All-Star Varsity's Monopoly

[Hoosea]

Do you have proof of this? I really don't see the 90% of uniform market control. Outside of the all-star world (rec & school, which are both really big), Varsity does not have a big stronghold. I've coach at a handful of those programs and none of them used Varsity OR Rebel. They use much cheaper, no name brands. Throw in the gyms that use Rebel and I just don't see them controlling 90% of the uniform market.

Its actually 80%. In my first post I said 80% then in the second post 90. It’s 90% of total cheer industry. In my list of post are 2 interviews with Rebel CEO who confirms Varsity’s market share.

Sources posted

 

[Hoosea]

Lol, I've already deemed her "Hoosaid."

not sure if this a compliment or diss. Sources to the comments is the EASY part since this isn’t a new topic, and without going into details, is one that’s privately and publicly been discussed. Now I’m going to get back to my vacation - where the issue isn’t whether my post are coming through. It’s about me having to search for a signal - hence the international (on a small island in the middle of an ocean part) If you need any other documentation or “sources” it’ll have to wait until I return to the states next week. Or you could always google it. Enjoy.

 

[Hoosea]

Oh that's the reason, this explains everything.



Your posts are coming through no problem, go ahead and post your sources on uniform market share, the camp land they own, and Varsity's debt to income ratio and their buy out. It's sound like you have researched a lot and I can't wait to read it all.

While it continues to be debated, I posted earlier in the thread, the Supreme Court actually deemed sport issues a Congressional matter and not anti-trust.

This isn’t just a sports issue. It’s bigger than that and thus the legality issues you raise in terms of antitrust aren’t entirely applicable. It’s a big, complicated, messy issue with lots of moving parts and one that can’t and shouldn’t fully be explained in a chat room.

 

[catlady]

@Hoosea
Do you even read what sources you post? I read last night and this morning and not a single one mentions any of the statics or facts on uniform market share, this camp land you say they own, nor any recent debt or expense information to that $1.9B in sales that people love to quote, but never seem to have their debt ratio. I worked for a $11B company (May Corp), and while people loved to talk about all the money they made they were acquired by Federated in 2005 (pre internet sales boom). Sales mean nothing, if I only discussed our income and not our debt we'd look pretty good too.

The business of cheer | Fortune

2012 article: Discusses Stunt and developing a sport that meets Title IX sport requirements. People forget if cheer becomes a sport it could end up like HS gymnastics which the majority of HS's dumped because of insurance cost, lack of qualified coaches, and nowhere to store required equipment (where do you store a spring floor if required).

The Business Behind Cheerleading
Tuesday, March 20, 2012 By Reid Van Mouwerik

https://cheerwatchdog.wordpress.com

Article 2011: Discusses USASF is not listed as a non-profit. Um hello, they put on World's for a profit. Who writes this stuff?!

Netflix cheerleading docuseries sheds light on $2B industry | Fox Business

Article 2020: States the $2B industry comes from retail, gym owners and wholesalers. Rebel founder states the uniform business is worth $450 million alone, the made $600,000 in 48 hours and Rebel has grown 26% since last year and competes with Varsity who is the #1 seller (no market share mentioned).

Meet Rebel Athletic, the $20 Million Custom Cheerleading Uniform Startup Living Up to Its Name | Inc.com

Talks about the same stuff as the Netflix article above.

Cheerleading has evolved into a billion-dollar business

Regurgitates it's a $2B dollar business, going to the Olympics, and cheer grew 11.7% in 2016 for a total 4.03 million cheerleaders in the US.

Varsity Brands Founder On The Big Business Of Cheerleading

Webb founder started the company with $85,000 in seed funding offering training camps, they sold to Charlesbank to continue to expand, and why he stepped down as CEO.

This is Not a Democracy, It's a Cheerocracy: The Cheerleading Monopoly Varsity Brands
Matt Stoller, 2019
This is Not a Democracy, It's a Cheerocracy: The Cheerleading Monopoly Varsity Brands - BIG by Matt Stoller

Seriously? You're quoting the article that started the thread and still mentions nothing about the market share you're spewing off about, as well as, all of this mysterious camp land you said they own, and while you love to mention their income you still haven't provided a source that mentions their debt ratio after the buyout.

https://www.investors.com/news/mana...ding-with-focus-on-athleticism-entertainment/

Bain Capital buys Varsity for $2.5 B. Discusses 330,000 athletes attend over 4,000 Varsity cheer camps (FYI that doesn't mean they own the actual camp land). Puts on over 600 comps attracting 900,000 participants, partnered with Disney for 25 years and host 90,000 athletes at seven of Varsity's premier events there.

