Falconhead Buys Race Owner, Magazine
By Daniel Kaplan, Staff Writer for Sports Business Journal
Published January 07, 2008 : Page 03
Falconhead Capital has acquired marathon owner Elite Racing as well as Triathlete magazine and an event and publishing firm, underscoring the growing interest of private equity in the world of professional sports.
Sports companies ranging from IMG to Formula One have in recent years been consumed by private equity firms, and fund managers on their own have bought teams such as the Boston Celtics. The Falconhead deals, which are set to be announced today, mark the first foray into the world of endurance racing by institutional money.
“We intend to be the dominant player in the endurance sports area,” said David Moross, founder, chairman and chief executive of Falconhead, which buys sporting and leisure companies and has raised a total of $504 million for investment since its inception in 1998. “We control today 16 races. We could be up to 30 races in the next three years.”
In addition to buying Triathlete and Elite, which owns eight races and is known for its Rock ’n’ Roll marathons in cities such as San Diego and Phoenix, Falconhead is buying Competitor Publishing. Competitor distributes a free endurance sports magazine and organizes the Muddy Buddy races, which feature two-person teams competing in bike/run relays over six- to seven-mile courses.
The new company overseeing the acquired entities will be called Competitor Group. Falconhead declined to disclose terms of the transactions.
The endurance sports space is a highly fractured business. Most races are owned by local nonprofits, such as running clubs. A handful of private companies, like Elite, have emerged over the last decade to try to roll up races in an effort to market across more than one contest. Competitor Group’s 16 races this year will feature 160,000 competitors, most of them in the former Elite races.
Last week, Falconhead hired Velocity Sports & Entertainment to handle marketing across its new assets, though Competitor is also in the process of hiring a chief marketing officer.
While fractured as a business, road racing draws a highly coveted demographic: wealthy, computer-savvy runners willing to spend money on their athletic passions and eager to participate in races that feature professionals.
Falconhead’s new company will be based in San Diego and employ about 100 people. Tapped to run the new company is Peter Englehart, a Falconhead executive who previously was senior vice president of programming and production for the Outdoor Life Network. The company will use the Web address it picked up with the Competitor purchase, www.competitor.com, as its main portal. Moross hopes to transform the site into the Web’s major destination for endurance sports enthusiasts.
Chris Devine, whose Devine Racing owns marathons and half-marathons in Los Angeles, Chicago, Salt Lake City and Denver, said Falconhead approached his company, too, and that the parties are still in discussion about a sale.
“Falconhead can build a multimedia environment around the sport,” Devine said. “They have the capital and the personnel to build a business.”
Moross said Falconhead is not done buying in endurance sports, but he declined to disclose any potential targets.
Competitor’s board features Moross; Englehart; Falconhead executive Brian Crosby; the former owner of Elite, Tim Murphy; Charles Goldstuck, the president of Bertelsmann Music Group U.S.; and Martin Franklin, chairman and chief executive of Jarden Corp., a consumer products company.
Private equity firms traditionally have about a five-year period in which they seek to turn around a business and then sell it.