Falconhead Capital makes move to sell Competitor Group
Endurance racing business Competitor Group Inc. is on the market, with equity fund owner Falconhead Capital shopping the firm. The plan was detailed in an executive summary of the company sent out recently by an investment bank and confirmed by market sources.
|The Rock ‘n’ Roll Marathon, run in multiple cities, is a recognizable brand for CGI.
The move also underscores that endurance races have become big business because they attract the kind of high-income participant base that sponsors covet. A private equity investor, Providence Equity Partners, for example, also owns the Ironman Triathlon series.
“We can’t comment on CGI or any other matter relating to our portfolio companies as they relate to exit planning,” said David Moross, Falconhead’s chairman and chief executive.
The executive summary of the prospectus prepared by Falconhead’s banker, Perella Weinberg Partners, a copy of which SportsBusiness Journal obtained, describes the company as providing “content and live events to a market of over 100 million participants in the United States and an equivalent or larger audience internationally. CGI expects to generate revenue of $126 million and Adjusted EBITDA of $25 million in 2012, representing 5-year compounded annual growth of 26% and 39%, respectively.”
EBITDA is earnings before interest, taxes, depreciation and amortization, a common cash flow measure.
Falconhead acquired the business, best known for its Rock ’n’ Roll Marathon Series, and a group of endurance publications four years ago and quickly rebranded the new aggregate company CGI. Since then, there has been an aggressive strategy of rolling up road races, including internationally (see chart), allowing for a wide marketing platform. 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.
CGI’s chief executive, Scott Dickey, referred questions to Falconhead.
John Korff, who owns the New York City Triathlon, said one attraction to the racing business is its low labor costs, because most participants are recreational runners, with few professionals. “If you want to get into the event space, these are great,” he said. “Prize money is negligible and irrelevant.”
Korff also lauded CGI for finding nonendemic sponsors of races, such as Zappos.com in Las Vegas.
It could not be determined which companies Perella is talking to, but the source that provided the executive summary said CGI was in advanced discussions with at least one firm.
CGI also has a digital media and print publication business, so the company could be attractive to that sector. Magazines include VeloNews and Triathlete.
CGI projects in the executive summary that at least 600,000 people will participate in its races this year, with 1.3 million spectators.