Superfly, one of the most successful independent live entertainment companies in North America, quietly fired its co-founder Jonathan Mayers seven months ago, according to legal filings reviewed by Billboard. Mayers is now suing his longtime partners for allegedly lowballing him during settlement talks, with a lawsuit claiming misrepresentation, breach and fraud.
Those same filings show that Mayers has not seen or spoken with co-founders Rick Farman, Richard Goodstone or Kerry Black since August and has been unable to reach a final settlement for his shares of the company. With negotiations stalled out, Mayers filed a lawsuit in New York on March 23 against Superfly, two of his three former business partners, and a California private equity fund whose top executive, Jesse Watson, allegedly strung Mayers along for months promising $5 million in financing before firing him last summer.
Watson and Virgo Investment Group each face a single civil count of fraud in the lengthy March 23 civil complaint written by Mayers’ attorney Kenneth J. Rubinstein, along with civil charges of breach of good faith and unjust enrichment. Mayers is also accusing two of his former partners, Farman and Goodstone of breach, of fiduciary duty — a charge their attorney, Andrea Levin Kim of Houston firm Daniels & Tredennick, says is baseless and should be thrown out.
The bitter fight is a surprisingly acrimonious end to the partnership behind a company created in 1996 while Mayers, a native New Yorker, was working at New Orleans venue Tipitina’s and Farman and Black were students at Tulane who volunteered to help promote a Medeski Martin and Wood show. Named after the Curtis Mayfield soundtrack Super Fly, the company began promoting shows around Jazzfest with an eventual goal to create a new model for festivals in the U.S. that mirrored major camping-based events in Europe.
In 2002, the four men identified a site in Manchester, Tennessee, to host a 70,000-person festival and with the help and blessing of promoter Ashley Capps of AC Entertainment, agent Chip Hooper of Paradigm and manager Coran Capshaw of Red Light – along with a buy-in from luminaries like Trey Anastasio from Phish, the Grateful Dead’s Phil Lesh and Bob Weir — launched and sold out the first Bonnaroo. Six years later, they struck gold again, joining forces with Gregg Perloff and Another Planet Entertainment to launch Outside Lands in San Francisco.
Both events were highly successful and over the years Superfly would experiment with new concepts like Vegoose in Las Vegas, headlined by Rage Against the Machine and Daft Punk in 2007, and the Great GoogaMooga in Brooklyn’s Prospect Park in 2012 and 2013. Festivals are risky ventures and in some ways, Superfly was a victim of its own success — there were very few festival properties in the U.S. when Bonnaroo launched in 2002, but by 2018, the market had exploded with competition and in order to stay competitive, Superfly began exploring a new round of capital raises. According to Mayer’s lawsuit, a 2018 meeting with Watson and Virgo Investment Group to discuss a new investment was organized by Superfly’s attorneys at Loeb and Loeb.
With a $1.8 billion in funds under management, Virgo is considered small in the private equity world — most PE funds average about $5 billion under management, according to the International Centre for Trade and Sustainable Development. The private equity business is often criticized for loading companies it acquires with debt and bankrupting them and Virgo is no exception. A month before closing the Superfly investment, Virgo was sued by a federal bankruptcy trustee after it borrowed $41 million to purchase film distributor Millennium Entertainment, paid itself a $14.5 million dividend and eventually bankrupted the company.
In August 2018, Virgo made a minority investment at an undisclosed amount to fund new capital ventures at Superfly. Virgo was granted a 13% ownership interest in Superfly, while Mayers and Farman held a 22% stake, Goldstone held an 18% stake and Black held a 9% stake (the remaining shares were held by previous investors).
Mayers had hoped to raise about $7 million for a new concept he had been developing around popular TV shows like South Park, Arrested Development and It’s Always Sunny in Philadelphia while working on the Comedy-driven Clusterfest event in San Francisco. His idea was to license content from Viacom, NBC Universal and Warner Brothers for pop-up “step-inside the show” experiences based around popular shows. In 2019, he finalized a proof of concept activation based around the show Friends to run in New York and feature set recreations, original props and costumes, interactive exhibits, and a merchandise store with exclusive products.
The idea impressed Watson and during a 2020 board meeting in Santa Monica, California, Superfly’s co-founders agreed to reorganize parts of the company into separate business divisions. Mayers’ division would be called Superfly X and focus on “creating ‘themed based entertainment’ fan experiences.” A proposed term sheet created by Virgo granted 58% of Superfly X to Mayers and a smaller percentage interest to Watson and the other co-founders.
As Mayers and Watson worked to finalize the restructuring agreement, Mayers made a series of personal investments into Superfly X equaling $1.4 million and raised an additional $1.35 million from an outside investment group to fund operations. Rubinstein claims that Watson committed to investing $5 million into Superfly X, but only delivered $3.5 million which fell short of the capital needed to license the rights and fund Superfly X’s ongoing and planned projects.
In late July 2021, Mayers, Watson and the original partners “reached agreement on the material terms” for Superfly X, Rubinstein writes. Then, to Mayer’s surprise, he received a phone call from Watson and Guthrie on Aug. 12, informing him that “he was being terminated, without cause,” from both Superfly and the new Superfly X entity.
Mayers’ cofounders “were not on the call and have not had any contact with Mayers since the termination,” Rubinstein writes. The attorney added that the decision to suddenly end negotiations with Mayers, after the other co-founders signed off on the new partnership, is a sign that Superfly had allegedly planned “to deprive him of the fruits of his labor” and prevent him from “owning a majority interest in the most profitable and promising business unit of the Company” so defendants instead allegedly “decided to terminate Mayers thereby triggering a buy-out provision of his interest for a fraction of the Company’s actual (and projected) value.”
Virgo is now required to buyout Mayer’s 22% stake in Superfly covering all of its business interests, including the experiences division he had been developing. A few weeks after being terminated, Mayers submitted a valuation based on a recent term sheet “provided by an independent third-party shortly before Mayers’ termination.” that were “based on recent valuations and/or industry comparables.”
The company responded with a valuation “which was a quarter of the value assigned by Mayers,” Rubinstein writes, and half of what the company was valued at when Virgo bought first invested, telling Mayers that he needed to account “for the adverse impact to the Company from the departure of Mr. Mayers,” writing “the provision defendants referenced was clearly not drafted for a situation like the present where Mayers was terminated without cause.”
When asked for comment, a Superfly spokesperson told Billboard that “Superfly’s board of directors made the decision to part ways with co-founder Jonathan Mayers in August of 2021. As company policy, we do not discuss ongoing litigation. Since that time, Superfly has seen robust growth with current and new projects, licenses and clients. Our business is healthier than ever as we wrap up Q1 2022.”
That includes Outside Lands 2021, which sold out within minutes of its on-sale announcement, moving 225,000 tickets for the October festival. As well, the company is producing the launch of ‘Prince: The Immersive Experience,’ opening June 9 in Chicago in partnership with the Prince Estate, and last fall’s REVOLT Summit x AT&T event was recently named a finalist for the Ex Awards’ best multi-cultural event campaign.
Superfly X also continues, expanding The Friends Experience across the country with “strong sales in Phoenix in February and D.C. and Denver this month,” new activations planned for San Francisco and Toronto and the one-year anniversary of NYC Friends flagship location. Superfly X recently wrapped the debut Office Experience in Chicago on March 27 and will be announcing the next stop soon.