AI Overview

Private equity (PE) firms have aggressively consolidated the cheerleading industry, turning youth sports into a highly profitable corporate ecosystem. The most prominent player, Varsity Brands, was acquired by global investment firm KKR for \(\$4.75\) billion. This institutional takeover has fundamentally altered the sport's landscape, generating major controversies and financial burdens for participating families.

How the Corporate Takeover Works

The PE strategy in cheerleading involves serial acquisitions to control multiple levels of the supply chain, squeezing profits from a dedicated, inelastic market.

Event and Venue Monopoly: Corporate platforms own the vast majority of regional and national cheer competitions. If a team wants to compete, they often have no choice but to use PE-owned event producers.

Mandatory Uniforms: PE-backed companies dictate the apparel and spirit wear that teams are required to purchase, often requiring exclusive, yearly updates.

Vertical Integration: Dominant companies write the rules of the sport by effectively controlling the board seats of governing bodies, while simultaneously operating exclusive streaming platforms like Varsity TV to broadcast the events.

Impact on Families and Athletes

The financialization of competitive cheerleading has made it one of the most expensive youth sports in the United States.

Skyrocketing Costs: Families can easily spend between \(\$5,000\) and \(\$25,000\) per year per athlete once you account for competition entry fees, camps, mandatory private coaching, and apparel.

"Stay to Play" Policies: Tournaments frequently force out-of-town families to book rooms exclusively at approved, corporate-partnered hotels, often at inflated rates.

Paywalls: Parents are charged steep admission and streaming fees just to watch their children perform at PE-run venues.

Legal and Legislative Pushback

The consolidation and monopolistic business practices of PE-backed cheer companies have sparked pushback on several fronts.

Antitrust Lawsuits: Varsity Brands has faced and settled multiple antitrust class-action lawsuits, paying millions in damages to both competing gyms and parents who alleged anti-competitive behavior and overcharging.

Federal Legislation: The escalating costs and corporate control of youth sports—including PE investments in platforms like Varsity Brands—have caught the attention of U.S. lawmakers, driving the introduction of the Let Kids Play Act. This proposed federal legislation targets junk fees, "stay to play" travel mandates, and exploitative practices in the youth sports industry.

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911653)

The long-and-short of it is that they buy up every part of the cheerleading ecosystem (jerseys, gear, events, media apparatus, etc.) and then force families to participate in every part of their ecosystem. If you don't participate in every part of the ecosystem they've created, you basically can't do cheerleading on any real level. You are basically BARRED from participating on a structural level.

The craziest part is that the shit these people do in cheerleading and other youth sports doesn't even pretend to add value. It's a pure extraction / rent seeking play. Literal parasitism.

It's like someone sees a basketball league at the local YMCA and thinks "this is inefficient, I should organize this instead of the YMCA and then raise prices. And I should force people to buy jerseys from my company or else they can't play." Whereas a normal person thinks "this sounds like fun, I want to play."

I think the PE firm that backed Varsity Brands got a large fine, but it's like who cares if you're the PE partner on the deal? You already got your bonus check and created "value" for yourself using other people's money. Who cares what the fallout is? That's some other sucker's problem (and your problem if your kid does cheer.)

PE has done this across basically the entire economy. They are responsible for inflation in a major way, but the average person can't see it or understand it.

When air travel suddenly costs 50% more than it did five years ago...some of that is due to all the money printing and what not. But there is a hidden PE tax that exists as well. PE firms buy up all the airplane component manufacturers and the aircraft repair businesses and start jacking up prices.

For instance, PE firms love companies that manufacture some key component that is essential, but is only a small part of the overall cost of a structure. i.e.) a lugnut that goes on every engine casing. Maybe the lugnut is only 1% of the overall cost of the engine casing. So they double or triple the price and now it's maybe 2.5% of the total cost. No value added at all, it's just that the prior owner (entrepreneur or family) wasn't fussed enough to do a "pricing analysis" every year because they had a good business and actual relationships with the people they sold to. So they didn't raise prices and built a great business that people liked working with. So good, in fact, that a PE firm wanted to buy it from them.

And while it doesn't sound like doubling the cost of some lugnut is a huge deal...the issue is cumulative. PE has done this across every part of the airplane. And more broadly, across every part of the economy. So everything costs more despite not actually improving in line with cost increases.

Very, very sick stuff. It's like a really lame and gay version of the Mafia.

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911723)

i haven't been a violent person since my 20's but this makes me want to go outside a kick the shit out of some PE dork. they're crawling around everywhere in their dumb fucking patagonia vests

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911744)

In better news, I think the gravy train is slowly coming to an end. It's really just another UMC profession now, with most of the juice already squeezed. Higher interest rates coupled with the mass proliferation of PE firms over the last 10+ years will be the (practical) death of the industry.

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911757)

agreed on the gravy train ending due to higher interest rates. their exit opportunities are also drying up faster than millenial women. they're now forced to innovate, improve operations, etc. you know, things someone who actually cared about the business would do

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911809)

edit: this cheerleading stuff does sound dystopian and like rent extraction. certain markets are natural monopolies and don't have multiple competitors due to network effects

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911753)

Sure, anyone can raise prices. But it's much, much, much easier to raise prices when you are a PE investor who bought the business with someone else's money, already paid yourself a bonus, and won't have to deal with the fallout of your approach because you will have exited the business 3.5 years later.

I read you say "but i think the nature of business is to raise prices as much as you can" and I just shake my head.

It's sort of like when a PE firm (or company) talks about the 80/20 rule. e.g.) 80% of your profits come from 20% of your products. So they do an analysis of their sales by product and then they eliminate a huge number of products that weren't generating any meaningful profit for them. Maybe they were low margin and low volume. At first this turns out great, profits are up, you can utilize the plant better. But over time you realize "oh wait we did that short run low margin product for those two customers because they would then bring us their higher margin, higher volume work. They saw value in that low margin, low volume product. Now they've dropped us for someone else."

It's this sort of short-term MAXIMIZE EVERYTHING thinking that has ruinous effects in the long run. And it's basically been going on in every facet of the economy since 2009. And this correlates directly with the MASSIVE growth in the number of PE investors since that time.

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911778)

maybe we should talk about these cheerleading outfits now

(http://www.autoadmit.com/thread.php?thread_id=5870638&forum_id=2,#49911758)