Private Equity's New Venture: Youth Sports

https://jacobin.com/2025/11/youth-sports-hockey-private-equity

by wahnfrieden • 8 months ago

94 80 8 months ago

jacobin.com

captainkrtek2• 8 months ago

Add "Private Equity's New Venture: ..." to the list of sentences that scare me.

vannevar2• 8 months ago

"Private Equity's next victim..." From the people who brought you America's medical system, and looming debt crisis.

terminalshort3• 8 months ago

How, exactly, is private equity responsible for our medical system and our massive government budget problems. Please explain to me step by step like I'm stupid.

barbazoo2• 8 months ago

Instead, parents are forced to subscribe to these companies’ exclusive recording and streaming service, which can cost many times more than the streaming costs for professional sporting events. Meanwhile, the firms’ exclusive contracts have prohibited alternative video services from being made available.
In some instances, parents have been threatened that if they choose to defy the rules and record the game, they may end up on a blacklist that punishes their kids’ teams. Those threats were even reportedly made to a sitting US senator.
Black Bear’s streaming service costs between $25 and $50 a month, depending on the package and additional fees. In addition to its recording rules and associated costs, Black Bear is starting to add a $50 “registration and insurance” fee per player for some leagues. That’s on top of what players already spend on expensive equipment, team registration, and membership to USA Hockey, the sport’s national governing body.

Feeling bad for the folks having a hard time pulling the plug on scams like these and going back to a more sensible and sustainable way of life.

ramy_d• 8 months ago

It really doesn't get more sensible and sustainable than kids playing team sports and parents witnessing this part of their lives. The blame here is squarely on PEs like black bear nickel and dimming parents. How do you pull the plug on that? It's so gross.

barbazoo2• 8 months ago

Sure you're right, if that's their thing, having their kids perform the sport and watching them doing it then this is a good solution. The streaming makes it so they can even stay in the car and watch from there.

underlipton4• 8 months ago

Don't sign up for it next year? Boycott and maybe spin up your own league.

timenotwasted• 8 months ago

I feel like this article is trying to make this seem like this is becoming a widespread thing despite the entire thing being about hockey. In my experience hockey was always the sport that the wealthier households participated in due to the costs (equipment, rink time, travel, etc..).

As a parent with two younger kids I haven't run into this at all so I wonder how much of it is more sport dependent where the company controls the infrastructure. Maybe I'm being naive here but I struggle to imagine this is going to make its way very far into other sports where you simply are out in a field.

gedy• 8 months ago

Yeah, while I know there's parents who get a little kooky about "MY KID IS GONNA BE THE NEXT ____", anything that gets too expensive or restrictive around what amounts to basically a ball and some grass ain't gonna fly with normal folks. We'll just go to the park.

wahnfrieden3• 8 months ago

https://news.ycombinator.com/item?id=46006518

dehrmann2• 8 months ago

I haven't run into this at all so I wonder how much of it is more sport dependent where the company controls the infrastructure

My experience is with San Jose where I'd be really surprised to see this happen. There's a massive six-sheet facility owned by the city and managed by the parent company of the Sharks, so being good for the community and good for hockey might be enough without them having to resort to these tactics.

jerlam• 8 months ago

Other pro hockey teams are not as magnanimous:

‘They control everything’: How the Dallas Stars monopolized Texas youth hockey: https://www.usatoday.com/story/news/investigations/2025/08/0...

srameshc• 8 months ago

Anywhere there is money, making an everyday man some money, these pests creep in. I generally dislike what has become of recreational sports and how the parents are either forced to spend for things that really don't matter, when learning to play. But learning Private Equity is eyeing this give me creeps. There must be some guy who observed how families are spending and decided it would be the next destination for PE.

wahnfrieden3• 8 months ago

Just the free market at work

edit: Would like to understand from downvoters how this does not meet free market principles?

psadauskas• 8 months ago

A "free market" is one in which all the participants of the market have perfect information and act completely rationally. This is, of course, an academic ideal, similar to solving a physics problem that tells you to ignore friction.

What we have here is a "capitalist market", where those with more power (capital) within the market leverage it to exploit the other participants. Private Equity uses their money to extract as much money as possible from a segment of the market, usually destroying it in the process. But for a beautiful moment in time they created a lot of value for shareholders!

