Learfield likes new owner’s long-term view

Louisville, Clemson and Alabama, all highly ranked in football this year, are on Learfield’s list of more than 120 schools and conferences that it does business with. Photo by: GETTY IMAGES (2)

Greg Brown thinks he’s sold Learfield for the last time.

The company’s longtime president and CEO signed off on Learfield’s $1.3 billion sale to Atairos Group in the early morning hours of Oct. 8, wrapping up a process that formally began in the summer and ended with Learfield’s third sale in five years.

But in Atairos, Learfield found a holding company that intends to build over a much longer runway — a decade or more, rather than the quick flips of the last two private equity owners.

“The long-term approach was very attractive,” Brown said. “It’s a different relationship than what you’d typically have with a private equity firm. I do think there’s a benefit to real stability. It will feel much more like a strategic long-term relationship than a private equity.”

In a rare interview last week before flying out of the country, Atairos Chairman and CEO Mike Angelakis said he’ll look to build on Learfield’s rapid growth of the last three years, both in its base of collegiate multimedia rights and extensions of that business.

Learfield publicly made 10 acquisitions while owned by Providence Equity Partners the last three years, giving it new competency in licensing, branding, digital and LED signage. Along the way, Learfield increased its earnings before interest, taxes, depreciation and amortization to a projected $100 million for 2016-17. That’s more than double Learfield’s EBITDA in 2013 when Providence bought the company from Shamrock Capital Advisors for $570 million.

“We have a pretty deep knowledge of the sports industry, particularly on the media side,” said Angelakis, who left his CFO role at Comcast earlier this year to launch Atairos with $4 billion in capital from Comcast. This is Atairos’ third transaction this year, including a $250 million investment in Groupon, but the Learfield acquisition is easily Atairos’ biggest move so far.

“Learfield’s leadership team has executed really well on their plan, both through horizontal and vertical growth,” Angelakis said. “I think we can be very helpful in continuing that growth program as we look at new opportunities.”

Even though it is spending Comcast money, Atairos operates independently from the mass media conglomerate. But clearly there will be opportunities for Learfield and Comcast, the world’s largest broadcasting and cable company, to work together.

The first could come at Notre Dame, which is expected to put a parcel of rights up for bid in the next month. Comcast-owned NBC already has the Fighting Irish’s TV rights, and Learfield likely will bid on their other rights, such as corporate sponsorship, game-day hospitality, digital and possibly the national radio network.

That could put Learfield and NBC together in the business of Notre Dame by matching up sponsorships and TV advertising.

Within the Comcast family, Comcast Spectacor runs concessions, stadium management and ticketing businesses, each of which could contribute to Learfield’s stated goal of being a one-stop shop for its college clients.

If Learfield goes looking for growth in its core of multimedia rights, it might look for acquisition opportunities at JMI Sports, which owns the rights at Kentucky, or Outfront Media Sports, which represents a handful of power five schools like LSU, Maryland, Utah and Virginia.

For now, though, it’s too soon to speculate about an acquisition strategy, Atairos’ chief says.

“We’ve been 100 percent focused on acquiring the company,” Angelakis said. “That’s really been where all of our efforts have gone. Of course, it’s not lost on us that we have a strategic partner with Comcast and there’s different areas where there could be collaboration and commercial relationships. We hope to be catalysts to that. What that is and the form it takes, it’s just way too early. We haven’t had any engagement on that at all.

“Obviously, at some point, we will sit down and see if there are some areas of cooperation that make sense for both entities.”

It’s not certain if Atairos’ bid was the most lucrative, but Brown did say that Learfield and its seller, Providence Equity, were not necessarily obligated to go with the highest bid. Industry sources say it was neck-and-neck between Atairos and TPG, the private equity that owns CAA. Two other private equities, Thomas H. Lee and New Mountain Capital, were among the finalists.

Learfield would not comment on the sale price or the other bids.

In a toss-up situation, though, Atairos had two clear advantages. One was the long-term approach as opposed to another three-year flip, which comes with the territory in private equity ownership. The other was a deep familiarity between Atairos’ management and Providence’s leadership.

Both Angelakis and Alex Evans, a partner at Atairos, previously were longtime executives at Providence, where they became two of the firm’s experts on media companies. Angelakis was at Providence from 1999 through 2006. Evans spent 17 years at Providence, working side-by-side for much of that time with Providence’s Michael Dominguez, who spearheaded the Learfield acquisition in 2013 and subsequent sale.

Their styles were bred at Providence, and they have maintained friendships over the years, which made for easy conversation in the negotiations.

“They’re a lot alike in their bedside manner,” Brown said.

Angelakis said he and Evans benefited from their depth of experience in the media space. Both went from Providence to Comcast before taking leadership roles at Atairos.

“I don’t really consider ourselves to be a private equity firm,” Angelakis said. “I consider ourselves to be a much more long-term strategic holding company. We’re really focused on more long-term ownership and helping management teams build their companies. We’re not a private equity; we’re not structured that way, we’re not internally organized that way. We have a different type of philosophy than the traditional private equity firm.”

While it didn’t happen, the TPG scenario would have been the most compelling. TPG owns the majority of Hollywood talent agency CAA and its sports division, which includes collegiate licensing agent Fermata Partners. It’s not clear whether TPG intended to merge Learfield with CAA Sports, but Brown wasn’t interested in any scenario in which Learfield lost its name or its 40-year-old identity in the college space.

A CAA Sports/Learfield match would have put CAA in even more direct competition with its chief rival in Hollywood, WME, which owns IMG College. But that scenario never materialized.

“The devil is always in the details,” Brown said. “There’s way more to it than a number on a sheet of paper.”

In addition to keeping Learfield’s identity, Brown insisted on maintaining the company’s current seven-person senior management team, each of whom has an investment and has been integral to Learfield’s three-year pattern of growth. That growth contributed to an impressive 2.9 multiple on the return for Providence’s investors, meaning they nearly tripled their investment. In that time, Learfield’s employee count has jumped from 500 to more than 1,000.

“If there was any question about the value of the college business, it’s certainly been validated by this deal,” said JMI Sports President Tom Stultz, a veteran of the multimedia rights business. “It’s phenomenal for the marketplace. What you’ve seen by the interest in Learfield is that a lot of people are very bullish on the college space and they want to be involved.”

For Brown, the rapid growth of the last three years accelerated the timeline for Providence to sell Learfield.

“This was the right time for us,” Brown said. “Providence was getting a lot of inquiries. At some point, we decided that maybe we need to start having discussions with people that might have interest. And the great thing was that Providence allowed us to have a voice. They allowed us to be active in the process, and that was great.”