Eli Manning’s private equity firm buys RCX in bet on youth sports

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Brand Velocity Group, the private equity firm of former New York Giants quarterback Eli Manning, is acquiring RCX Sports, the company that manages the licensing of the NFL, NBA, WNBA, MLS, NHL and MLB’s official youth sports programs.

RCX has about 150 employees and makes money by distributing sports products such as uniforms and equipment and servicing local parks and recreation centers. Financial terms of the deal were not disclosed. The transaction is backed by a broad group of investors, including other former and current athlete partners Emmitt Smith, Larry Fitzgerald and Jameis Winston.

Parents of kids who play youth sports are probably pretty familiar with these programs: NFL Flag; Jr.NBA; Jr.WNBA; MLS GO; NHL Street and MLB Pitch Hit and Run. NFL Flag is the largest youth sports league in the world, involving nearly 1 million kids, according to RCX CEO Izell Reese.

The youth sports business is well suited for private capital. It is backed by passionate customers, stable and reliable cash flows (each sports season comes with new fees) and is decentralized.

This lack of compliance has led to countless mobile apps and websites used to follow games, pay league fees, order equipment and chat with coaches.

A standard private equity playbook is to bring together various minor leagues or practices, reduce costs by eliminating back-end duplication, and gain scale through a series of acquisitions. This it’s starting to happen in youth sports. Josh Harris and David Blitzer, two of the world’s most prominent private equity partners, Unrivaled Sports two years ago as a youth sports rally investment vehicle.

Yet there is distrust among some powerful people that the industry will put consumers’ wishes ahead of its ability to generate returns for stakeholders.

This led a group of Democratic congressmen to specifically introduce a bill to block private capital from investing in youth sports.

The “Let Kids Play Act” would ban private equity firms from investing in youth sports. U.S. Rep. Chris Deluzio of Pennsylvania and Sen. Chris Murphy of Connecticut announce bicameralism invoice last month.

Congressional leaders said in a speech: expression He said youth sports is currently “a $40 billion industry dominated by private capital with the sole purpose of extracting as much profit from families as possible.”

“As a hockey dad, I have seen how ruthlessly these private equity firms rip off families.” Murphy said in the statement.

The private equity firm is different, Manning said. He said BVG’s interest in RCX was to bring more scale to its programs and increase inclusivity.

“That means a lot more access, keeping prices low and just growing it,” Manning said. “The fact that you’re working with professional leagues, they don’t want it to come at a heavy cost to kids. They want more kids playing sports, being active, being on the field. So our goal is to bring in capital so they can scale this, expand it.”

Manning’s reputation will likely help make the case that not all private equity firms are the same. He became a great champion of flag football, including serving as an assistant coach for his daughters’ teams. He said his goal is to make flag football a high school sport for both girls and boys.

“That’s what we hope for [for]“We think flag football doesn’t have to be just a stepping stone to competition,” Manning said.

New Jersey last month became the 18th state to sanction girls’ flag football as a high school sport. But flag football may be more difficult to get approved as a men’s sport.

Coaches may not be pleased if star football players choose to play flag.

However, this can be mitigated by presenting the flag in a different season (e.g. spring) than the autumn contest.

“The challenge is not year-round, the flag is,” said RCX’s Reese. Reese is a former NFL safety who played a total of seven seasons with the Dallas Cowboys, Buffalo Bills and Denver Broncos.

Reese said flag football’s multi-season nature also allows kids who want to compete to “work on their football skills,” while also giving other kids a chance to just play flag.