Learfield Cuts $600M in Debt, Raises $150M in Ownership Shuffle
College sports dealmaker Learfield has new majority ownership, part of a series of transactions the company says will allow it to clear $600 million in debt and bring on another $150 million in additional capital.
Learfield, which works with 1,200 collegiate institutions, announced its “comprehensive deleveraging” Tuesday as it faced $1.1 billion in debt maturities in 2023.
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Its majority ownership is now comprised of three private equity firms that were prior creditors: Clearlake Capital, Charlesbank Capital and Fortress Investment. Learfield’s previous equity holders—Endeavor, Silver Lake and Atairos—will continue to retain ownership positions.
“Learfield has been a leader in innovation and growth throughout the college sports and entertainment industries, and this reboot of our capital structure only positions us for even greater success in the years to come,” Cole Gahagan, Learfield’s president and CEO, said in statement.
Clearing more than half a billion dollars in debt will allow Learfield to reset its business, getting out from under liabilities that mounted during the COVID-19 pandemic. The broader challenge, which still remains, will be the company’s ongoing shift from school relationships almost entirely based on guaranteed yearly payments to arrangements that include more revenue sharing.
In mid-May, Sportico reported that Learfield renegotiated the terms of six multimedia rights deals with major schools, including UCLA and Florida State. Each of those agreements had been signed prior to Learfield’s merger with IMG College in 2018. At the time, Gahagan insisted the company was only approaching a limited group of partners “under legacy deals that yielded significant losses.”
Nevertheless, word of the renegotiations motivated a number of other schools to begin contingency plans, including the possibility of bringing their MMR operations in-house, Sportico learned.
Tuesday’s announcement comes after several years of successive bad headlines for Learfield, the long-dominant force in the college sports multimedia game—a once flourishing business that has been increasingly challenged by the changing economic landscape in college sports and consumer habits.
Last fall, Moody’s Investors Service dropped Learfield’s credit rating to Caa2, the bottom half of its scale for non-investment grade companies. At the start of this year, S&P piled on with its own downgrading of Learfield, while forecasting that the company would “not be able to repay all its debts coming due this year.” Meanwhile, Learfield told Sportico that it was EBITDA positive in each of the last four years.
In any case, the analysts’ prophesies of doom appear to be halted, at least for now, thanks to its new majority owners, each of which has notable ties to the sporting world.
In 2022, Clearlake Capital partnered with Todd Boehly to take control of the England soccer powerhouse Chelsea FC. Fortress Investment Group co-founder Wes Edens is co-owner of the Milwaukee Bucks.
Charlesbank previously owned cheerleading giant Varsity Brands, which it purchased from Varsity founder Jeff Webb in 2014. It later sold that company—which includes graduation- and educational-product maker Herff Jones and team outfitter BSN Sports—to Bain Capital in 2018.
Moelis & Company served as Learfield’s investment banker, while Kirkland & Ellis and Simpson Thacher & Bartlett handled legal advice.
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