All-Star Varsity Brands For Sale?

[SharkDad]

Depends on where you want to put them.....

so to speak!!! (hehe)

 

[SharkDad]

Images of Dr. Evil saying 'One BILLION dollars' entered my head.

Net is different than gross. For my day job selling a billion dollars would make Varsity my third smallest customer.

If they netted one billion dollars that would be something different.

Along with angry bass (or sharks) with friggen lasers??

 

[Rusty]

Let's not beat around the bush. You (and pretty much everyone who works at a gym) is concerned that selling off the company would lead to someone else buying it who has LESS than altruistic motivations with their new toy. Their bottom line will be to to destroy cheerleading as long as it makes a profit! The issue is that whether Varsity, Jamfest, this guy named John, my cleaning lady Raquel (she comes once a month but MAN is it helpful), or my dog Jack try to run cheerleading specifically their own way that is not beneficial to all of us at some point all the customers will move on. It isn't a monopoly, there are options. And if there isn't a competitive option today for what they do, there will be when their are disgruntled customers. I still get about 5 requests a month to do websites because people have been unhappy with the options out there provided, and I have to turn them down because I don't have time. If I wanted to I could turn myself into a full time Cheerleading Website person. But I don't, so there is an opportunity for someone else. That is the nature of business. And in todays instant communication age if your company isn't on the up and up and someone of equal value is, your customer will leave you and go to them.

PS: I don't work at a Gym, nor do I personally believe this represents a sinister thought process, however I am curious others perspectives on what may change "IF" or "WHEN" this sale occurs.

 

[Rusty]

I'd like to see the D&B or Hoovers report. I trust them a whole heck of a lot more than Cortera.

Does anyone have access to either for comparison?

 

[Rusty]

Look, all of this is rampant speculation, because as the actual article clearly stated, it is only a RUMOR that Varsity is even being shopped. And if it is, you'd have to think about who would want to buy it? Unless you have a sense as to who would even want Varsity, all of this is pretty much tilting at windmills.

And as Kingston said, if Varsity were to go away, there are companies out there (JamBrands, Cheersport, Spirit Innovations, etc.) that are big enough to potentially fill the void and then some.

When Herkie sold NCA to make his investment portfolio liquid UCA was poised to take advantage of the change in leadership. The first company to own NCA, leading into the VBI purchase of NCA, after Herkie (Lawrence Herkimer, Father of the Cheer Training clinics & Cheer Competitions for the newbie’s) was focused upon wringing more profit out of the uniform production facilities. Unfortunately, they didn’t perform a very complete “Due Diligence” process and discovered the facilities were already running at capacity producing Cheer uniforms after taking ownership and therefore the business could not add Baseball or other uniforms to the mix to increase profitability.

Question I am asking, “What do you think would change “IF” VBI is sold?” Yes, it is a hypothetical, … but the speculation may allow some vendors to prepare their business for the “IF” in the equation.

 

[Rusty]

That's $45 million EBDITA. That doesn't take into account interest payments, taxes, or depreciation/amortization costs on assets. That suggests to me the actual net is even lower than that, and if the company's actually grossing $1 billion per year that's an embarrassing ROI.

http://www.financialdictionary.net/define/EBITDA/
EBITDA is the abbreviation of Earnings Before Interest, Taxes, Depreciation and Amortization. This refers to a method of measuring a business’s financial performance. The full calculation is:

EBITDA = Revenue– Expenses (excluding interest, tax, depreciation and amortization).

EBITDA is often used to study and evaluate profit and performance against the competition and similar industries. It is affective because it ignores things like depreciation and other financial conclusions, by looking at the raw revenue and expenses.

Despite this EBITDA is not a credited calculation by the Generally Accepted Accounting Principles (GAAP), because it is easy to include only some revenues and expenses. In other words it can be calculated how a business wants to do it, leaving it open for bias, and there is nothing stopping a company including one item in one quarter and another in the next to make it look better; there is no consistency.

EBITDA does not represent cash earnings. It is a good evaluation of profits and is often used in the accounting as a method to “window dress” the earnings, so they can be touted in a positive press release. This is not illegal, but can be deemed unethical.

The EBITDA measure is of high interest to a company's creditors and banks. It is basically the income that a business has free for repayment of loans and other debt. In fact when it first started being used in the 1980’s, it was applied solely to demonstrate a company’s ability to pay off debt.