“The outcome has been incredibly profitable — over $1.9 billion in sales, with 9,000 employees and independent representatives.”

Still no mention of their debt ratio. $1.9B in sales means nothing unless you tell me what their debt is.

Disscuss BSN, Varsity Spirit and Herff Jones creating $1.9B in sales with 9,000 employees and the importance of creating proprietary products and services as a means of sustainability in the age of Amazon.

'A passion project:' Varsity Brands not only sells sports gear, but works to create school spirit | Generational Insights

USA Cheer – 15 Board seats of which 9 are Varsity employees and 1, the Exec Direc was hired from a Varsity comp

“USASF / 18 Board seats of which 12 are Varsity Employees (direct and contractual)”
US All Star Federation: USASF Board and Committees

IASF has removed their list of Board members from online. I have the list on my laptop. If memory serves Varsity controls roughly 70% of those seats.

Varsity Brands Owns Cheerleading and Fights to Keep it From Becoming an Official Sport
LEIF REIGSTAD | JULY 21, 2015 | 7:00AM

Yes, and rightfully so. While Varsity is concerned about their business, there are many people concerned if it becomes a sport many HS's will do away with it like they did gymnastics.

https://cheerwatchdog.wordpress.com

Literally talks about tumbling.

Varsity Brands Finds Bigger Growth Partner In Bain Capital
Posted by SGB Media | Jun 20, 2018 |

We are well aware.

Chief Executive Magazine, 2018

Varsity Financials SEC CIK #0000874786, 2003

SEC Info - Varsity Brands Inc - S-1/A on 2/2/00

Their SEC filings from 2000 to purchase Riddell Sports. While this is from 2000, this is your one and only source that talks about their debt from 20 years ago and since then they have purchased BSN sports. I will post their debt concerns listed after I finish. Why don't you mention their debt with all of those sales?

Hoover’s, 2020

Varsity Brands | The Fashion Industry Law Blog

Private equity firm celebrates $2.5B sale of Varsity Brands
By Richard Morgan, New York Post June 19, 2018

Varsity Brands Finds Bigger Growth Partner In Bain Capital
Posted by SGB Media | Jun 20, 2018 |

“Varsity Brands charges $200 per camper for its four-day session, meaning participants and their parents shell out an estimated $54 million for the camps alone. There are also additional costs associated with the camp experience — including must-have apparel, photos, videos and late night pizzas — all which can add up to more than $500 per cheerleader.”

Yes, and much of that is handed over to the University (government owned, going back to my main point) dorm and food budgets since that's where they take place. Not at all of these "Varsity owned properties" you implied they own. They provide the service not the property.

Note: This was in 2002 BEFORE Varsity completed acquisitions of independent event producers and camps.

Mellody's Math: Cheerleading Ca-Ching - ABC News

Article 2002: Again talks about sales nothing about debt.

“Bain Capital Private Equity bought Varsity Brands for $2.5 billion in 2018. Varsity Brands' annual revenues exceed $1.35 billion, according to the company. It has more than 4,000 full-time employees.

Revenue and sales are interchangeable, nothing about debt.

“330,000 athletes in teams attend over 4,000 Varsity Spirit cheerleading training camps each summer.

....and, they take place on government property which get a huge chunk of that.

Varsity Spirit puts on over 600 cheerleading competitions across the country annually. The events attract some 900,000
participants. The company has partnered with Disney for 25 years and hosts nearly 90,000 athletes at seven of Varsity Spirit's most premier events at the Walt Disney World Resort in Orlando, Fla.

Repeat from above article.

For the last 35 years, Varsity Spirit partnered with ESPN to broadcast their cheerleading competitions around the world. The broadcasts reach over 100 million homes and 32 countries annually.”

Name a youth sport that isn't putting their claim and partnering for their media rights.

Bain Capital Private Equity bought Varsity Brands for $2.5 billion in 2018. Varsity Brands' annual revenues exceed $1.35 billion, according to the company. It has more than 4,000 full-time employees

Third time, still says the same.

