Hoonigan files for bankruptcy?

According to sources.  $1.2 billion debt.

It's unfortunate that Wheel Pros rebranded themselves as Hoonigan after they acquired the media company.  Now Wheel Pros and the venture capitalists behind them are dragging the Hoonigan name through the mud more than they already had. All that aside, how the hell do you acquire $1.2 Billion, with a B, in debt?

That's a big tire bill.

RacetruckRon said:

All that aside, how the hell do you acquire $1.2 Billion, with a B, in debt?

I'm unsure, though it likely happened over a long period.

If I had to point a finger, I'd say that being involved in several motorsport activities racked up many bills.

Colin Wood said:

RacetruckRon said:

All that aside, how the hell do you acquire $1.2 Billion, with a B, in debt?

I'm unsure, though it likely happened over a long period.

If I had to point a finger, I'd say that being involved in several motorsport activities racked up many bills.

Looks like Wheel Pros has been on a buying spree of other companies in the last few years:

https://www.crunchbase.com/organization/wheel-pros/company_financials

Probably a lot of debt financing of those acquisitions based on certain expectations of future economic conditions, and when things slowed down due to inflation/etc they couldn't keep the ball in the air.

I figured they were in trouble when a year or so ago, WheelPros sold off the Hoonigan shop and never mentioned it. All the fans found out secondhand when Daily Driven Exotics released their video saying they had bought the Hoonigans building and were making it their shops. By that point, all the Hoonigan old guard (Hert, Vin, Zach, Brian Scotto) had all left, they had laid off the two fab guys they had hired for big builds, and the content had almost exclusively moved to the This vs. That videos, which while fun when they came out, have gotten really played out. It makes me sad to see what happened to a brand that I really loved. During the old Daily Transmission era, there was just such an awesome breadth of content; drifting, drag-racing, time attack, off-road, their own builds, deep dives into the nitty-gritty details of guest builds. A lot of fun. Now all gone.

Also worth noting that Ken Block sold off Hoonigan to WheelPros before his death, and that Ken kept Hoonigan Racing Division and it's been rebranded to Block House Racing and is still run by his wife and daughter.

I just thought Hoonigan was like Ken Block's instagram page or something. Didn't know it was a "company". 

In reply to NickD :

100% agree. Once the personalities leave the brand, it never feels the same.

I actually started following Formula 1 this year after Lia was announced to compete in F1 Academy. 

maschinenbau said:

I just thought Hoonigan was like Ken Block's instagram page or something. Didn't know it was a "company". 

You're doing better than me. I thought it was just a sticker.

I'm not surprised. I saw some posts about the internal culture of Wheel Pros and was like that is a shame. I mean honestly, why does a wheel company need a media arm? I know they bought it for the name but it's totally out of their scope of experience.  

Look at Donut to be next. It sounds like the same thing is going on there.  

VC's doing VC things. Buy company, load it up with debt, drain all the cash out of it, exit stage left...

So it's actually closer to $1.8mil of debt, with 1.2 being dealt with via bankruptcy and another $600mil of capital being raised (probably from leveraging other companies they own).

this particular iteration of Hoonigan bears little resemblance to the company they bought from Block/Scotto/et al. That Hoonigan was basically an ad agency/lifestyle brand whose largest source of income was partnership deals on videos like the Gymkhana series and others. Plus a buttload of t shirts. Shortly after Wheel Pros bought Hoonigan, they rebranded the whole organization as Hoonigan, so suddenly Hoonigan owned like a dozen aftermarket companies, and of course they were all owned by a predatory PE concern, so it's not surprising the inevitable final stage of PE acquisitions is playing out here. 

When a VC buys your company and says "we bought this company not for its products, but for you, the great and loyal employees, you're the reason this company is so great and has grown so much and has such loyal customers. You are the greatest asset and no changes are planned..."  dust off your resume immediately because everyone is being let go and production is moving offshore. 

maschinenbau said:

I just thought Hoonigan was like Ken Block's instagram page or something. Didn't know it was a "company". 

It's kind of confusing.

Ken Block owned DC Shoes originally and sold it off, and made a ton of money. Around that time, Travis Pastrana was moving from motocross to rally and was going to rally school, and Ken Block was buddies with Pastrana and went with him. Pastrana got into rally racing and Ken Block instead decided to make the Gymkhana films, and he formed Hoonigan Media to direct and produce the Gymkhana films. Hoonigan Media also sponsored drivers in different motorsports and made videos of motorsports events.

Then Ken Block decided to get into rally racing, and he made Hoonigan Racing Division. The media company was SoCal-based, while HRD was Utah-based and there really wasn't a ton of crossover between employees. Hoonigan Media then started making their own series of videos out of what was basically just a merch store. They were working on stuff, inviting guests to do burnouts or drift the parking lot or all sorts of silliness, and they still produced the Gymkhana/Climbkhana films and sponsored drivers. 

