General Sports Worldwide (GSW), a global sports consulting and management firm, will announce its acquisition of the career development platform, theClubhouse, later this morning. Terms of the deal will not be disclosed. The purchase is the latest in a series of investments made within the sports-centric executive search sector.
The rise of job-hopping has made an already lucrative business more attractive and helps explain the investment activity. “It’s a growing vertical right now that a lot of people are getting into because there is a lot of opportunity,” Lou DePaoli (managing director, General Sports Worldwide) said. But the long-time C-level executive (Mets, Pirates, Hawks, Thrashers) said the fact that other areas of the sports agency business are getting squeezed has also driven some to become more well-rounded (thus also spurring investment activity). “A lot of these agencies, us included, realize that the whole is greater than the sum of its parts, and you need to have more breadth and depth across your agency to create a higher level of engagement, which will lead to increased revenues.”
JWS’ Take: Former Phoenix Suns VP Bob Hamer founded theClubhouse, a career development services platform, in 2018. The business maintains several components. “It has a blog that [is used to] share best practices,” DePaoli said. “There is also a pretty active job board for people who are looking to work in the sports industry.” Job opportunities typically range from the VP level down to entry level.
Employers looking for a place to simply promote a listing can use theClubhouse platform for free. But GSW offers a host of ancillary services it believes will allow the company to derive revenue from the job board. “If [a team, league or company is] looking for us to help screen or filter [through] some candidates, then there is a fee. If they want to post a job, [have us] do some screening and then also interview candidates, the fee would be higher. It’s a tiered model depending on what the client is looking for,” DePaoli explained.
GSW is also getting a subscription business that generates five figures in recurring monthly revenues in the deal. Roughly 20% of theClubhouse’s nearly 15,000 members pay $7 a month for a “pro membership” with access to enhanced content and the ability to tap into theClubhouse’s mentor network. According to the company website, there are more than 140 sports industry professionals willing to share their time and knowledge to assist those seeking direction.
TheClubhouse has been profitable in the past (the pandemic outbreak and subsequent hiring freeze have since hampered the business). But DePaoli explained the acquisition is less about the business’ current financials and more about “the career development platform” it will assume. The technology “is a piece to the puzzle,” he said. “If we’re going to be serious about focusing on career development, we need a platform like this to help get us there.”
To be clear, GSW had a training vertical prior to the acquisition. But the blog and video content it will get in the deal (including 65+ on-demand webinars) is expected to fortify the offering.
GSW is boosting its career development offering in an attempt to establish a full-service partnership with their clients. “We’ll come in and do the consulting. We’ll help [the client] hire and then the piece of our business that is really growing is our training division with Travis Apple and Jentry Mullins leading the way. So, we’ll train the new hires, as well,” DePaoli said.
The logic in expanding the scope of services is that it will give GSW additional opportunities to engage existing clients, members and mentors. GSW believes the training vertical will also help to distinguish the company from the increasing competition and provide access to a plethora of talent that could help strengthen its business.
GSW’s acquisition of theClubhouse is the second executive search-related M&A deal in the last 10 days. Excel Sports Management announced the acquisition of Nolan Partners on Feb. 28. CRG Search (an executive search and contract-staffing firm) acquired TurkeyZRG in January ’21, while CAA has also made meaningful investments in recruiting over the last 18 months.
Job hopping is clearly a catalyst for the “immense amount of movement” in sports search. Emilio Collins (chief business officer, Excel Sports Management) called recruiting a “phenomenal business [to be in] right now given how challenged the talent market is and combined with the fact that sports is such a complex, dynamic and rapidly-changing industry.”
But that seems to be particularly true for agencies that may find parts of their business–such as athlete representation/marketing, sponsorship, naming rights and hospitality—under pressure. “Whenever you have a diversified business, much like a diversified portfolio, you’re managing against risk,” Collins said. “You are also creating a lot more opportunity for growth and monetization.”
In addition to the potential growth and risk mitigation an established recruiting business offers, Excel’s strategic alignment with Nolan Partners made the acquisition a “no-brainer,” Collins said. “It helps us to grow internationally, where they give us a fantastic foundation. We have a property sales business that aligns perfectly with the clientele of Nolan…[And] we see the performance side of Nolan’s business, the coaching and GM roles that they do, as having phenomenal upside given our footprint in team sports.”