Other endurance properties take on equity investors, debt
Competitor Group Inc. is not the only company in the endurance space working through some financial engineering, as the once-booming sector struggles to match its high growth rates of recent years.
Spartan Race, which operates competitive obstacle course events, raised $10 million late last month in a new equity round after more than a year of searching for investors. And quietly last year, Tough Mudder borrowed $7.5 million to aid its global international licensing strategy.
Both companies, like Competitor Group, are increasingly looking overseas for the type of growth opportunities they enjoyed domestically a few years ago.
Wall Street sources said Tough Mudder last year worked with Evercore Partners on a sale. Tough Mudder founder and CEO Will Dean confirmed he had talked with Evercore but denied it was about a sale or was ever in a formal capacity. He added that the loan, which he said is from a private investment group, is low cost and will be paid off in the coming year.
The loan also carries warrants, meaning if it is not paid off, it can convert to equity.
Greg Lee, the Evercore executive who worked with Dean, did not reply for comment.
Meanwhile, Spartan Race said it would reveal more about its new equity investor in a month. Spartan disclosed the investment in a Form D filed with the Securities and Exchange Commission last month.
Two sources identified Hearst Corp. as the equity purchaser. Neither Spartan Race founder Joe De Sena nor Jim Pallotta, founder of current Spartan Race backer Raptor Group, would identify the new partner, which is not disclosed in the Form D. Hearst did not reply for comment.
Raptor Group, which bought its stake in 2012, has not sold any shares, Pallotta said.
Not all areas of endurance are finding challenges in seeking capital. Last year, Providence Equity Partners had no issues selling World Triathlon Corp., owner of the Ironman triathlon series, for a reported $650 million to Wanda Group. Finance sources drew a distinction here because of the strong brand Ironman has built over four decades.