DFW sports company acquired by Bain Capital in estimated $2.5B deal, 2018”

Yep, that's a lot of sales and debt.....and yet, still not a monopoly.



https://www.investors.com/news/mana...ding-with-focus-on-athleticism-entertainment/

Literally the same article as above.

By LEIGH BUCHANAN
FEB 22, 20163:34 PM

The Rebel information, sames as above.

Honestly I could provide dozens more. These conversations (and sources) have been taking place, privately, for years.

 

[catlady]

While it's from @Hoosea article from 2000 and not current, the SEC filing for Riddell Sports provides a realistic look into not only sales, but also the risks and debt. People look at Varsity as if they are acquiring companies in hostile takeovers, but the reality is many of our retailers are up to their eyeballs in debt.

Varsity still currently maintains a B3 Moody's Credit Score because their debt to income ratio is way too high. Market Insider

RISK FACTORS

You should carefully consider the risks described below and the other
information in this prospectus before deciding to purchase our shares. Many
factors, including the risks described below and other risks that we have not
recognized, could cause our operating results to be different from our
expectations and plans.

This risk factor section is divided into three sections. The first section
relates to the general business risks associated with Riddell. The second
section relates solely to the risks associated with this offering. The third
section relates to the risks specifically associated with the our Internet
business.

General business risks

Our significant corporate indebtedness could affect our financial health.
We have significant corporate indebtedness. In June of 1997, we borrowed $115
million to acquire the Varsity Spirit Corporation and refinance some of our then
outstanding indebtedness. We also have a $48 million revolving credit facility
that we use for working capital purposes, primarily to finance inventory and
receivables, and a $7.5 million convertible note. As of September 30, 1999, we
had $115 million outstanding in respect of the senior notes, $22.64 million
outstanding in respect of our revolving credit facility, and $7.5 million
outstanding in respect of the convertible note. This adds up to approximately
$145 million in total outstanding indebtedness as of September 30, 1999.

Some of the risks associated with our corporate indebtedness include:

o As the amount of money we have borrowed is large relative to our
size, our ability to raise additional capital, if needed, in the
future, may be limited.

o A significant portion of our cash flow is needed to pay interest and
principal on our debt when due. Also, as our revolving credit line
has a variable rate of interest, an increase in interest rates could
be harmful to us.

o We are more vulnerable to economic downturns and more limited in our
ability to withstand competitive pressures, particularly from those
competitors that have not borrowed as much money as we have.

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o Our ability to pay principal and interest when it becomes due or to
refinance our debt depends on our future operating performance and
cash flows, which are subject to factors beyond our control, such as
prevailing economic conditions, prevailing interest rate levels and
financial, competitive, business and other factors.

o If we do not have enough cash flow to make principal and interest
payments on our debt obligations when they come due, we may not be
able to raise cash to meet our payment obligations because of the
restrictive agreements in our debt obligations.

o If we default on a credit obligation in one or more of these
facilities, and this default is not cured or waived, this default
could result in other debt obligations automatically becoming due
under what are commonly referred to as cross-default provisions.

Restrictive covenants limit our discretion on various business matters.
Our financing agreements contain financial and operating covenants that encumber
our assets and restrict our ability to use our discretion on various business
matters, including our ability to:

o borrow additional money;

o pay dividends and make specified other payments;

o loan money to our subsidiaries or other parties;

o make investments, loans and guaranties; and

o sell our assets.

We depend on third-party manufacturers and suppliers for most of our
products and do not have any long-term. We depend on foreign and domestic
third-parties to manufacture most of our products. We also purchase raw
materials used in our protective products from third-party suppliers. We do not
have any formal, written long-term agreements with any of these manufacturers or
suppliers. As a consequence, all of them have the ability to cease doing
business with us for any reason. If this were to occur among a number of
manufacturers and suppliers at one time it could harm us. Our foreign and
domestic third-party manufacturers produce most of our athletic equipment,
practicewear, uniforms, cheerleading accessories and collectible products. We
also compete with other companies for third-party production capacity. Our
arrangements with our non-U.S. suppliers are subject to the risks generally
associated with doing business abroad, such as: (1) changes in import duties;
(2) tariffs; (3) foreign governmental regulations; (4) political unrest; (5)
foreign currency fluctuations; (6) disruptions or delays in shipments; (7)
weather and time risks associated with transoceanic shipping; and (8) additional
U.S. quotas, duties, taxes or other restrictions that could be imposed on
importation of products in the future.

