What Is 3Step Sports and Why Are They Buying So Many Lacrosse Companies?

(Photo courtesy of @NationsBestLax on Twitter)

In the span of two weeks last August, Inside Lacrosse reported that 3Step Sports had acquired HoganLax and NXT and, in a deal that will be announced next week, the organization acquired Robinson Sports in December, including its assets like the M&D Lacrosse Club, the National Girls Lacrosse League and Mid-Atlantic Summer Club Lacrosse Championships.

The flurry of commercial activity raises a number of questions. Who or what is 3Step Sports? Why is the entity buying all these teams and events? And what does it mean for the sport, from parents and players to club directors and coaches to college coaches to fans who just want what’s best for the game?

To answer those questions, I spoke to 3Step Founder and CEO David Geaslen this week.

Geaslen has an interesting background. He was part of Scouts, Inc., founding in 2001, serving at its CEO. After ESPN purchased Scouts in 2006, Geaslen became a VP of High Schools Sports and Recruiting for the Worldwide Leader. He left to start a white-label sports content company in 2010, then founded 3Step in 2016.

Visiting the company’s website gives a sense for what 3Step is — they own club teams, host national events, create content, provide custom apparel, handle team travel and manage facilities. They do that in eight sports (though Geaslen mentioned the prospect of a ninth). The third section of the website is headlined “Welcome to the Team” and the brands that 3Step has acquired scrolls beneath, with the date of each deal labeled below.

Across brands, age groups and gender, 3Step has about 350 lacrosse teams under its umbrella.

“It started with 3d, worked its way to Aloha/Breakers, Thunder LB3/Storm, John Matthews/CT Wolves and a few in Massachusetts,” Geaslen says of how they started rolling up lacrosse companies. “Then we sat back and said ‘What do you want to do? Where do we want to get bigger? How do we get better?’ And it’s a club, but it’s also really an event strategy, which you can see by different things. Then we added NXT, then Hogan, then we added Robinson for M&D and all his events. Chris was a big piece. [All the companies we acquired were] too heavy boys, and we had to even it out. Ultimately, can I get to 50/50 [boys/girls]? I don’t know, I’d love to. But we had more than three million kids go through our events in all our sports last year, and 46% were girls. We’re the largest girls’ sports operator in the country. … I think we’re uniquely qualified to help grow, consolidate the girls’ space. And that’s really what we’re concentrating on next.”

That period when they sat back coincided with the pandemic. For example, sources tell IL that the deal with HoganLax that was completed in the summer of 2021 was near completion in March of 2020, but talks paused was the shutdown began. After weathering the operational challenges of jurisdiction-by-jurisdiction rules on return to play, 3Step acquisition activity in lacrosse resumed early last year. Going forward, Geaslen says as it relates to lacrosse, 3Step’s focus is on the girls’ game because he thinks there’s opportunity in the space. He says, as a non-lacrosse person, it looks to him to be even more fragmented than the boys’ space, and he thinks 3Step can make the experience better.

How does it all work? With so many deals having been done, the company has added hundreds — if not thousands — of employees, including dozens of entrepreneurs who carry with them the outlook, opinions and egos that typically accompany personalities willing to strike it out on their own. Add the layer that many of the operators are coaches, and the “customers” are kids and their parents, and clearly the onboarding and integration strategy is essential to success.

“Everybody goes into a group [organized by sport],” Geaslen says. “Everybody runs their own club. Everybody runs their company that we acquired. Then we consolidate resources — registration, insurance, apparel, credit card fees — that’s the easy stuff. Then everyone gets in the same room and says ‘How do we make the experience better for the kid? How do we make national teams? How do you seed my tournament? How do we work events together?’ Then they pick and choose what they’re supposed to do. So I’m not dictating to [for example, Thunder Director] Andy Pons, ‘You have to play in 3Step events.’ He decides where he wants to go play. Now, do I want everyone to be a team player? Yea. … Every operator we purchase in the sport is financially rewarded when the sport does better. … When lacrosse gets bigger, we all get a bonus. It’s our way to bring everybody together.”

