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May 2020: Antitrust lawyers filed a class action lawsuit against private equity-owned Varsity Brands
The Coming Collapse of a Cheerleading Monopolist
Antitrust lawyers filed a class action lawsuit against private equity-owned Varsity Brands, the organizing force behind competitive cheerleading.
Matt Stoller
May 27, 2020
Hi,
Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…
Today I’m writing about big news in the cheerleading world. Yesterday, plaintiff lawyers filed a class-action antitrust case against the Bain Capital-owned corporation that controls that sport, Varsity Brands. As unlikely as you may find cheerleading to be as a useful model for how the American economy functions, it actually works quite well as a case study. It’s got private equity, monopoly, small business, and American culture, all wrapped up into one nice package.
{snip}
A Glittery Fall from Grace
Back in January, I wrote up an analysis of how cheerleading works in America. I didn’t look at the cultural or athletic side, but the business of the sport, and in particular, the corporation known as Varsity Brands, which I noticed because of a brief mention on the excellent Netflix series Cheer. That series is a dramatic telling of the season of one particular cheer team, mostly a story of the social dynamics of the team and the passion of those involved. In the final episode, cheer participants talk quickly and fearfully about the control Varsity exercises on everyone involved in the sport, before moving on to the gripping final contest. So I looked into Varsity, and realized that the corporation is a monopoly, with a lot in common with Standard Oil.
[snip}
The lawsuit, which you can read here, tracks the analysis in January. I learned a lot more about the sport in the lawsuit, which confirmed rumors that I kept hearing. The key to the monopoly is, as I put it four months ago, “Varsity’s chokepoint control of major cheerleading competitions.” Cheerleaders are above all competitors, and they compete with one another at competitions.
{snip}
This case is a wonderful illustration of the sad state of American business. Varsity Brands is owned by Bain Capital, a private-equity firm, which bought it because it was one of the few consumer branding businesses with fortified market power sufficient to withstand Amazon. I subsequently heard from an investor that private equity firms were looking for Varsity-like business models. At any rate, the pandemic has radically shifted all sports, including cheer. As the coronavirus picked up steam, I heard from frustrated cheer participants about how Varsity wouldn’t cancel its major competitions, or would try to retain revenue unfairly. Cheer was one of the last sports to acknowledge reality, and is now attempting to move to virtual cheerleading.
{snip}
Antitrust lawyers filed a class action lawsuit against private equity-owned Varsity Brands, the organizing force behind competitive cheerleading.
Matt Stoller
May 27, 2020
Hi,
Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…
Today I’m writing about big news in the cheerleading world. Yesterday, plaintiff lawyers filed a class-action antitrust case against the Bain Capital-owned corporation that controls that sport, Varsity Brands. As unlikely as you may find cheerleading to be as a useful model for how the American economy functions, it actually works quite well as a case study. It’s got private equity, monopoly, small business, and American culture, all wrapped up into one nice package.
{snip}
A Glittery Fall from Grace
Back in January, I wrote up an analysis of how cheerleading works in America. I didn’t look at the cultural or athletic side, but the business of the sport, and in particular, the corporation known as Varsity Brands, which I noticed because of a brief mention on the excellent Netflix series Cheer. That series is a dramatic telling of the season of one particular cheer team, mostly a story of the social dynamics of the team and the passion of those involved. In the final episode, cheer participants talk quickly and fearfully about the control Varsity exercises on everyone involved in the sport, before moving on to the gripping final contest. So I looked into Varsity, and realized that the corporation is a monopoly, with a lot in common with Standard Oil.
[snip}
The lawsuit, which you can read here, tracks the analysis in January. I learned a lot more about the sport in the lawsuit, which confirmed rumors that I kept hearing. The key to the monopoly is, as I put it four months ago, “Varsity’s chokepoint control of major cheerleading competitions.” Cheerleaders are above all competitors, and they compete with one another at competitions.
{snip}
This case is a wonderful illustration of the sad state of American business. Varsity Brands is owned by Bain Capital, a private-equity firm, which bought it because it was one of the few consumer branding businesses with fortified market power sufficient to withstand Amazon. I subsequently heard from an investor that private equity firms were looking for Varsity-like business models. At any rate, the pandemic has radically shifted all sports, including cheer. As the coronavirus picked up steam, I heard from frustrated cheer participants about how Varsity wouldn’t cancel its major competitions, or would try to retain revenue unfairly. Cheer was one of the last sports to acknowledge reality, and is now attempting to move to virtual cheerleading.
{snip}