Bain Capital’s $2.5B cheer on Varsity buy

Charlesbank Capital Partners gave itself a billion reasons to celebrate on Tuesday by selling Varsity Brands for $2.5 billion.

The price marked a $1 billion profit over four years for the Boston-based private equity firm, showing that cheerleading is no longer a sideline sport.

Indeed, with 4 million US participants from elementary school through college and domestic revenue in excess of $2 billion, the business side of cheerleading is highly profitable.

That bodes well for VB’s new owner, Bain Capital, as it takes over a company that has always been a PE sweetheart.

The owner before Charlesbank, Leonard Green & Partners, paid $131 million for VB in 2003. That PE firm cashed out in 2014, giving itself a paper profit of nearly $1.4 billion — and that’s before all the dividends PE firms routinely award themselves.

VB focuses on what it calls “the student experience” through three divisions: Varsity Spirit, the country’s leading maker of cheerleading uniforms and organizer of competitions; BSN Sports, the leading distributor of sports apparel and equipment; and Herff Jones, a supplier of achievement products like class rings and graduation gowns.

Moody’s most recent report on the company credits its one-stop shopping to schools and students interested in sports, cheerleading and merchandise for giving it a “competitive advantage.”

Yet VB’s product line is also sufficiently diversified, Moody’s added, “to limit volatility in financial performance.”

The result, CEO Adam Blumenfeld said, is that, in 44 years, the BSN division has never had a down year, and the Varsity Spirit division has had only one down year.