Libidinalecon• 8 months ago

It is a good example of neoliberalism gone completely insane and your comment is a good example of the religion of neoliberalism.

It is this deluded idea that "the market is always right" so naturally to not let market forces at work in children's sports is equivalent to a type of moral wrong.

The real insanity of neoliberalism is in convincing people like you that this is some kind of natural law like gravity, so to object is like objecting to the law of gravity to the point you can't even understand why you are being down voted.

It is actually a form of scientism and the misapplication of the efficient market hypothesis to unwarranted situations.

Convenient cover for ripping people off.

acessoproibido• 8 months ago

The problem is mostly how unregulated gambling is in 2025. If you couldn't bet on everything I think sport would be much less infested by money.

One more "great" use case that cryptocurrencies enable

plorg• 8 months ago

Youth sports have been moving in this direction since long before sports gambling was a meaningful economic force in the US at least. I attended both a high school and a college that started football programs while I was a student because the leadership thought it was necessary to maintain enrollment.

potato3732842• 8 months ago

Youth sports isn't like driving for Uber on the side. It's a giant money fire for the consumers that partake. I'm surprised it took PE this long to say "hey, there's a bunch of money on fire over here let's go get some"

lotsofpulp6• 8 months ago

The way the term private equity is used is meaningless. It’s just business, and the same thing happens anytime a business is sold, because the new owners have paid a 5x or more multiple, and the reason they would is if they think they can cut costs and increase prices.

One should expect lower quality and higher prices anytime a business is sold.

tw042• 8 months ago

Really, one should expect lower quality and higher prices anytime a business is sold.

They really shouldn’t. And the fact this is treated as common knowledge kind of speaks to everything that’s currently broken in our country.

sarchertech3• 8 months ago

Well a lot of times these “businesses” were sold to existing employees or family members who were going to run it themselves and it usually wasn’t for a huge multiple.

In many cases they weren’t sold at all just passed down to heirs. The differentiator is that PE has figured out that they can offer enough to bypass the traditional methods of business continuation.

underlipton4• 8 months ago

But it's not just that a business was sold; it's that it (usually) was sold in such a way (leveraged buy-out) as to weaken the business and make it more desperate from jump. Doctor's practices et al. used to change hands all the time without much trouble; it's only now that PE is allowed to buy them with massive amounts of debt that they're allowed to use aggressive tactics to pay off (and pay themselves) in just a few years that we've started to have these troubles.

When you buy a house, the mortgage is associated with the buyer, not the house, and you can't just dismantle the house and sell it for parts to cover payments. Could you imagine if we could, though? Pretty soon, we'd have a lot of on-paper debt associated with empty lots that mortgage holders could simply walk away from (perhaps after a nominal sale). Then, the house declares bankruptcy and the bank is just out all that money. It's preposterous, they'd never let that happen. So, why with businesses?

SoftTalker3• 8 months ago

They have only discovered what lots of small operators in youth sports already knew. Parents will pay stupid money to have their kids participate.

My kids played some travel sports, the tournament organizers were all in it for profit, they also had deals with local hotels and parents were required to stay at the "tournament approved" hotels. They were inevitably rather premium hotels such as Marriott brands and the room rates were high. The tournament organizer got a kickback on every room sold.

Hockey is particularly expensive because the costs to operate a hockey rink are high. Costs to run and maintain chillers are high, especially if you are open in the summertime, and you need trained staff who can drive a Zamboni and otherwise maintain the surface, and you can't just switch that off if nobody's using it. Usually a community-owned ice rink runs at quite a loss to the municipality. A privately-owned rink will have to charge hundreds of dollars an hour for ice time and they often are barely profitable. There's no way to scale beyond about 12-16 hours a day where anyone wants to use the ice, and often 5pm-midnight is the only ice you can sell.

Then there are the "academies" for the parents who think their kid is the next NHL or NBA superstar. They are private schools, operated at or near the sports facility, where kids go to school as well as play/practice their sport. The tuition rates are what you might expect: exclusive, to say the least.

sam_lowry_• 8 months ago

If you think hockey is expensive, you are lucky to have sons, otherwise you'd experience the wrath of ice skating.

Not only it is individual sport unlike hockey, it is also elitist especially because it is completely shut off youtube because... not cp, no. Music!

etempleton3• 8 months ago

A private equity company has purchased every sports league, indoor sports complex, pool, and summer camp in my area. They then drop prices to destroy the local competition and then buy them too. After that they raise prices.

terminalshort3• 8 months ago

Have they raised prices yet?

