Ethics CasesSport

Cases · Varsity Brands / USASF · 2020–2024

Who Runs Cheer? The Varsity Brands Antitrust Settlements

Varsity Brands is the leading organizer of cheerleading competitions and camps and a major uniform supplier. In 2020 gyms and parents filed federal antitrust suits alleging Varsity, with the U.S. All Star Federation (USASF), a governing body Varsity helped found, kept prices high by excluding rivals and rewarding exclusive loyalty. Varsity settled with gyms for $43.5 million in 2023, agreeing to separate its leadership from USASF. In 2024 Varsity, its private equity owners and USASF settled with parents for $82.5 million, with limits on tying camps, exclusivity and required hotel stays. Defendants denied wrongdoing. The case asks what happens when a company both sells to a sport and shapes its rules.

By Tanner Simkins, editor

Timeline

  1. All-star gyms file an antitrust suit in California, later re-filed in Memphis as Fusion Elite All Stars v. Varsity Brands.
  2. Parents of cheer athletes file Jones v. Varsity Brands on behalf of indirect purchasers.
  3. Varsity and the gym plaintiffs agree to settle shortly before class certification.
  4. The court approves the $43.5 million Fusion Elite settlement, with limits on Varsity's ties to USASF.
  5. Parties in Jones file a notice of settlement before a scheduled July trial.
  6. KKR completes its acquisition of Varsity Brands from Bain Capital and Charlesbank.
  7. The court grants final approval of the $82.5 million Jones settlement and conduct restrictions through April 2029.

The ethical issues

  • Conflicts of interest when a commercial supplier helps run a sport's governing body.
  • Cost and access for families in a youth sport.
  • Exclusive dealing and loyalty rebates as barriers to competition.
  • Private equity ownership of youth sport infrastructure.
  • Settlements without admissions and what they mean for accountability.

Stakeholders

StakeholderInterests & obligations
Cheer athletes and familiesAffordable, safe and fair competition.
All-star gymsChoice of events and suppliers at fair prices.
Varsity Brands and its ownersProfitable growth and control of a valuable business.
USASFCredibility as an independent governing body.
Rival event producers and suppliersAccess to the market.
School programsCamps, uniforms and competitions at reasonable cost.

The case

Competitive cheerleading families pay for gym fees, uniforms, summer camps, competition entries and, often, hotel rooms at events. In much of the sport, many of those payments flowed to one company: Varsity Brands. Varsity runs leading competitions and camps and sells cheer apparel. It also helped found the U.S. All Star Federation (USASF), the body that sets rules for all-star cheer and decides which events can award bids to its world championship.[6][1] In 2020, gyms and parents filed federal antitrust lawsuits alleging that this combination was used to keep prices high and rivals out. Two class actions ended in settlements totaling $126 million, with changes to how Varsity and USASF operate. The defendants denied wrongdoing.[3] The case asks what happens when the business that sells to a sport also shapes how it is governed.

Background

According to the court, Varsity “advanced the modern style of cheer,” in which athletes’ routines are the “main event” and year-round training and summer camps are needed to stay competitive.[2] In 2018 Bain Capital bought Varsity Brands, which also includes the team apparel maker BSN Sports, from Charlesbank Capital Partners for $2.5 billion.[6] Varsity’s founder, Jeff Webb, was later named as a defendant.[6][2]

The gym lawsuit, first filed in May 2020 and re-filed in Memphis in August, alleged that Varsity “in conspiracy with” USASF “acquired, enhanced, and maintained monopoly power in the All Star Cheer Events Market” in violation of the Sherman Act.[1] Sportico reported that it targeted “Network Agreements” under which bigger gyms committed to near-exclusive attendance at Varsity events and exclusive purchase of Varsity apparel.[5] A second suit, filed in December 2020 by parents of all-star and school cheer athletes, alleged that families paid “artificially inflated prices” for camps, competitions and apparel bought indirectly from Varsity.[2]

