learfield is the product of a $2bn merger in 2018 between two of the largest multimedia sports marketing groups in college sports. The merger came with a more than $1bn debt burden, as well as multimedia rights contracts with several university sports departments that resulted in multimillion-dollar annual losses, according to people familiar with the matter. Financial pressures on the company were exacerbated by the Covid-19 pandemic.
Cole Gahagan, chief executive of Learfield, told the Financial Times that the company was able to renegotiate terms of five significant college sports contracts in order to stave off a potential Chapter 11 bankruptcy filing and secure the debt restructuring with the previous lenders turned equity holders.
The company will be focused on content and media strategy in the era of name, image and likeness, or NIL, the shorthand for student athletes cashing in on sponsorship deals.
“As more and more and more student athletes seek brand deals with schools and brand partners, they’re doing so in content, our largest growth initiative,” Gahagan said.
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