7thaccount2• 8 months ago

They always do....that's partly how private equity works.

Example, buy out a well-known software product with a lot of customers. Then offshore development to cut costs. Then raise prices to milk customers that are too slow to migrate. Eventually the software dies off.

etempleton3• 8 months ago

Depends on what it is and if there is any competition left. Some things have gone up in price where they have a local monopoly. I think their real play is the underlying land value. They are often able to buy distressed businesses with a lot of land cheaply.

MengerSponge• 8 months ago

Has there been a FPP about cheerleading? There's billions of dollars in a cornered youth sports market.

bearjaws2• 8 months ago

Friend works for a vet clinic, got bought by PE 2 years ago.

Routine layoffs, increased costs, and worse quality of service have crept in over the past 6 months.

Average turnover went from 4 years to 1 year, hes one of the last few people who are there from when they were purchased.

terminalshort3• 8 months ago

If this is true, why don't they go out of business? I just don't buy the argument that PE takes over businesses and makes them strictly worse. You don't make money doing that.

t-writescode2• 8 months ago

How many vet clinics do you know about? How often do you take your pet to the vet? Are there any “first visitors” events you need to do?

If someone is going to the vet once a year for blood work and a rabies vaccine; and there’s only like 3 in the whole city, you’re probably not going to rotate between them. What if the next one is even worse?

I have left a single vet over “bad behavior” and most of the other times it’s been over moving and things getting too far away.

The reality is most of their “getting worse” and “increased prices”, etc, is missed because most people come in once a year, so changes over time aren’t especially visible.

lotsofpulp6• 8 months ago

You certainly can. It depends what kind of investors you can find. There is often a lag between the time sellers make changes to the business and the collective buyers' reaction to those changes, so if you can line up investors (whether it be equity or fixed income), then you can turn long term good will into short term cash for yourself.

For example, the business in the comment above might be selling veterinarian services, but the new owner's business is actually selling cash flow. The veterinarian services are just a means to an end, so it could be possible to take the built up good will and convert that to cash flow by cutting costs/raising prices in the short term, and then selling the new and improved cash flow.

You might ask, who would buy from this person again when they know the underlying business is being trashed? The answer is usually dumb money, such as defined benefit pension funds where the investor and the beneficiary are far disconnected. As long as it looks like due diligence happened, everyone can kind of get away richer in the short term with no one to stop them.

The hard part is lining up the investors, that requires being in the right networks.

dehrmann2• 8 months ago

There are also a lot of PE strategies. Buying a class of small business and squeezing out value is one, but it's completely different from buying failing businesses and restructuring them, hoping for a turnaround.

the_snooze• 8 months ago

They will go out of business, in the long-term. What PE does is hot potato: they "trim the fat" off an existing business to goose up margins in the short-term, unload it to someone else, and that someone else is stuck with a business that's unsustainable long-term because that "fat" was actually resilience.

Sometimes, these buyouts are leveraged, with the company itself taking on the debt the PE firm used to buy it, so the PE's own risk is minimal.

SoftTalker3• 8 months ago

Yes, there are some PE takeovers that are legitmately trying to improve things and generate more profit. You don't hear about those because it's not controversial. You only hear about the "slash costs and cash out" types of takeovers.

threetonesun• 8 months ago

Increased costs here, I assume, means to the customer, not to the business. PE buying up medical adjacent practices (vets, eye doctors, dentists) has been growing model over the last decade. They make money just fine because there's no alternatives, and manage to make both their employees and clients more miserable in the process.

vjvjvjvjghv• 8 months ago

In my town it works like this: Vets get taken over by PE, raise prices over time. People move to the old style vets. These are overwhelmed and can’t take more patients, so people have no choice but going to the PE vets.

pseudalopex• 8 months ago

I just don't buy the argument that PE takes over businesses and makes them strictly worse. You don't make money doing that.

The effects in health care were studied.[1]

Less competition supports higher prices. People can be convinced to purchase unnecessary services. People are slow to leave trusted doctors. Non compete agreements limit new competition. The time to train new veterinarians limits new competition. Short term profits fund future acquisitions.

[1] https://pmc.ncbi.nlm.nih.gov/articles/PMC10354830/

bearjaws2• 8 months ago

They bought 3 other vet clinics, 1 has already been closed.