So if that’s the how (and it’s up to anyone’s opinion as to how complicated integrating so many businesses under one roof must be), Geaslen’s answer for why 3Step is rolling up youth sports is far less complex.

“We’re doing this in nine different sports. We’re going to roll up the best clubs, best event operators and create our own ecosystem. Reason why? It was possible,” he says with a laugh. “I don’t know that there was a special why to the whole thing. There was opportunity there to make the experience better for all these event operators, all these club operators, which in turn is better for the kids and the parents. Are we going in trying to change sports? No. I’m trying to make the experience better for the kids and the parents.”

If the way Geaslen and his team structures their deals is to keep the acquired business’s leadership in place, why would a club or event operator want to sell to 3Step? Aside from the check that gets written when the deal gets done, at least.

“The biggest thing we do is give the operators back 20 hours of work off their plate every week to focus on their sport. Because I’m taking things off their plate that they don’t want to have anything to do with.”

While there have been deals that haven’t worked out and 3Step has sold off or shuttered some businesses it’s bought, Geaslen cites the company’s growth to say that the strategy has worked great: the business is 25 times bigger than it was in 2018.

Those hows and whys raise at least one additional how and one additional why: how is this operation being funded? In 2019, Juggernaut Capital Partners announced their investment in 3Step, and sources tell IL that 3Step has continued to bring in capital investment since then, more recently bringing on Fiume Capital.

With high-level investors analyzing 3Step and continuing to drive capital into the business, clearly they see value. What is the thesis behind the ongoing investment in youth sports? Google the phrase “Youth sports are recession-proof” and find articles from Forbes, CNBC and MarketWatch dating from 2009, 2013, 2016 and 2021 supporting that idea.

“One-hundred percent,” Geaslen said when asked whether the stability of the youth sports market was a driving factor in the investment firms’ decision-making. “We looked to roll up and consolidate a very fragmented market. There are so many operators. Then you look at the business model and you say ‘recession-proof’ because parents want to have their kid play, or the kid wants to play. We’re never going to have a conversation ‘Participation is down, kids don’t want to play, parents don’t want their kid to play.’ You can almost take that out of the equation and say, ‘Everyone has to eat, well everyone wants to play.’”

When pressed on other motivations — specifically the ability to utilize such scale to stand up a huge uniform, apparel and footwear operation (consider that former Under Armour executive Walker Jones is now 3Step’s CMO), Geaslen pushed back, calling that motivational ancillary.

So, in summary, 3Step sports is an investor-backed company that’s buying lacrosse clubs and events, providing back-office infrastructure to operators and compelling them to cooperate and aiming to provide a better experience for parents and kids. Unless you’re a club event or team operator or the parent of a player, why does this matter? Could 3Step’s strategy have a larger effect on the future of lacrosse?

“3Step has more resources to — I want to say change, but enhance — the experience for the kids and the parents,” Geaslen says. “We are a consolidated group that has one vision together because we took the emotions out of it and brought the financials together.”

As an example for how that could benefit the sport, consider that club lacrosse teams at the youth level are, right now in most areas, organized by grade and usually named by high school graduation year. Many club coaches advocate for reorganizing youth teams by age (think U13 vs. 2027) in an effort to reduce the issue of grade reclassification and the subsequent ambiguity and unfairness that is anecdotally driving some to quit lacrosse in middle school. Even if there was consensus opinion to implement that change, there’s a chicken-or-egg argument between teams and events as to who can or should take the risk first; teams that reorganize by age may be at a competitive disadvantage playing vs. teams organized by grade if there aren’t enough age-based events to attend. Events that set up divisions by age may not be able to fill their spots if not enough teams are willing to organize themselves that way.

“3Step has way more resources than anybody out there in all these different sports, but really what they have is everybody pulling in the same direction,” Geaslen says. “If 10 clubs come together, they always have to worry about their club — it’s human nature. We’re one. Our financials, our employees, everyone rolls up into one. By having good investors, good capitalization and a large group of club and event operators, life’s a lot easier.”