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SBJ/April 28-May 4/Finance
Owners buy into skateboarding circuit
Published April 28, 2014, Page 3
The deal marks the most recent example of an equity fund targeting sports. The industry in recent years has attracted a steady flow of such investments.
“[Funds] see the value and continued growth in media in sports,” said Bob Caporale, chairman of sports advisory firm Game Plan, which was not involved with the deal. Street League recently signed a new TV contract with Fox Sports 1.
Park Lane Investment advised Street League on its business and getting the minority stake ready for sale.
The investment provides Street League with capital to expand its business by adding events and improving its media offerings. The investment itself, at its maximum level, would be about $5 million and values the circuit at $10 million to $12 million, sources said.
Street League President Brian Atlas declined to comment on the investment or outline specific plans.
“We want to evolve from an events biz to a global media platform that creates sustainable infrastructure for the sport of skateboarding,” Atlas said.
Dyrdek is a former pro skateboarder who transcended the sport with his 2006 MTV reality show “Rob & Big,” featuring him and his best friend and bodyguard. The show succeeded, and MTV followed it with a show called “Fantasy Factory” in 2009.
As his fame grew, he remained passionate about the sport of skateboarding, and he grew frustrated with the lack of a professional circuit for true street skateboarders. He used his credibility in the sport to pull the top street skaters together for the first time around a three-stop competition to determine the best skater.
“He really had the vision to update the competition,” Causeway’s Wan said.
The series launched in 2010 and has averaged more than 50,000 spectators a year and more than 300,000 viewers per event. In addition to ticket sales, it has landed sponsorships with Nike, Monster Energy and GoPro.
Prior to the new deal with FS1, the series aired on ESPN.
Causeway launched last year with the express purpose of investing in sports. According to a 2013 filing with the Securities and Exchange Commission, it intended to raise $125 million, and the principals are Wan, Grousbeck and Robert Higgins. Street League is the fund’s second investment, following one in Formula E, a new electric car racing series.
Wan said the new capital should help Street League expand both domestically and internationally.
“We certainly believe it has growth potential,” he said.
Other funds have seen potential in sports too. Among those deals in recent years are Providence Equity buying Learfield Sports; Guggenheim Partners buying the Los Angeles Dodgers; and Columbia Capital and Rho Ventures buying into Mandalay Sports Media.
“As the cash flows in and around sports, private equity type investors are being quite creative in the ways they get exposure to the space,” said Don Cornwell, a Morgan Stanley managing director with a specialty in sports and media.
Such dealings only add to a space that is filled with other individuals, like Grousbeck, who made their fortunes in private equity and then chose to buy into sports teams.