Private equity deals typically are straightforward. The fund buys a company, seeks to turn around the financial performance of that company over several years, and then boom — it sells the business.
So it is noteworthy that Bruin Sports Capital, in conjunction with RedBird Capital Partners, chose a very different model for its first deal. Bruin and RedBird are not buying but, rather, licensing the NFL’s hospitality business for big events, NFL On Location. Also somewhat outside the box for the private equity world: The deal comes 90 days into Bruin’s existence, a very short time frame for a new fund to execute its first transaction.
“Our philosophy is to build and hold. We have no pressure from investors for an exit,” said Bruin founder George Pyne. “Not to say we wouldn’t sell a business, but what Bruin is all about is building a lasting company that has a legacy.”
Pyne’s comments are echoed by Gerry Cardinale, the RedBird founder who is a known commodity in private equity circles from his days as co-head of Goldman Sachs’ private equity group. “We absolutely didn’t think of it like a typical private equity transaction,” Cardinale said, noting that RedBird also is seeking different types of models.
Pyne and Cardinale have known each other for 20 years. Pyne’s career stretches from NASCAR to IMG, where he operated the business one door down from the company’s chairman, the late private equity legend Ted Forstmann.
When questioned about rates of return and fund-investor appetites for quick profits, Pyne quotes Forstmann, saying a good investment is one that is a good idea.
The traditional private equity model may not function as well in sports as it can outside the industry, Cardinale said. Cardinale knows sports from his role in creating the YES Network and Legends Hospitality Management. In sports, the issue of rights holders controlling the intellectual property, and the unique role leagues have in overseeing financial structures, makes partnership a better model, he said.
Nine months ago, Cardinale and Pyne had breakfast at Manhattan’s Ritz-Carlton at Central Park, where the duo decided to begin seeking an opportunity together. Pyne had not yet launched his fund but had begun putting it together.
Snaring the NFL deal is clearly a great advertisement for Bruin, a point Pyne himself makes.
“We are thrilled to invest in the NFL,” he said. “We are trying to be credible.”
By getting a deal so early in Bruin’s life, that might suggest that having a tie into the sports world, like Pyne obviously does, could be a distinguishing factor. No doubt the NFL felt more comfortable licensing out the NFL On Location business to a known quantity like Pyne. If customers have a bad time at an NFL On Location trip, they will blame the NFL, not Bruin, so Pyne’s reputation in sports was important.
But Pyne’s ties in sports can only go so far. For outright sales, the highest bidder often wins.