 

[King]

When Herkie sold NCA to make his investment portfolio liquid UCA was poised to take advantage of the change in leadership. The first company to own NCA, leading into the VBI purchase of NCA, after Herkie (Lawrence Herkimer, Father of the Cheer Training clinics & Cheer Competitions for the newbie’s) was focused upon wringing more profit out of the uniform production facilities. Unfortunately, they didn’t perform a very complete “Due Diligence” process and discovered the facilities were already running at capacity producing Cheer uniforms after taking ownership and therefore the business could not add Baseball or other uniforms to the mix to increase profitability.

Question I am asking, “What do you think would change “IF” VBI is sold?” Yes, it is a hypothetical, … but the speculation may allow some vendors to prepare their business for the “IF” in the equation.

Changes in ownership rarely are immediately positive (unless the company being sold is going under). I would estimate if VBI was sold the areas you would see possible changes are in apparel, camps, possibly funding of the USASF (as doesn't return any money for the investment they put into it). Apparel would be the big place to make a jump. The apparel and uniform market is going to become more and more highly competitive business. As the barrier to entry to start your own apparel company becomes less and if sublimated uniforms take off that means even less supplies needed.

Camps I seeing being a more and more difficult business as allstar gyms have as many resources as a large camp company for their area. If they can undersell and offer a more cost affective experience with the same knowledge it will be very competitive.

As for the USASF, I don't know what would happen if they lost their funding. Hopefully they have the USASF athlete registration system done and can support themselves that way.

Competitions themselves should be fine.

The biggest thing hurting Varsity and cheerleading in general is there is no overall good IT infrastructure. There are some good individual software pieces that are done well and handle pieces of it, but as far as a plan and system to tie it all together there is nothing as of yet. Someone needs to architect something.

 

[BlueCat]

Changes in ownership rarely are immediately positive (unless the company being sold is going under). I would estimate if VBI was sold the areas you would see possible changes are in apparel, camps, possibly funding of the USASF (as doesn't return any money for the investment they put into it). Apparel would be the big place to make a jump. The apparel and uniform market is going to become more and more highly competitive business. As the barrier to entry to start your own apparel company becomes less and if sublimated uniforms take off that means even less supplies needed.

Camps I seeing being a more and more difficult business as allstar gyms have as many resources as a large camp company for their area. If they can undersell and offer a more cost affective experience with the same knowledge it will be very competitive.

As for the USASF, I don't know what would happen if they lost their funding. Hopefully they have the USASF athlete registration system done and can support themselves that way.

Competitions themselves should be fine.

The biggest thing hurting Varsity and cheerleading in general is there is no overall good IT infrastructure. There are some good individual software pieces that are done well and handle pieces of it, but as far as a plan and system to tie it all together there is nothing as of yet. Someone needs to architect something.

Varsity put up the initial funding for USASF, but that has been (or is being) repaid. To my knowledge, they do not contribute anything financially to the USASF at this point - nor is there co-mingling of funds. They do share a building, but they function as completely separate entities. (which is how it should be.). Varsity does not own nor control the USASF.

 

[King]

Varsity put up the initial funding for USASF, but that has been (or is being) repaid. To my knowledge, they do not contribute anything financially to the USASF at this point - nor is there co-mingling of funds. They do share a building, but they function as completely separate entities. (which is how it should be.). Varsity does not own nor control the USASF.

I did not mean to indicate they own or control it. I was under the impression USASF still receives some funding to function as they do not make enough day to day to payments. Maybe just the fact they pay for their building and operating expenses (someone has to pay the power bill!).

 

[MissBee]

Varsity put up the initial funding for USASF, but that has been (or is being) repaid. To my knowledge, they do not contribute anything financially to the USASF at this point - nor is there co-mingling of funds. They do share a building, but they function as completely separate entities. (which is how it should be.). Varsity does not own nor control the USASF.

I have a bridge I'm looking to sell....

 

[BlueCat]

I have a bridge I'm looking to sell....

I have witnessed enough important USASF decisions to see for myself that Varsity as an entity does not exert control over USASF. However, I'm sure that nothing I could say would deter some people from their conspiracy theories.

I did not mean to indicate they own or control it. I was under the impression USASF still receives some funding to function as they do not make enough day to day to payments. Maybe just the fact they pay for their building and operating expenses (someone has to pay the power bill!).

USASF gets the bulk of its operating revenue from the net profit from Worlds. The "seed" money was there to get the USASF up to the point where it could fund itself. It is more than doing that now, even returning a large portion of the money that was borrowed. I believe that the operating budget is publicly available.

