Endeavor Nearing Deal To Acquire On Location Experiences For More Than $650M
Endeavor is close to a deal to buy On Location Experiences, the high-end hospitality firm partly owned by the NFL, according to several sources.
The two sides have agreed on a price north of $650 million, but they still are negotiating some of the deal’s finer points — a process that could take several more weeks.
Majority owners RedBird Capital and Bruin Sports Capital, whose combined investment with the NFL helped create On Location four years ago, had been looking for opportunities to sell for several months. The firms will exit with a staggering profit on their initial investment, believed to be in the neighborhood of $70 million combined.
On Location’s revenue grew dramatically from $23 million in 2014 to more than $600 million last year. Selling a company after a period of significant growth is common for investment firms like Bruin and RedBird, which need to repay investors.
Specifics still are being worked out, but it looks like the NFL will be the only one of On Location’s four current owners that stays with the company, keeping its 20 percent stake in the business. That’s important because of On Location’s status as the NFL’s official hospitality provider and the source of Super Bowl tickets. Other primary owners — Bruin (which owns roughly 30 percent), RedBird (30 percent) and Carlyle Group (10 percent) — will cash out and leave the partnership.
On Location CEO John Collins left the NHL to join the company in 2015. Part of Collins’ deal gave the longtime sports executive an ownership stake in the company.
Sources said that On Location had been in talks to sell to Live Nation for a higher price. But the NFL has deep relationships with Endeavor’s executives and pushed for On Location’s owners to accept Endeavor’s slightly lower bid. The NFL’s opinion held sway because even though Bruin and RedBird are exiting this deal, they still are heavily involved in the sports business and want to keep good relations with the powerful league.
On Location did not hire a banker for this process. Sources said the firm was approached by several companies looking to buy it, but Endeavor and Live Nation were the two most serious.
Immediate reaction among industry insiders was that the acquisition adds valuable earnings to Endeavor’s bottom line as the Hollywood agency prepares for an initial public offering. The Wall Street Journal reported last week that Endeavor has begun the paperwork required to file for an IPO, possibly later this year. Speculation about Endeavor going public has been rampant since 2013 when it acquired IMG.
Endeavor unloaded the New York ad agency Droga5 last week as company officials were negotiating the On Location deal. One source said that adding On Location, a major player in the sports space, will help round out Endeavor’s sports and entertainment portfolio.
A big component of the arrangement between On Location and the NFL includes access to Super Bowl tickets, which On Location has combined with travel, concerts and other events to create high-end sports and entertainment packages. On Location sells these packages to individuals and the corporate crowd, charging thousands of dollars per person. It receives about 9,500 Super Bowl tickets each year, plus an allotment through PrimeSport’s relationship with 24 NFL clubs. On Location owns PrimeSport.
Having posted $55 million in net earnings last year, On Location generated $175 million in revenue from Super Bowl LIII in Atlanta two months ago. The firm was created in 2015 as a unique joint venture between the NFL and venture capitalists Bruin and RedBird. Part of the deal included rights as the NFL’s official hospitality partner.
The 2017 acquisition of PrimeSport, a ticket and hospitality broker, helped drive the most recent growth, but it came with some consolidation as well. On Location last month laid off 14 employees, which is about 3 percent of its workforce. The company has about 500 employees.
Staff writer Terry Lefton contributed to this story.