Vans, Inc. (NASDAQ: VANS – news) today announced that it has executed agreements to acquire 70% of the VANS Warped Tour(TM) in a two-step transaction with LAUNCH Media, Inc. and the original founders of the Tour.
The transaction is subject to certain conditions prior to closing. Under the terms of the new agreement, LAUNCH will operate the Tour this year and will retain the exclusive rights to sell sponsorship for the 2002 and 2003 Tours. The Company stated that it expects the acquisition to be accretive to earnings upon gaining control of the Tour in the summer of 2002.*
Gary H. Schoenfeld, Vans’ President and Chief Executive Officer, commented, “We are very excited to add the VANS Warped Tour(TM) to our portfolio of proprietary businesses and branding properties. The VANS Warped Tour(TM) is the premiere alternative music and Core Sports(TM) festival each year featuring 40 to 50 up and coming bands in an all day festival format. Beyond its reach to approximately 400,000 attendees annually in 35 to 45 cities across the U.S., the Vans Warped Tour further establishes the authenticity of our brand through music with a number of great bands like Pennywise, Blink 182 and Green Day having played on the Tour early in their careers and this year looks to be the best ever.”
Mr. Schoenfeld continued, “We look forward to reuniting with the founders of the Tour – Creative Artists Agency, Kevin Lyman, and the law firm of Codikow & Carroll – and building upon what we had established together over the past six years. Each of the original three founders will have a 10% equity interest coupled with operating agreements to continue as active participants in the Tour.”
“The essence of the VANS Warped Tour experience is the cross section of great music from emerging artists combined with the skate/surf culture in a unique, exciting, and affordable environment,” stated Mr. Lyman. “Vans represents the ideal partner, as the Company’s brand image and philosophy are synonymous with music, Core Sports and the youth market.”
The Tour began in 24 cities in 1995 and in 1996 Vans became title sponsor after which Vans purchased 15% of the Tour for $500,000. In August 2000, the Company and the three founders of the Tour sold their collective interest to LAUNCH for $7.5 million at closing plus a $23.5 million earnout consisting of up to $1.5 million annually for three years, up to $2.0 million annually for two years, and up to an additional $15 million on January 1, 2005 based upon achieving certain cumulative targets tied to attendance and the number of shows. Approximately 95% of the first $1.5 million was paid earlier this year and it is anticipated that a substantial portion of this year’s $1.5 million payment will be paid this Fall with the remaining portion of the earnout forgiven as part of this transaction.
Mr. Schoenfeld concluded, “The VANS Warped Tour,(TM) along with our other major entertainment events and venues such as the VANS Triple Crown(TM) Series, the VANS World Amateur Skateboarding Championships, the VANS High Cascade Snowboard Camp,(TM) and our eight large-scale VANS skateparks, allow us to make a powerful emotional connection and build a high degree of brand loyalty within our core market. Our goal is to further the leadership position of our brand and leverage our unique 35-year heritage through a combination of leading edge product and unparalleled experiences.”