There's now only 2 emergency vet clinics within 30 miles of each other, there are no other options unless you want to drive nearly an hour away.

etempleton3• 8 months ago

I have experienced it first hand so many times. You have to understand that PE comes in with an exit plan. They most often do not plan to hold the asset beyond 5, maybe 10 years max. Their goal is to come in, extract as much money as possible in the short term to recoup the expense, and then sell off the remaining assets for whatever they can get for it as a cherry on top.

How do they extract as much profit as possible? Because wouldn't the previous owner have tried to, you know, make as much money as possible? Yes, but PE firms have more capital and scale and will specialize in a certain type or types of business to maximize impact.

Here's how it works:

1. First the PE Firm will focus on a business type - maybe it is auto repair shops, maybe it is pediatric clinics, maybe youth sports facilities and leagues. It doesn't really matter. What matters is that they will buy a lot of them.

2. Now that they own quite a number in a certain geographic area, maybe even most of that type of business they have leverage over customers, employees, and sometimes suppliers. The PE playbook dictates they first cut costs wherever they can. Reduce staff, add surcharges and fees, negotiate better prices with suppliers.

3. The businesses are now operating at a slightly higher margin, which is great, because the initial capital outlay was huge and they had to pay a premium because no one really wants to sell to PE. So over the next 5 years or so they need to make all of that investment back and they usually will. They might lose some employees and some customers, but people hate change and most will stick around even though service is a bit worse. And anyway, who cares, their profit margins are now nice and padded.

4. It has been 5 years and now their businesses are really starting to show signs of cracks. It is getting harder to find competent onsite management who will put up with the terrible work environment. Customers are leaving. Some of those employees are starting their own shops. But who cares, the money has already been made back. Now is the time to sell before the whole thing implodes and if it already has imploded, well, that is less than ideal, but there are still assets to sell. Sell for whatever you can and walk away. The PE firm netted slightly higher than if they were to invest in the stock market. Could they have made even more by just running competent businesses over the long term? Maybe...but that would have required a lot of time and active management and no one wants to do that, so on to the next venture.

bell-cot• 8 months ago

In theory, the parents could just vote their feet.

In practice, humans are frogs, and eager to prove their fitness as the pot of water grows hotter and hotter.

tylergetsay2• 8 months ago

The kids want to be part of the team. A parent saying no to a kid because of $50 is cool in theory, but in practice...

triceratops• 8 months ago

Private equity being able to buy up everything is a stark example of the level of wealth inequality in our society.

underlipton4• 8 months ago

Considering that these people are the class that use youth sports credentials to sneak their mediocre kids into top schools, the situation is bound to get interesting. Tension at the fundraiser ever since Bob priced Janice out of her son's cheap in to UPenn. She's going to have to actually make a donation now.

yieldcrv• 8 months ago

This article is about deterring everyone from being on their phones the whole time during the event

Most of the people here would be for varying forms of these deterrents in a VC model or some other potentially non-monetized user experience, if it was independent of the owner of the game

purplezooey• 8 months ago

Part of the reason PE succeeds is their choice of things that have a large or lengthy startup cost or other supply restrictions. Most towns will support only 1 hockey arena. Or lately, with veterinarians. New supply is complex and doesn't appear overnight. If PE is to be controlled (so they don't ruin everything), we need to lessen the barriers to create more supply, like in housing. Also, perhaps it would be good to make them actually pay some taxes, if only to mitigate a fraction of the problems they cause. PE is sort of like cigarettes. They exist, and do damage to everyone.

squigz• 8 months ago

If PE causes so many problems and needs to be controlled, why not... control it? Regulate it heavily, or ban it outright, or make it very difficult for them to own a large portion of businesses in any given area, etc, etc

It's just the "remove barriers to do X" arguments tends to be used to justify removing important regulations that protect consumers, or the environment, or institutional integrity - all of which may indeed help the little guys, but it also certainly helps the big guys.

I'm also wary of the idea that regulations and the like are the real issue small businesses have a hard time of things - and not just that operating a business has become more expensive/difficult in the modern age (even after taking out regulations), as well as the simple fact that big businesses can, for example, tank losses for a lot longer than a small business in order to win out a market. How would less regulation for the smaller businesses help situations like that?

Private Equity's New Venture: Youth Sports

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