TLDR:

Hoonigan Media was very much Brian Scotto's beast and was a California-based media company.

Hoonigan Racing Division was Ken's baby and was the Utah-based rally team.

It seemed like Wheelpros went on a huge buying spree of entry level wheel brands. Some like established companies like TSW, Amercan Racing, to relative upstarts like Rotiform, Ruff, Motegi, etc.

I swear, back around 2010 to 2015ish, there was a few upstart "wheel" companies dedicated to selling a wheel for the VW market that no longer exist, 3DSM, Watercooledind, etc. Anyone who could design a wheel in cad and contact a factory in China to make it for them and sell a 600-1000 dollar set of wheels. 

In reply to pinchvalve (Forum Supporter) :

You mean private equity right? Big difference. Venture capitalists don't buy companies. PE's do.

I consult for schedule A start-ups in the tech space on sales and distribution strategies as a side hustle. They live because of VCs and most would love to get bought out by PE to cash in. 

Sorry, Just wanted to make sure we were clear. 

Tony Angelo actually just did a video on the meltdown of Hoonigan and Donut Media last Friday.

Peabody said:

You're doing better than me. I thought it was just a sticker.

It's more than a sticker. It's a "lifestyle brand"!

I don't know, either.

DarkMonohue said:

Peabody said:

You're doing better than me. I thought it was just a sticker.

It's more than a sticker. It's a "lifestyle brand"!

I don't know, either.

Huge Youtube presence at one point, back during the pre-Covid Daily Transmission days. The channel currently has 5.73 million subscribers, and I guarantee that's down from where it used to be. Lots of cool car culture stuff. But things kind of started to come unraveled even back then. They would have people at the old Donut Shop on 405 Golden Ave. in Long Beach doing burnouts and drifting and jumping off the docks with trophy trucks, and then the school down the road through a fit. They were able to move forward by getting permits from Long Beach, but then Long Beach stopped issuing them. Then they got offered a dormant parking lot at Irwindale Speedway, but that kind of ruined the spontaneity of the channel (before, famous car people would just show up on a whim) because it was over an hour drive, on a good day to Irwindale, and then after a year or so, they got bounced because someone drove on the grass in one of the medians in the area they were granted (seriously, BJ Baldwin was doing a donut in a trophy truck, went a little too wide, drove over the grass and they were out). After that they moved to a huge industrial-zoned complex in Compton, and that was promised to be a return to the good old days, only now there were no schools or residents to complain, but that spot just never seemed to live up to the hype. They really didn't do a ton of stuff out in the back lot, and then they transitioned more to the This vs. That content.

Good stuff back in the day though. Five days a week you were guaranteed a 15-30 minute video right at lunch time, and you literally never knew what it was going to be. John Chase nerding out about a lowrider or traditional hot rod? Hert and Vin drifting their Miata kart and E36 down the loading dock ramp into the parking lot? Aussie burnout cars? Pro drift cars? Drag racers trying to pull wheelstands in the parking lot? A trophy truck absolutely annihilating the place? Touring a Funny Car team's shop? There was something for everyone. They had the Build N Battle series that was really cool: two teams of four were given a discipline of racing and had to build a car at the Hoonigan shops with $15k and 10 days to then compete in that discipline of racing, and it was all videoed and the budget all itemized.

bmw88rider said:

In reply to pinchvalve (Forum Supporter) :

You mean private equity right? Big difference. Venture capitalists don't buy companies. PE's do.

I consult for schedule A start-ups in the tech space on sales and distribution strategies as a side hustle. They live because of VCs and most would love to get bought out by PE to cash in. 

Sorry, Just wanted to make sure we were clear. 

I was going to point out the same. VC is broadly within the category of Private Equity, but typically VC's are comfortable making a minority investment in a company, where what we think of as PE typically will only invest for a majority/controlling interest.  When we're talking about huge strategic rollups and mountains of debt, it's generally PE and not VC. 

Hoonigan is owned by private equity firm Clearlake Capital and racked up most of its debts in the years following the pandemic with a series of acquisitions aimed at rapidly expanding the business.

 

Say no more. Private equity is just different spelling for "Slow motion train wreck". 

NOHOME said:

Private equity is just different spelling for "Slow motion train wreck". 

No truer words have been written..........................

This reminds me that I actually got to visit the new HQ in Compton while I visited my brother (when he still lived in L.A.).

It was cool to see the place I'd seen in a bunch of videos, but something felt off–like the vibes I was expecting to feel just weren't there, at least for me.

Ended up getting an early dinner at the King's Hawaiian restaurant in Torrance after that. Very delicious. I highly recommend.

In reply to Colin Wood :

Did they have the bread?

Why do I keep expecting this very same thing to happen to the Cleetus McFarland empire? There is something that does not feel right about his meteoric rise. I know that most of his $$$ comes from Holley who now owns everything.  But keep in mind that:

In 2012, the private equity firm Monomoy Capital Partners acquired Holley Performance Products.