Ideally, I would like the funding for the USASF to be more evenly distributed among the industry. As it stands, many people criticize the USASF for being "all about Worlds" or "all about level 5." While I would disagree with that statement, the fact remains that Worlds and the Level 5 athletes are essentially the ones paying all of the "cheer tax".

 

[King]

I have witnessed enough important USASF decisions to see for myself that Varsity as an entity does not exert control over USASF. However, I'm sure that nothing I could say would deter some people from their conspiracy theories.

USASF gets the bulk of its operating revenue from the net profit from Worlds. The "seed" money was there to get the USASF up to the point where it could fund itself. It is more than doing that now, even returning a large portion of the money that was borrowed. I believe that the operating budget is publicly available.

Ideally, I would like the funding for the USASF to be more evenly distributed among the industry. As it stands, many people criticize the USASF for being "all about Worlds" or "all about level 5." While I would disagree with that statement, the fact remains that Worlds and the Level 5 athletes are essentially the ones paying all of the "cheer tax".

Which if the athlete registration system works they could get funding for all levels.

 

[Future]

Varsity put up the initial funding for USASF, but that has been (or is being) repaid. To my knowledge, they do not contribute anything financially to the USASF at this point - nor is there co-mingling of funds. They do share a building, but they function as completely separate entities. (which is how it should be.). Varsity does not own nor control the USASF.

Varsity does, in fact, own USASF. USASF is NOT, I repeat, not a FEDERAL registered company. They (USASF) post on their web site, the state charter company registration....they post "financials"....these financials are Varsity produced as there is no 990's (tax return required of 501(c)3's and 501(c)6. Varsity has spun a good one...and we are all falling for it! Look through the smoke screen and you will see USASF for what it really is...a company registered in Tennessee, with the Varsity staff as directors. They spin they are a 'non-profit charity'...however, they are not. Go to: IRS.gov....lookup Charities and Non Profits and nothing comes up....call the IRS and ask, there is a number specifically for this question....or go to guidestar.org. So you say Varsity does not own or control USASF? Think again, and if Varsity is sold, there will be issues with USASF, USA Cheer, ICU, IASF, OSIP...and all of the other companies that Varsity owns. None of the "non profits" are non profit in the sense they are being 'hawked' to be....not one! A national governing body MUST be a 501(c)3 according to the US Code (sets the rules for this).....so how is it that Varsity is boasting they are trying to get to the Olympics...they cannot!

 

[SharkDad]

@Future that is a factual and unemotional statement. I like it.

I have asked in the past to see the national non-profit filing. Of course, there is none. They only don't have to pay taxes in TN, and therefore the "financials" they proudly post are only what they want to show.

I don't blame any of this on Varsity, though, one day MEMBERSHIP (coaches, gym owners, athletes) has to step up and decide they want to start driving the direction their sport is heading, rather than let it just happen. If it were me I would start with bylaws and allow for MEMBERSHIP to start electing whomever they want to the board of directors (within reason). That's how non-biased national governing bodies are supposed to work.

 

[Future]

@Future that is a factual and unemotional statement. I like it.

I have asked in the past to see the national non-profit filing. Of course, there is none. They only don't have to pay taxes in TN, and therefore the "financials" they proudly post are only what they want to show.

I don't blame any of this on Varsity, though, one day MEMBERSHIP (coaches, gym owners, athletes) has to step up and decide they want to start driving the direction their sport is heading, rather than let it just happen. If it were me I would start with bylaws and allow for MEMBERSHIP to start electing whomever they want to the board of directors (within reason). That's how non-biased national governing bodies are supposed to work.

As we look at the other sports in the USA, there are 26 Olympic and NCAA sports operated by 501(c)3 organizations. Only football and golf (past Olympics) have not been represented in the Olympics...and they are still run by a 501(c)3. We will never, under the current structures, EVER see cheerleading in a respectable place. Cheerleading will always be the 'step-child'. Even the ICU is not what they pretend it is. It is owned and operated by a profit company. It will never see the respect on a world platform that it so desperately seeks. If so many actually see these issues, why do we still buy into the "promise land theory"? Maybe it is because the spider 'webb' that is so entrenched in the industry is hard to break free from. From the Family Plan....too many gym owners are relying on the rebates they get back...to the universities accepting money and uniforms to compete in STUNT....the 'webb' is spun and we are all caught up in it. But to grow and do justice to the athletes, we really should break free and call out, change up, and redirect the sport of cheerleading. And Sharkdad, you are absolutely right...