Sports Means Business For New Firm

A team of sports industry all-stars has launched a new growth capital firm with a game plan to raise an institutional buyout fund in a year. New York-based Accrue Sports and Entertainment Ventures started up last month with an initial $5 million to $10 million to invest in media and technology companies catering to sports fans.

The new firm rounded up seed money from a group of strategic investors such as Tom DiBenedetto, a Boston Red Sox minority owner, and Jesse Itzler, founder of Marquis Jet. The firm plans to make two to three investments this year. Following those deals, Accrue Sports intends to raise a $100 million-plus pool of capital that it will use to buy sports media platforms.

Two of the founders hit a pair of home runs in the space. Steve Solomon, the firm’s chief operating officer, and CEO Bryant McBride created Accrue Sports after investing in two sports-focused online ventures, the community site, and scouting directory Football Scouts Inc. Time Warner’s Sports Illustrated bought the first business and ESPN the second, notching 4.1x and 8.8x returns, respectively, for investors.

Although they considered their investments in the two sites to be informal, Solomon and McBride liked the opportunities they saw in the space. They decided to team up with media and sports industry executive Doug Perlman and former buyout pro Paul Levy to initiate a formal effort. Perlman previously worked with the National Hockey League’s media team and at IMG World. Levy previously worked for Main Street Resources, a lower mid-market buyout firm.

In addition to making investments, the firm will also operate a consulting arm designed to facilitate deal flow and generate short-term income, Perlman said. Accrue Sports shouldn’t have trouble scaring up deals; the firm has already looked at 100 investment opportunities, he said.

Accrue Sports expects to take advantage of its founders’ vast rolodexes of sporting industry contacts. The network should not only help the firm secure vendor relationships but also facilitate exits, Perlman said. Aside from its founders, Accrue Sports has lined up advisory relationships with familiar industry faces such as Richard Dresdale of LBO shop Fenway Partners; Walter O’Hara of investment bank Allen & Co., and Jeff Seltzer of Pierce Yates Ventures, a venture capital firm.

Accrue Sports won’t be moving alone in the wide world of sports investing. Louisville, Ky.-based Blue Equity LLC, for instance, has built up a specialty in the sports and entertainment field. Earlier this month, the firm consolidated its media and consulting holdings into an entity known as Blue Entertainment and Sports Television.

Meanwhile, Falconhead Capital, a shop run by David Moross that used to be known as Sports Capital Partners, plays in the sports space. The firm recently rolled up a series of publishing and event companies geared toward extreme sports such as triathlons. And media-focused InterMedia Advisors has carved out a niche in sports-related investing, having backed a company that provides Web-only footage of Olympic sports such as track and field.