Varsity Brands, the powerhouse behind cheerleading giant Varsity Spirit and school sports apparel supplier BSN Sports, is rising in the eyes of analysts following its acquisition last July by private equity firm KKR and the resolution of high-profile legal challenges.
This week, S&P Global Ratings upgraded Varsity Brands’ credit rating to “B” from “B-,” moving it higher within speculative-grade territory. The upgrade reflects improving financial performance and reduced legal and restructuring costs. The company carries $2.375 billion in debt due in 2031, tied to its leveraged buyout by KKR.
“Sales and key credit metrics continue to improve, reflecting solid demand in both segments, management’s effective execution in expanding the businesses and the wind-down of significant legal and restructuring cash expenses,” S&P said in a July 14 note.
The S&P upgrade follows a similar move by Moody’s Investors Service two weeks earlier, which raised Varsity’s credit rating to B2. Both agencies pointed to rising sales and the resolution of a major antitrust lawsuit as drivers of improved creditworthiness.
In May 2024, Varsity and its previous owner, Bain Capital, settled a class-action antitrust lawsuit filed by cheerleading customers who accused Varsity of monopolizing the cheer competition, camps and apparel markets. A year earlier, Varsity paid $43.5 million to settle another class action filed by all-star cheerleading gyms, who also alleged illegally anticompetitive practices.
While Varsity Brands does not publicly disclose full financials, industry estimates suggest the company generates over $2.3 billion in annual revenue—two-thirds from BSN Sports and the rest from its cheerleading business.
S&P projects Varsity Brands will maintain a 15% EBITDA margin, translating to about $350 million in earnings before interest, taxes, depreciation and amortization. Revenue is expected to grow by 6% in 2025.
The ratings agencies flagged some future uncertainty due to potential changes with global tariffs. An acceleration of customer orders in response to tariff concerns has made Varsity’s 2025 performance more predictable, but 2026 remains less certain—particularly given President Donald Trump’s volatile approach to trade policy and its potential inflationary impact.
Even so, S&P believes Varsity is “well-positioned to offset tariff headwinds,” citing its dominance in the cheerleading sphere and a loyal customer base willing to pay a premium for its products and services.
