My big question about the Learfield/TPG sale

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Earlier this week, a massive business deal in college sports launched a thousand #takes. College sports mega-everything Learfield has reached an agreement to be purchased by TPG, a massive private equity company. The deal is reportedly valued at roughly $2 billion, which, in my humble opinion, is a lot of money.

To help make sense of this transaction, I have prepared a brief Q&A. But first, a word…

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Learfield, (or LEARFIELD, if I’m trying to correctly follow a corporate style guide) is a massive sports marketing company. In college sports, they’re best known for serving as a multimedia rights (MMR) sales partner for dozens and dozens of athletic departments, as well as offering wildly used products supporting ticket sales, team websites, intellectual property licensing, and more.

All of the ads you see around a football stadium? The radio station that carries your team’s games? The logos and uniforms you see in the college football video game? There’s a good chance Learfield had a hand in all of that stuff.

These firms have been some of the most important business partners to athletic departments for years (outside of the P4, most schools earn more money from MMR sales than they do from television media rights), but in the post-House era, this relationship can be even more important.

I don’t personally think so, no. Because here’s the dirty little secret. Private equity was already here.

It’s not like Learfield was some mom-and-pop shop that just got bought out by some evil bank from a Hallmark movie or something. Learfield was already owned by private equity companies. In fact, these institutional investors have been involved in owning Learfield since at least 2016. The TPG purchase is a PE-to-PE sale. Those happen in other industries all the time.

I would not look at this deal, or any analysis of this deal, the same way as, say, what Utah athletics is trying to do.

Doug Fillis, a former IMG business development executive and founder of Accelerate Sports Ventures, told me that private equity, as a group, “believes college sports is significantly undervalued.” Sports, in general, has become highly attractive for all kinds of institutional investors.

When there aren’t as many other types of businesses to absorb capital investments (not everything can be an AI company, apparently), and with sports typically offering predictable returns, long-term revenue contracts and durable cash flow…it would make sense for huge management companies to want to be involved. And since you (mostly) can’t buy a public school athletic department (yet), perhaps buying a chunk of their commercial rights management company could be the next best thing.

I don’t know if worries ” is the right word, exactly. But I do have one question for anybody looking to make a massive investment in one of the pillar companies in college sports management. Where does the new revenue come from?

Learfield already works with more than 100 college sports programs, including massive athletic departments like Ohio State, USC, Oklahoma, Texas, and more. There’s always potential room to grab market share from competitors like Playfly, or schools that don’t use any major MMR partner (like BYU or Clemson), but there’s not that many schools that could potentially become new clients.

So the bigger question is about how the company can find ways to drive even more revenue from their current partnerships and clients, in everything from incremental sponsorship sales, to ticketing, digital media, and more.

Fillis told me he thinks there’s still plenty of blue water in new sponsorship categories. “I think there’s a huge opportunity in jersey patch naming rights, field sponsorships, and other big-ticket items.” Another potential area, according to Fillis, could be more aggressive monetization and partnership opportunities around “data rights” for regular season contests.

There’s also major demand from schools to have MMR partners assist in sourcing and executing “above the cap” NIL deals. This can be harder to execute, since State Farm or AT&T isn’t going to overpay an athlete for a marketing deal because they’re secretly big Texas A&M fans. They want to do athlete and school deals to make money, but large firms like Learfield have more data and scale to facilitate those kinds of conversations than individual schools or agents.

On the non-school side? I dunno. There aren’t that many college sports companies that are large enough, and have enough potential to really scale, that would likely interest many PE firms, although I’m sure plenty exist. If those companies need capital to grow, PE investments could very well be attractive options.

But I don’t think anything about TPG or Learfield meaningfully changes the calculus for how schools or conferences might approach these sorts of deals. If it made sense for Utah last year, I don’t think anything has changed. And if didn’t make sense last year, well, those same barriers to doing huge deals are also still there.

So as a consumer, or heck, as a school, I wouldn’t panic. If you want an excuse to do that, Lord knows there are plenty of other ones out there. You don’t need to worry about this one.

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Great question!

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Thanks for reading. I’ll see you online next week!