Some big-name athletes are about to soak up beaucoup bucks because Cholula Hot Sauce has been purchased by McCormick. The deal, which came down Tuesday, is for $800 million in cash.
What does this have to do with athletes? Well, a number of them, including NFL starts Travis Kelce, Mitchell Schwartz, J.J. Watt, and Ryan Tannehill, invested in Cholula in 2019.
Stars @DwyaneWade, @tkelce, @JJWatt & @dak among athletes to cash in on $800M sale of Cholula to McCormick. All part of Patricof Co investment vehicle; hot sauce investment up roughly 300% in 19 mos. https://t.co/fQy42uBZcL pic.twitter.com/DgqftqMsYH
— Kurt Badenhausen (@kbadenhausen) November 24, 2020
Forbes reports the athletes, who also include NBA stars Dwyane Wade and Victor Oladipo, invested in the hot sauce as part of private-equity firm’s L Catterton’s purchase of the brand in April 2019. L Catterton and its initial investors are expected to generate a massive return of roughly four times their investment, according to one source; the negotiations were first reported Monday by the Wall Street Journal.
The athletes invested in Cholula through Patricof Co, an investment platform created in 2018 by investment banker and entrepreneur Mark Patricof. The business operates along twin paths, as an advisory practice and as an investment platform. Athletes receive financial advice gratis and are expected to invest roughly $500,000 annually toward private-equity deals. …
For Kelce and Schwartz, the Cholula investment follows Warren Buffett’s famous advice to invest in what you know. “I love my sauces and know all about Cholula, but it had to make financial sense,” Schwartz told Forbes last month. Kelce adds, “It is fun to get behind a brand that you already love.”
Patricof has 85 athlete investors, whose funds are supplemented by firms like J.P. Morgan Private Equity Group, which committed $200 million to co-invest when Patricof launched. “The underlying thing is you need the connector, somebody to introduce you to a great idea or investment, and that is what Patricof does for athletes,” Kelce said.
Cholula CMO Miguel Leal came up with a close analogy for the company, which is third behind Tabasco and Franks in the category.
“We are all about making good food great and great food unforgettable,” Leal says. “We are the Pippen to the Jordan.”
