Legends Valued At $1.35 Billion on Sixth Street’s Control of Hospitality Joint Venture

January 12, 2021

Via Sportico

Private equity firm Sixth Street is said to be buying a controlling share of Legends, the sports hospitality, sponsorship and sales consultancy co-founded by the New York Yankees and Dallas Cowboys, according to people familiar with the sale.

The deal values Legends at $1.35 billion, said the people, who were granted anonymity because the terms are private. Sixth Street will own 51% following the close of the transaction. The Yankees and Cowboys will split the rest.

The deal should help accelerate Legends’s long-term growth. It also comes at a critical time. After nearly 12 months of pandemic-disrupted seasons, matches and tours, the sports and entertainment industries are starting to prepare for life after COVID-19. The new business reality could upend stadium construction, merchandise sales, concessions and ticketing, all areas of focus for Legends.

New Mountain Capital—which in 2017 bought roughly a third of Legends in a deal that valued the company at more than $700 million—is exiting as part of the Sixth Street transaction. The current Legends management team, which includes CEO Shervin Mirhashemi and COO Mike Tomon, will remain in place.

Sixth Street, which has $50 billion under management, was founded in 2009 as an arm of TPG, a private equity firm part-owned by Seattle Kraken owner David Bonderman. The business was spun off of TPG last year, and Sixth Street immediately began raising money for its flagship fund, named TAO. The group raised $10 billion between April and the end of August, one of the largest pools of private equity ever gathered so quickly, according to the Wall Street Journal.

TAO is prioritizing assets that can grow double-digits annually and tend not to be subject to the moves of the broader stock market, according to a presentation given last summer. It also favors investments in which it is the only private equity owner—80% of the fund’s gains, according to that presentation, are from such companies.

The firm likely sees Legends as capable of growing fast enough to produce at least a 13% internal rate of return each year—the average for the TAO fund over its lifetime—without being correlated to stocks, a feature of sports-team related investments generally. And while most private equity investments are made with an eye toward cashing out in three, five or 10 years, TAO’s philosophy is more open-ended, an approach that should satisfy Legends’s long-term horizon.

Legends was co-founded in 2008 by the Yankees and Jones Concessions LP, an affiliate of the Cowboys. The company started primarily as a concession and hospitality service, but over time expanded its offerings to include sponsorship valuations, naming rights sales, hospitality, ticketing, fundraising, e-commerce and merchandising.

The company works with a number of teams, venues and entertainment companies, such as Liverpool FC, the University of Notre Dame, Ohio State University, UFC, the Cleveland Browns, Wimbledon and SoFi Stadium. It is also the sponsorship sales agent for the 2028 Los Angeles Olympics.

Moelis & Company and Herrick & Feinstein advised Legends on the deal, which is expected to close in the first quarter. Sixth Street was advised by Ropes & Gray and Goldman Sachs. (Goldman was a founding Legends investor but sold its stake in 2012.)

(This story has been corrected and updated to show when Goldman sold its stake in Legends in the last paragraph.)

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