SBJ/December 3-9, 2012/Events and AttractionsPrint All
Private equity firm Calera Capital is buying endurance sports leader Competitor Group Inc. for close to $250 million, sources said, ending a nine-month auction of the company.
The CGI management team, led by CEO Scott Dickey, will remain in place as they move from working under one private equity firm, Falconhead Capital, to another.
Calera becomes the latest such investor in the space, replacing Falconhead and joining Providence Equity Partners, which owns the Ironman Triathlon series.
“Financial investors are looking at different tailwinds — whether obesity, health and wellness, declining financing for physical education in schools, [or] health costs — and are looking at ways to get in on that wave of change,” Dickey said.
The deal was nearing completion late last week. It was expected to be finalized early this week, if not already complete.
Financial firms, including companies other than Calera, were not the only businesses that looked at buying CGI, which Falconhead bought in 2008 for an undisclosed price. AEG, Madison Square Garden Co., Lagardère Group and Tour de France operator Amaury Sport are among the strategic parties that considered the property, as did several individuals, sources said. In all, 32 entities made initial bids, a number that was scaled down to six and then to a final two, a source said.
The identity of the runner-up could not be determined.
CGI’s business is thriving, fueled by the health and wellness craze and the high-end demographics of road races. The company expects to generate revenue of $126 million and adjusted EBITDA of $25 million in 2012, representing five-year compounded annual growth of 26 percent and 39 percent, respectively, according to an executive summary sent out earlier this year by CGI’s banker, Perella Weinberg Partners.
EBITDA is earnings before interest, taxes, depreciation and amortization, a common measure of cash flow.
CGI earns its money with participant and registration fees, sponsorships, advertising, and through its publishing arm.
Calera’s David Lorsch is an endurance sports participant.
Photo by:COMPETITOR GROUP
When Falconhead bought the racing company in early 2008, it had 16 races. Today there are 75, making it the largest operator of endurance races in the United States. The company is based in San Diego and has 240 employees.
Calera, which is named after a type of limestone, sees further growth potential, and not just internationally.
“We see this as a rapidly growing industry, driven by some very sustainable trends,” said David Lorsch, managing director of Calera, which has $2.8 billion in assets under management. “There is an increased emphasis on healthy lives and fitness, which is driving participation rates in endurance sports.”
Lorsch, an endurance race participant himself who had planned to run CGI’s Las Vegas half marathon Sunday, also cited CGI’s growth with its magazines, its digital business and its race registration operation.
Scott O’Neil, former MSG president who sits on the board of organic food company Hain Celestial, described the trend of health and wellness as being in its first quarter. CGI, he said, represents a “pretty effective offering for a partner looking to make headway in a space that is growing like crazy.”
“In running, they put on the best races in the marketplace,” said Weber, whose company has a presence at about 500 races annually. “They have created a real festival atmosphere and successfully expanded it.”
For Falconhead, the deal ends its five-year run becoming the biggest player in endurance sports.
“We built this company, we founded this company, we made a very good return on it, and we are delighted it is going to a terrific new owner in Calera Capital,” said David Moross, chairman of Falconhead. “Falconhead will continue its mission of creating new companies in the world of sports and media, and we remain bullish on the industry.”
Peter Englehart, who ran CGI as CEO until Dickey took over that role but remained as chairman, stays with Falconhead.
USA Gymnastics and AEG generated more than $15 million in revenue from the Kellogg’s Tour of Gymnastics Champions, making it the most successful post-Olympics gymnastics tour since the one that followed the 1996 Atlanta Games.
USA Gymnastics President and CEO Steve Penny said he expects the tour will be profitable for both his organization and its partner in the tour, AEG. He added that almost all of USAG’s proceeds would go to the gymnasts and coaches who put the tour together.
“These athletes have worked their whole lives for this moment and they’re the ones who sell the tickets,” Penny said. “We do it for all the other reasons. It helps build our brand. It helps integrate sponsors to the grassroots level.”
