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Private Equity

AmherstCane said:
PE always takes more than it gives. That’s the model for the winning returns.

Might make sense for a business that needs cash to turn the corner or cost cutting to enhance shareholder value. Makes no sense for major CFB programs/conferences.

As has already been written, community hospitals are the best comparison. PE did a great job sucking the blood out of them and destroying community health systems in the process.
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A true Faustian bargain.
 
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bacane said:
Silly question - what’s to prevent an individual athletic program from cutting a similar financial deal, specifically a private university?
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Florida State tried to get PE backing to help pay for leaving the ACC. The issue is what’s in it for a PE group? Athletic departments typically lose money or make very little. The only thing generating revenue or with value is the television deal with the conference, which if even feasible, could only be used as collateral at an individual school level. So now you’re just talking about a traditional loan, which is not what PE is interested in.

This Big 10 deals seems a bit nuanced to me. The decision makers are not the Athletic Departments or BOTs, but the University presidents of chancellors who all seem to be in the same boat that athletics is becoming a bigger drain with revenue sharing, NIL, colossal buyouts, stadium renovations to cater more hospitality settings, and travel expenses with these cross country conference expansions. This “Big 10 Enterprise” sounds not only highly speculative but also like a bureaucratic nightmare.

The REAL reason this is being done at the conference level is that’s how these investment groups can get to the TV rights/revenue. I would bet money that these deals are only going to get done if these groups have some kind of guarantee or vessel to get to the tv revenue if things don’t work out as planned.
 
Can someone explain how a deal with a PE helps Miami get an invite to the B10 or SEC?
 
Garnacho said:
The REAL reason this is being done at the conference level is that’s how these investment groups can get to the TV rights/revenue. I would bet money that these deals are only going to get done if these groups have some kind of guarantee or vessel to get to the tv revenue if things don’t work out as planned.
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This. The growth in the TV money is what they're after. To them it looks like a money tree that plants a forest of future money trees every time the contract is renegotiated.

I don't know the details of the Big 10 deal, but if even Big 10 athletic departments are hemorrhaging money, I think this is going to end poorly. PE might not be able to strip assets like they usually do but they will seek to impose cost discipline. Coach, player, and support staff salaries would be on the chopping block until they push it too far - product begins to suck - and the TV money stops growing exponentially (fat chance that ever happening I think).

Not sure how it would work with Title IX too, which guarantees money losing sports teams by design.

Perhaps I'm way off here?
 
I think people are miss interpreting this convo just a little.

There is a difference between Private Equity and Private Capital. Private equity is money for ownership. Private Capital is money for return on investment.

Now, both have impacts and influence. But, owners vs money return is a big difference. Private capital I’m not as concerned with. Company invest 100 million with expectations of 120 million return on investment. Do the have influence, sure a bit. They want a return. But giving up equity or ownership in whole heartedly against.

I thought the big 10 was looking at private capital, not equity.
 
Reyrey said:
I think people are miss interpreting this convo just a little.

There is a difference between Private Equity and Private Capital. Private equity is money for ownership. Private Capital is money for return on investment.

Now, both have impacts and influence. But, owners vs money return is a big difference. Private capital I’m not as concerned with. Company invest 100 million with expectations of 120 million return on investment. Do the have influence, sure a bit. They want a return. But giving up equity or ownership in whole heartedly against.

I thought the big 10 was looking at private capital, not equity.
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honestly no one has seen much of the deal to know. But it has been revealed that the other party (UCI?) will be taking ownership in “Big 10 Enterprises” as well as collateral, which I would bet is television rights. What would generate a return on investments has not been revealed. UC Investments is technically private investment but they work with private equity firms and let Bacchar or whatever his name is (CIO) do whatever he wants and he answers to no one nor takes any advice, which might be why it has done so well.

People throw around “PE” because that has been what the hillbilly ADs have been throwing around to sound cool.
 
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Reyrey said:
I think people are miss interpreting this convo just a little.

There is a difference between Private Equity and Private Capital. Private equity is money for ownership. Private Capital is money for return on investment.

Now, both have impacts and influence. But, owners vs money return is a big difference. Private capital I’m not as concerned with. Company invest 100 million with expectations of 120 million return on investment. Do the have influence, sure a bit. They want a return. But giving up equity or ownership in whole heartedly against.

I thought the big 10 was looking at private capital, not equity.
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You are correct. The journalists are using the terms interchangeably. But it is private capital.

Either way, it's still going to be a compliance nightmare.
 
This thread is in my bailiwick but its a more complicated topic than what has been discussed here.

One of the keys if not THE key is that PE invests to make money, not to "win". As a hypothetical, Steve Cohen might spend wildly because its his money and his ego, but if he sold out to PE, investors would demand a return. So the Mets would likely cut spending dramatically, even if it hurt their championship chances, because that would improve the bottom line.
 
RozayCane said:
Ah ok.. thanks
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How are they doing this, the government is shutdown? Who is bribing (I mean campaign donating for this)? So they believe making this deal keeps away the PE that wants to make their own separate super league where the B1G and SEC aren't in control.
Private capital is one thing, private equity another. If that takes adding 10 more years of GOR (making it 21 years) someone should be slapped. Open the government and pass the bill to stop them from ******** themselves. Every option is bad. Greed is just destroying this game I love.
 
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AmherstCane said:
PE always takes more than it gives. That’s the model for the winning returns.

Might make sense for a business that needs cash to turn the corner or cost cutting to enhance shareholder value. Makes no sense for major CFB programs/conferences.

As has already been written, community hospitals are the best comparison. PE did a great job sucking the blood out of them and destroying community health systems in the process.
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Google Steward Healthcare and Horizon Health. Sold assets to investors, sucked out proceeds to investors saddled hospitals with unpayable leases then hospitals went bankrupt and closed
Never trust an Ivy MBA
 
Fart Keyhole said:
I haven't read the bill, but I think it would be fairly straightforward to argue that this private capital deal runs counter to the arrangement by which public universities are tax-exempt.
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That's why they are splitting it off into a separate entity, called the BTE. The investment isn't going to be given to the universities.

www.sportico.com

Big Ten Private Equity Deal Could Expand NCAA Legal Controversies

As the Big Ten reportedly is set to sign a multi-billion dollar private capital deal, potential legal claims of athletes in the Big Ten could change.
www.sportico.com www.sportico.com
 
caneingville said:
That's why they are splitting it off into a separate entity, called the BTE. The investment isn't going to be given to the universities.

www.sportico.com

Big Ten Private Equity Deal Could Expand NCAA Legal Controversies

As the Big Ten reportedly is set to sign a multi-billion dollar private capital deal, potential legal claims of athletes in the Big Ten could change.
www.sportico.com www.sportico.com
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That makes sense in practice, but I'm not sure the legal fiction of a "separate entity" makes the situation better in principle.
 
Fart Keyhole said:
That makes sense in practice, but I'm not sure the legal fiction of a "separate entity" makes the situation better in principle.
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Agreed. One of the many reasons I said it's a compliance nightmare. Every piece, department, every part of the Big 10 is going to require tons of maneuvering to avoid all the litigation that's coming.
 
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