CAA Owner Among Final Bidders for College Sports Licensor Learfield
The purchase for around $1.2 billion would put TPG — the majority shareholder in CAA — in direct competition with WME in the lucrative (but difficult) sports licensing business.
The Hollywood agency arms race could be getting a lot more interesting.
TPG Capital, which owns a majority stake in CAA, has emerged as a final bidder for collegiate sports licensing group Learfield Communications, sources confirmed to The Hollywood Reporter.
If successful, the deal would put TPG — and thus CAA — in direct competition with WME, which also is deep in the sports licensing business since the agency assumed control of sports and fashion powerhouse IMG in a $2.4 billion deal in 2014. Sources say TPG has made an offer of $1.2 billion for Learfield, which sells media and marketing rights for 120 college programs including the University of Alabama, Penn State, the University of Oklahoma and Texas A&M as well as conferences like the Big Ten.
Providence Equity Partners, which acquired a controlling interest in Learfield three years ago, began exploring a sale of the Texas-based company back in July and enlisted Moelis & Co. to find a buyer. At the time, Learfield was expected to fetch as much as $1 billion in a sale, and WME/IMG, with its own Collegiate Licensing Company, was hinted at as a suitable fit.
But TPG appears to have upped the ante with its $1.2 billion bid (Comcast’s Atairos, New Mountain Capital and Thomas H. Lee Partners also are said to be in the mix, according to Sports Business Journal). It's a bold, albeit eyebrow-raising move, considering that top CAA agents had criticized rival WME for its time-consuming focus on the business of sports licensing. After the WME-IMG marriage, WME co-CEO Patrick Whitesell took the lead on the sprawling sports enterprise and spent a great deal of time away from Hollywood visiting colleges and keeping them in the fold.
But CAA already operates a highly lucrative division called CAA Sports, which represents athletes and brands in the sports business. It's unclear if TPG would merge CAA Sports and the Learfield business or keep them separate.
In 2015, TPG became the majority owner in CAA, and since then it has been in a race to grow against rival WME-IMG, backed by Silver Lake Partners. Observers believe one or both companies will pursue an IPO in the coming years. So it makes sense TPG would see an opportunity in the very same space that WME-IMG is exploiting. In 2013, IMG College alone accounted for close to $70 million in earnings. In a potentially sticky point, Learfield already appears to be in business with IMG with the joint venture IMG Learfield Ticket Solutions, which works with colleges and universities to increase fundraising revenue on ticket sales.
But colleges are increasingly demanding more money from the companies that broker their media rights deals. Furthermore, TPG could find itself in the same situation as WME-IMG was two years ago when it worked furiously to keep colleges from defecting. A number of Learfield’s plum contracts expire in the next five years, including Oregon State, Mississippi State and Kansas State.
Reps for TPG and CAA declined to comment.