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“Hand in the cookie jar” syndrome has long beset youth sports; most leagues are still tax-exempt nonprofits, though that requires far more public disclosure than private equity. Every few weeks, a youth sports league official in some county or another is arrested for embezzling from angry parents; in 2019, a travel baseball team official in New Jersey was arrested for robbing a bank to repay $6,500 he’d stolen from his team.
But as money and financial expertise has flooded the sector, the scams have gotten bigger and harder to prosecute. Last fall, USA Today documented a complex scheme uncovered by a volunteer hockey mom whereby Colorado youth hockey authorities were allegedly siphoning money into shell companies owned by the board chairman. USA Hockey eventually pushed the chairman and an associate out of their positions; the chairman was later found liable for civil theft, unjust enrichment, conversion, and breach of fiduciary duty, though that’s currently under appeal.
Such amateurism is an important part of private equity’s thesis of investment in youth sports properties. “The thing about fancy sports complexes is that they are exactly like stadiums: No matter how successful they are, they never seem to generate enough cash to cover the cost of building and maintaining them,” said Steve Griffin, a consultant whose odyssy through the youth sports is chronicled in this story. So the institutions involved in developing or controlling them need to get some sucker—ultimately, you and me—to shoulder that expense. |
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