We are subject to product liability and personal injury claims because of
the nature of our products. Given the nature of the products we manufacture,
recondition and sell, particularly our line of football helmets, we have in the
past, and will likely continue in the future, to be subject to product liability
and personal injury claims. Principally these claims have related to head and
neck injuries suffered during the course of a football game. We may also be
subject to personal injury claims arising from our cheerleader and dance team
camps and activities. Due to the uncertainty of litigation, we cannot assure you
that the ultimate cost of these claims will fall within the established reserves
on our financial statements, or that we will have adequate insurance coverage to
cover these claims in the future. Also, our product liability insurance coverage
expires in 2005 and we cannot

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assure you that, subsequent to 2005, our insurer will remain viable and that
future rate increases will not make such insurance uneconomical. We cannot
assure you that one or more meritorious claims against us for product liability,
serious personal, bodily injury will not have a material adverse effect on our
business, financial condition or results of operations.

We operate in a competitive market where there are companies larger than
us. In our team sports business, we compete with several large national
companies, such as Bike Athletic Co, Inc., Douglas, Inc., Gear 2000, Inc.,
Schutt, Inc., Rawlings Sporting Goods Company, Inc., Diamond Sports Co., and
Wilson Sporting Goods Company. In our athletic clothing business, we compete
with national companies such as Champion Products, Inc. and Russell Athletic,
Inc. We also compete with Adidas, Nike and other companies for soccer team
apparel, footwear and equipment. Some of our competitors offer a broad line of
sports equipment and are significantly larger and have substantially greater
financial and other resources at their disposal than we do. We also compete with
numerous independent dealers who market competitors' products and with numerous
smaller manufacturers and suppliers of sporting goods, reconditoners, services
and collectibles. In particular, the protective equipment reconditioning and the
sports collectibles industries are fragmented.

We compete with one major national company, National Spirit Group Limited,
that markets cheerleader and dance uniforms and accessories and cheerleader and
dance camps. We also compete with other smaller national and regional
competitors that serve the uniform and accessories market or that operate
cheerleader and dance team camps and clinics.

Competitive pressure could have a material adverse effect on our business,
financial condition and results of operations.

The fragmented nature of many of our markets means that much of our market
share information is extrapolated and may not be dependable. The market share
and other market data contained in this prospectus are based on some independent
industry publications and our good faith estimates. However, we cannot
independently verify market share data with complete certainty due to the
unavailability of raw data and the voluntary nature of the data gathering
process. As a result, estimates of market data may be incorrect, possibly to a
material degree. Management's estimates with respect to our market are based
only on the limited data in the public domain and our participation in the team
sports and school spirit industries.

 

[wishfulthinking]

I truly haven't been keeping up with this thread, but if you haven't seen the docuseries Cheer on Netflix (which I highly recommend on watching!), you'd know that Varsity was basically bad-mouthed in how they're overtly-controlling on the sport and it's no secret on how they cannibalized the industry. They even interviewed the president of Varsity and he seemed completely unapologetic of what his brand has done over the years. Obviously, with what huge success the show has become, Varsity (in true Varsity fashion), wanted to capitalize on people's growing curiosity on their brand, so they released Navarro's finals performance from Daytona last year. A whole nine months later. Gee, I wonder why? :rolleyes:

I'm living for the comments in the video. The more people understand and realize what a hindrance Varsity has become to the sport, the better.

 

[catlady]

I truly haven't been keeping up with this thread, but if you haven't seen the docuseries Cheer on Netflix (which I highly recommend on watching!), you'd know that Varsity was basically bad-mouthed in how they're overtly-controlling on the sport and it's no secret on how they cannibalized the industry. They even interviewed the president of Varsity and he seemed completely unapologetic of what his brand has done over the years. Obviously, with what huge success the show has become, Varsity (in true Varsity fashion), wanted to capitalize on people's growing curiosity on their brand, so they released Navarro's finals performance from Daytona last year. A whole nine months later. Gee, I wonder why? :rolleyes:

I'm living for the comments in the video. The more people understand and realize what a hindrance Varsity has become to the sport, the better.