What happened

Both cases were heard by Judge Sheryl Lipman in the federal court in Memphis, where Varsity is headquartered.[6] The gym plaintiffs reached a settlement on 31 January 2023, shortly before the deadline for class certification.[1] Varsity’s president told employees: “While we are confident Varsity Spirit has always acted appropriately and with the best intentions, reaching this mutual agreement is a positive outcome for everyone involved.”[5] The court approved the settlement in October 2023. Varsity paid $43.5 million, with 85% of the fund going to gyms and 15% to spectators, who could receive $10 per event up to $200.[1]

The parents’ case involved extensive discovery, with hundreds of thousands of documents and 45 depositions.[2] It was set for trial in July 2024 when the parties announced a settlement in April.[6][2] Defendants included Varsity, Webb, USASF, Bain and Charlesbank. They agreed to pay $82.5 million. The fund was split 53% for competitions, 26% for camps and 21% for apparel, and the court noted it represented about 67% of damages calculated by the plaintiffs’ experts through 2020.[2] In the settlement agreement, defendants “deny each and all of Plaintiffs’ claims and allegations of wrongdoing” and said they settled to avoid “burdensome and protracted further litigation.”[3] A Varsity spokesperson said the settlement “is not an admission of any wrongdoing or liability.”[6] Final approval came on 6 December 2024.[2]

The rules and governance

The settlements changed the rules of the market and of governance. Under the gym settlement, in effect until December 2028, no one may sit on the boards of both Varsity and USASF, and Varsity may not pay the salaries of USASF staff. No single event producer may hold more than one-third of USASF’s voting board seats or more than 40% of its Sanctioning Committee, the panel that decides which producers can award bids to the USASF Worlds championship. Varsity also may not require attendance at more than three of its events in a season to qualify for its lowest tier of rebates.[1]

The parents’ settlement, in effect until April 2029, bars Varsity from tying its competitions to attendance at a Varsity camp. It also bars exclusive purchasing requirements in its rebate programs and caps at 35% its ability to require competitors to stay in Varsity-approved hotels. USASF may not share confidential scheduling or attendance information from rival event producers with Varsity.[2]

Aftermath

In August 2024 KKR completed its purchase of Varsity Brands from Bain and Charlesbank. The company says it reaches “over eight million athletes and students annually.”[4] No jury ever ruled on the antitrust claims. A third case, brought by rival event producers, was dismissed on procedural grounds.[6] Separately, Sportico reported that Varsity had finalized its release from lawsuits by at least 21 plaintiffs who said they were sexually abused by cheer coaches; the terms were filed under seal.[6] The gym lawsuit had initially sought to link Varsity’s alleged monopoly to the sport’s sex-abuse scandal, a link Sportico reported Varsity strongly denied.[5]

The core dilemma

Is it acceptable for a company that profits from a youth sport’s events, camps and apparel to help create and influence the body that governs it? And if competition is restricted, who should bear the cost?

Competing values

Fair play and independence of governance sit against efficiency and investment that a dominant company may bring. Distributive justice matters because the costs fall on families and gyms. Accountability is in tension with the practice of settling without admissions.

Strongest arguments

Against Varsity’s model: A sanctioning body shaped by one event producer has a built-in conflict of interest. Loyalty rebates, camp tie-ins and required hotel stays push families toward one supplier.[1][2] Settlement terms separating Varsity from USASF suggest the arrangement needed fixing.[1]

For Varsity: Varsity helped build modern cheer and its competitive circuit.[2] Defendants denied all wrongdoing, no court found liability, and rebate programs can reduce costs for loyal customers.[3] Settling avoided expensive litigation, as the agreement states.[3]

Applying the frameworks

Justice

A justice lens asks whether the market’s burdens fall fairly. Families paying for camps, competitions and hotel packages bear the costs of any reduced competition, and higher costs can exclude lower-income athletes. Rules limiting tying and exclusivity aim to restore choice and spread benefits more fairly.[2]

Utilitarianism

A utilitarian would weigh the benefits of a unified, well-organized competitive circuit against higher prices and less innovation from rivals. The damages estimate underlying the $82.5 million fund suggests significant transfers from families to the company, though the claims were never proven at trial.[2]

Virtue ethics

Virtue ethics asks what a good steward of a youth sport would do. Practical wisdom would recognize that serving as both supplier and rule-maker invites distrust. A virtuous organization might separate the roles voluntarily rather than under legal pressure.

