Tough Mudder intends to spin off its line of boutique gym franchises and seek a major investor or buyer for the new company as it restructures its struggling core events business. The spin-off plan developed out of talks with a new capital partner that has joined in recent weeks, Tough Mudder co-Founder & CEO Will Dean said. He would not identify that partner, but acknowledged it. "We’ve taken capital into the business in the last few weeks, and that has given us the space we need to make some restructuring in the core events business,” Dean said. “That partner sees that ultimately the long-term growth of the Tough Mudder brand is going to come from pruning our event portfolio slightly, particularly in North America -- not big changes -- and then focus on the growth area in the business." Post spin-off, Dean said, they hope to find a large strategic partner for the gym franchise line. The new investor and Dean agree that fitness facilities carry far more upside than events. “With the right partner, I suppose it could be [a] 51 percent [stake],” Dean said. “I don’t want to say that would never happen. But the assumption is we’d sell a large minority stake in the business to someone who can then help us grow quickly." Dean said Tough Mudder’s status as a going concern is not in jeopardy, noting that sales are underway for '19 events. Meanwhile, Dean intends to step down from a day-to-day management position for a Chair-style role in the coming months.