How is this realization going to improve or change the sport? Our neighbor is a contract lawyer and his daughter cheered, so I posed the Monopoly question to him. He said cheer isn't dealing with Oil, Food, Tech, Drugs, or Communication which impact every household in America. A few million (primarily children) cheerleaders and the economic impact on their parents, wouldn't interest the government. When I brought up "Must attend a camp to attend a competition" situation, his response: You mean like professors requiring students to purchase their over priced, key coded book they wrote to attend their class?
It's legal. He, also said, "certified training" is a common safety requirement in contracts.

His questions: Who else is qualified with the necessary capital? It's a seasonal, children business dealing mainly with third parties? Are they aware of the regulation and liability contracts that come with doing business with children and third parties? His comments on Varsity:

Camps: Ten week window of opportunity between June-Mid Aug. Rely on third parties for room and board, must meet their contract requirements to secure their facilities.
Uniforms: Orders for HS, Rec, AS primarily placed June-August. Rely on third parties for production, meeting deadlines, and sign off on their liability and customs exemptions to do business. Majority of customers do not replace uniforms yearly.
Competitions: Majority are Nov-April. Rely on third party Government or Private venues for comps, securing specific dates and signing off on their insurance requirements to obtain the building and their liability exemptions.
Sport Government: Must have access for costly legal funding to deal with law suits, contracts, government regulation on youth sport, safety, etc.
Media Rights: When it comes to live streaming or handing over media to another source that wasn't covered in the initial contract, you must obtain the legal right to do so. Varsity can't just hand over their video to Netflix that has athletes, workers, and attendees in it that didn't consent if it isn't covered in their contract. He added, just because average Joe live streams something doesn't exempt him from trademark, copyright and privacy infringement lawsuits.
Sport Businesses are Dependent on Each Other: Acquisitions, and the debt that comes with it, are often required to keep the industry stable.
Luxury: In an economic down turn, people are less likely to fund non-necessities. The industry needs to be able to sustain itself for 2-3 years to survive long term.

These are what he sees as Varsity's business and legal constraints. What's the solution?

 

[OldskoolKYcheercoach]

How is this realization going to improve or change the sport? Our neighbor is a contract lawyer and his daughter cheered, so I posed the Monopoly question to him. He said cheer isn't dealing with Oil, Food, Tech, Drugs, or Communication which impact every household in America. A few million (primarily children) cheerleaders and the economic impact on their parents, wouldn't interest the government. When I brought up "Must attend a camp to attend a competition" situation, his response: You mean like professors requiring students to purchase their over priced, key coded book they wrote to attend their class?
It's legal. He, also said, "certified training" is a common safety requirement in contracts.

His questions: Who else is qualified with the necessary capital? It's a seasonal, children business dealing mainly with third parties? Are they aware of the regulation and liability contracts that come with doing business with children and third parties? His comments on Varsity:

Camps: Ten week window of opportunity between June-Mid Aug. Rely on third parties for room and board, must meet their contract requirements to secure their facilities.
Uniforms: Orders for HS, Rec, AS primarily placed June-August. Rely on third parties for production, meeting deadlines, and sign off on their liability and customs exemptions to do business. Majority of customers do not replace uniforms yearly.
Competitions: Majority are Nov-April. Rely on third party Government or Private venues for comps, securing specific dates and signing off on their insurance requirements to obtain the building and their liability exemptions.
Sport Government: Must have access for costly legal funding to deal with law suits, contracts, government regulation on youth sport, safety, etc.
Media Rights: When it comes to live streaming or handing over media to another source that wasn't covered in the initial contract, you must obtain the legal right to do so. Varsity can't just hand over their video to Netflix that has athletes, workers, and attendees in it that didn't consent if it isn't covered in their contract. He added, just because average Joe live streams something doesn't exempt him from trademark, copyright and privacy infringement lawsuits.
Sport Businesses are Dependent on Each Other: Acquisitions, and the debt that comes with it, are often required to keep the industry stable.
Luxury: In an economic down turn, people are less likely to fund non-necessities. The industry needs to be able to sustain itself for 2-3 years to survive long term.

These are what he sees as Varsity's business and legal constraints. What's the solution?

