Mark Cuban sure knows how to pick ‘em.
The Texas entrepreneur just scored a big win with a small investment -- small for a billionaire like him, anyway. In 2014, the “Shark Tank” co-host invested $1.75 million in Rugged Events, a Boston-based race organizer, after the company appeared on the reality TV show. Now, the Dallas Mavericks owner is cashing out -- as newspaper giant New Media Investment Group expands its empire to include marathons, half marathons, and mud-caked obstacle races.
New Media, better known as GateHouse Media, has acquired an 80 percent stake in Rugged for $10.4 million; founders Rob Dickens and Brad Scudder will hold onto the rest. Cuban sold his entire stake, essentially doubling his investment.
This acquisition will buttress GateHouse’s fast-growing events management division. GateHouse is, in part, trying to offset ad sales declines at its core newspaper business -- a massive, nationwide group that locally includes major dailies in Worcester, Providence, Quincy, and several other New England cities. The company also wants to build on its relationships with small businesses in its newspaper markets; event sponsorship remains a potential gold mine in that regard.
GateHouse executive Jason Taylor says its events and promotions business was on track to clear $40 million in revenue this year before the Rugged deal, up from under $1 million four years ago. These Rugged events, he says, represent a natural target for advertisers who want a spot at the registration tent, above the finish line, or in e-mails to racers.
For Dickens and Scudder, it’s largely business as usual for the 50-person company that the two former lawyers formed about eight years ago. One big change: Dickens says they’ll use the new cash to accelerate the pace of race acquisitions. He says they bought the Loco races in New Hampshire last year and a Maine group earlier this year, bringing the company’s total to nearly 60 events across North America, including its flagship Rugged Maniac series.
And now, they can try on the role of deep-pocketed investors, eyeing potential growth opportunities -- just like the one that Cuban played.Jon Chesto can be reached at email@example.com. Follow him on Twitter @jonchesto.