Walk it through: the Simple Decision Model

  1. What are the facts? Varsity dominated cheer events and helped found USASF; two class actions alleged monopolization; Varsity and co-defendants settled for $43.5 million and $82.5 million with conduct limits, denying wrongdoing.[1][2][3]
  2. Who are the stakeholders? Athletes and families, gyms, Varsity and its owners, USASF, rival producers and school programs.
  3. What are the options? For USASF: full independence from all producers, partial limits, or the status quo. For Varsity: litigate, settle, or restructure voluntarily.
  4. Which values are in conflict? Independence and fairness against efficiency, investment and commercial control.
  5. What do the frameworks suggest? Justice favors restoring choice; utilitarian analysis depends on contested price effects; virtue ethics favors separating rule-making from selling.
  6. What would you decide and why? Decide as USASF’s board. Explain to a cheer parent how your rules protect their family’s interests.

What’s settled and what’s contested

Settled: The settlement amounts and conduct terms, the court approvals and the change of ownership.[1][2][4]

Contested: Whether Varsity’s practices were anticompetitive, which defendants deny; how much prices were inflated; and whether the conduct limits will restore competition after they expire.[3][2]

Why this case matters

This case extends pay-to-play youth sports from family budgets to market structure, and connects to private equity in college athletics. It shows how a conflict of interest can sit inside governance itself, and why codes and guardrails must address who writes the rules.

Key terms

Conflict of interest
A situation where a person’s private interest could improperly influence a decision they make in an official role.
Commercialization
The process of turning sport into a product and a business enterprise, with profit pressures that can compete with principle.
Codes and guardrails
Written rules of conduct, backed by real consequences, that turn values into expected behavior. Without enforcement they are decoration.
Institutional accountability
Structures that make a sport organization explain its decisions and face consequences: clear authority, transparency, appeals, independent oversight and enforcement.
Stakeholders
Everyone with something at stake in a decision: athletes, coaches, parents, officials, fans, employees, sponsors, media, communities and regulators, including the less visible ones.
Principal–agent problem
When those acting on others’ behalf (agents such as executives, officials or agents) have interests that diverge from the people they serve.

Definitions from the Ethics Cases glossary.

Discussion questions

  1. Is it a conflict of interest for a company to help create the body that sanctions its events?
  2. Do loyalty rebates help or hurt cheer families?
  3. Should youth sport governing bodies be barred from commercial ties?
  4. What does a settlement without admission tell the public?
  5. Should private equity ownership of youth sport businesses face extra scrutiny?

Sources

  1. Order Granting Direct Purchaser Plaintiffs' Motion for Final Approval of Settlement, Fusion Elite All Stars v. Varsity Brands (No. 2:20-cv-02600) — U.S. District Court, W.D. Tennessee (via GovInfo)
  2. Order Granting Indirect Purchaser Plaintiffs' Motion for Final Approval of Settlement, Jones v. Varsity Brands (No. 2:20-cv-02892) — U.S. District Court, W.D. Tennessee
  3. Settlement Agreement, Jones v. Bain Capital Private Equity (Document 606-3) — U.S. District Court filing (via ClassAction.org)
  4. KKR Completes Acquisition of Varsity Brands from Bain Capital and Charlesbank — Varsity Brands
  5. Varsity Settles Antitrust Lawsuit Filed by All-Star Gyms — Sportico
  6. Varsity Brands, Bain on Verge of Settling Second Antitrust Lawsuit — Sportico