OMG!!!

I’m so glad you wrote this.

I’ve been reading this thread from the beginning and my primary thought the entire time has been “it’s cheerleading, who friggin' cares?”

 

[AshleyErin]

OMG!!!

I’m so glad you wrote this.

I’ve been reading this thread from the beginning and my primary thought the entire time has been “it’s cheerleading, who friggin' cares?”

I mean, I care.

 

[CLynn]

[QUOTE... What's the solution?[/QUOTE] @catlady (sorry meant to reply to you but messed up editing your post)

I've been thinking about your post and you cite some very real constraints. Ultimately I believe competition is good at all levels. It keeps us pushing out the best product and trying to meet clients needs as much as possible. On another note, I recently received an email that our lacrosse club team has merged with 3Step Sports, a "company based outside of Boston that specializes in club team sports, tournaments, sports apparel and media content". I was not familiar with them before but they don't sound so dissimilar to Varsity, though not involved in the cheer world at all.
3STEP Sports

 

[catlady]

... What's the solution? @catlady (sorry meant to reply to you but messed up editing your post)

I've been thinking about your post and you cite some very real constraints. Ultimately I believe competition is good at all levels. It keeps us pushing out the best product and trying to meet clients needs as much as possible. On another note, I recently received an email that our lacrosse club team has merged with 3Step Sports, a "company based outside of Boston that specializes in club team sports, tournaments, sports apparel and media content". I was not familiar with them before but they don't sound so dissimilar to Varsity, though not involved in the cheer world at all.
3STEP Sports

Wow, they really are similar. I have read articles where professional sport players are getting together and investing in sport parks, but this is the first time I have seen something like this taking on multiple sports.

 

[Mamarazzi]

Its actually 80%. In my first post I said 80% then in the second post 90. It’s 90% of total cheer industry. In my list of post are 2 interviews with Rebel CEO who confirms Varsity’s market share.

Sources posted

I just read an article that said 80% of apparel and 90% of comps.

"Webb’s strategy worked. In 2016, competitors estimated that Varsity had 80% of the market for apparel, and 90% of the market for competitions."

This is Not a Democracy, It's a Cheerocracy: The Cheerleading Monopoly Varsity Brands - BIG by Matt Stoller

 

[catlady]

I just read an article that said 80% of apparel and 90% of comps.

"Webb’s strategy worked. In 2016, competitors estimated that Varsity had 80% of the market for apparel, and 90% of the market for competitions."

This is Not a Democracy, It's a Cheerocracy: The Cheerleading Monopoly Varsity Brands - BIG by Matt Stoller

Key words "competitors estimated."

Welcome back! Unfortunately, that's the problem with these articles. there's absolutely no substantiation of actual numbers to back up these claims. I don't think anyone is going to debate that Varsity has a large market share of All Star and College when it comes to comps and uniforms, however, the mention of Rec, Elementary, MS and HS stock uniform companies and State/School/ Rec competitions are conveniently left out of these monopoly articles.

I get the frustration, but where are all these mysterious people or companies that have the capital and experience to come in and do what Varsity does at a lower cost? Why do these people leave out Varsity's massive debt and only talk about their income in these articles?
Businesses in high debt merge and acquire to pool resources and lower prices, how is dividing Varsity going to lower prices?

 

[oncecoolcoachnowmom]

Catlady - Are you Jeff Webb?

 

[coachrah]

Key words "competitors estimated."

Welcome back! Unfortunately, that's the problem with these articles. there's absolutely no substantiation of actual numbers to back up these claims. I don't think anyone is going to debate that Varsity has a large market share of All Star and College when it comes to comps and uniforms, however, the mention of Rec, Elementary, MS and HS stock uniform companies and State/School/ Rec competitions are conveniently left out of these monopoly articles.

I get the frustration, but where are all these mysterious people or companies that have the capital and experience to come in and do what Varsity does at a lower cost? Why do these people leave out Varsity's massive debt and only talk about their income in these articles?
Businesses in high debt merge and acquire to pool resources and lower prices, how is dividing Varsity going to lower prices?

Well one of their original investors was Jeffrey Epstein... he is pretty mysterious but not nearly as mysterious as Ghislaine Maxwell (Epstein’s recruiter) whose father Robert Maxwell was an original investor in Bain Capital