The tour averaged 6,413 spectators per stop. The best-attended events on the tour came in the final two weekends when it visited Boston; Newark, N.J.; Philadelphia; Washington, D.C.; Hartford, Conn.; Brooklyn; and Atlanta.
Boston, which drew 15,940 spectators, had the highest attendance of any stop. West Valley, Utah, which drew 2,700 spectators, had the lowest.
One of the ways USAG drove ticket sales was by enlisting the support of local gymnastics clubs. For every 25 tickets a club sold, it got to put one of its members in the opening ceremony of the show. More than 3,330 kids wound up in the opening ceremonies before the 40 tour stops.
The high per caps at the events were driven in part by strong program and merchandise sales. The tour sold 26,092 programs, 21,204 T-shirts and 17,545 items featuring the “Fierce Five” moniker given to the women’s gymnastics team of Gabby Douglas, McKayla Maroney, Aly Raisman, Kyla Ross and Jordyn Wieber.
“The success of the women’s team was tremendous in attracting the American public,” Penny said.
USAG and AEG signed a two-tour deal last year and plan to run another tour after the 2016 Rio Games.
The Professional Rodeo Cowboys Association starts its year-end Wrangler National Finals Rodeo this week with expectations of another sold-out event and organizers in host Las Vegas increasing the activity around the finale.
This year marks the 28th time the NFR has been staged in Las Vegas. The event, which begins Thursday and runs through Dec. 15 at the Thomas and Mack Center, has sold out more than 250 consecutive performances. Last year, the competition attracted 175,275 fans, with about 45,000 of those fans coming from out of town.
The PRCA is riding a sellout streak at its annual year-end rodeo in Las Vegas.
Photo by:AP IMAGES
For the competition itself, this year marks the second time the NFR will draw its TV coverage from Great American Country. PRCA Commissioner Karl Stressman said the relationship with GAC allows the association a certain degree of consistency in the way it can showcase its athletes. GAC airs in about 60 million households.
ESPN had aired the NFR, along with other PRCA events, until 2011.
“Sometimes, depending on the draw of the stock and lots of other elements, we don’t always get the consistent superstars in our short rounds or last performances of our rodeo,” Stressman said. “It’s difficult for our consumers and fans to follow specific athletes on television. We needed the opportunity to be a true partner and have a little more creative opportunity.”
The PRCA has about 5,300 active competitors and sanctions around 600 events annually. Stressman, who’s been the governing body’s commissioner since 2008, called the past year the PRCA’s strongest. He points to the increase in contestants despite rising participation costs as a key indicator of the PRCA’s growth.
“Our sanctioning fees that are a part of the rodeo commitments have increased,” Stressman said. “The positive response [to the fees] in a down economy is really what people are looking at.”
Also growing are the number of annual PRCA events and the total payout from those competitions. The PRCA had a net gain of 19 sanctioned rodeos in its 2012 season compared to 2011, and the annual payout increased to $39.3 million from $38.8 million in 2011.
This year’s Wrangler NFR payout will be $6.1 million, up $125,000 from last year.
Wrangler, title sponsor of the NFR, is represented by Raleigh-based agency French West Vaughan. Account supervisor Katie Johnson said the NFR being in Las Vegas at the same time as NASCAR’s year-end awards event provides unique opportunities for the PRCA event attendees.
“NASCAR is a really big thing here in Las Vegas around this time,” Johnson said. “We have some connections over at the Las Vegas Motor Speedway, so we’re doing some cool things with cowboys and cars and giving rodeo fans the experience of getting to hang out with the cowboys. They’re celebrities to them in that world, so we want to offer them that unique experience.”
Additionally, to accommodate the number of non-ticket-holders who come to town during the NFR, more than 40 hotels and casinos throughout Las Vegas plan to host NFR viewing parties during the event’s run.
Wrangler plans to use the new Cowboy FanFest as an added platform, hosting Rodeo 101 demonstrations with PRCA cowboys. The company also plans to donate autographed memorabilia for a live auction benefiting the Wrangler Tough Enough to Wear Pink campaign, which supports the fight against breast cancer.