Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

[Ross Hodgeson]

Wow this is getting crazy.  Does this mean you will be able to buy stock in a conference?  What type of performance will the private equity firms require for their investment?

 

[MeanGreenZen]

This is not good for fans at all.

[Udomann]

This weekends college football brought to you by.... Carl's jr

[UNTLifer]

1 minute ago, Udomann said:

This weekends college football brought to you by.... Carl's jr

I think Brawndo is more appropriate

[Green Lantern]

Gross. Pretty much encapsulates the current state of college athletics. Prepare for the vampires to hollow out anything good that’s left. 

[MeanGreenGlory]

1 hour ago, Ross Hodgeson said:

Wow this is getting crazy.  Does this mean you will be able to buy stock in a conference?  What type of performance will the private equity firms require for their investment?

 

 

A private equity acquisition or partner doesn't mean anyone can buy stock. This would be a private transaction with private stakeholders. However, there's a chance the private equity firm will push to take the organization public, at which time you could buy stock.

Regarding the type of performance the private equity firm will require for their investment, let's just say they're not providing $1B for charity purposes. I'd imagine they'd expect a minimum of 10%–20% ROI to get started. From there, given the amount of cash they're willing to inject, they probably view it as a "moonshot" opportunity and expect/hope to get much, much more than that.

In my experience, when private equity enters the picture, all they care about are short-term growth numbers. The types of gains they target are often possible to achieve for the first couple of years with a significant amount of restructuring and effort, but the target gains often become unsustainable after 3–4 years. One reason is that the demand for higher returns paired with the understaffed and overrun teams creates a negative company culture, and staff turnover becomes a huge operational drag. 

It's true that not ALL private equity firms operate this way, and there are some that seek to be genuine and realistic partners in the long-term growth of the company, but that seems to be the exception rather than the rule.

Edited June 13 by MeanGreenGlory

[untphd]

This is going around fast,

the pros and cons

 

https://www.si.com/college/byu/football/the-pros-and-cons-of-private-equity-investment-in-the-big-12

[El Paso Eagle]

 

 

[untphd]

Looks like this could be a good start.

[NorthTexasWeLove]

So... uh... when are WE fans going to boycott?

[Wag Tag]

I brought this up a few months ago. It is inevitable when you have this kind of money involved. It will be no big deal for the NIL NCAA settlement. As time goes on it will mean more money to the players.

[El Paso Eagle]

47 minutes ago, NorthTexasWeLove said:

So... uh... when are WE fans going to boycott?

Another question should be, since this has clearly been defined as professional sports by the players themselves, why should students continue to have to pay student athletic fees?

[Wag Tag]

3 hours ago, MeanGreenGlory said:

 

A private equity acquisition or partner doesn't mean anyone can buy stock. This would be a private transaction with private stakeholders. However, there's a chance the private equity firm will push to take the organization public, at which time you could buy stock.

Regarding the type of performance the private equity firm will require for their investment, let's just say they're not providing $1B for charity purposes. I'd imagine they'd expect a minimum of 10%–20% ROI to get started. From there, given the amount of cash they're willing to inject, they probably view it as a "moonshot" opportunity and expect/hope to get much, much more than that.

In my experience, when private equity enters the picture, all they care about are short-term growth numbers. The types of gains they target are often possible to achieve for the first couple of years with a significant amount of restructuring and effort, but the target gains often become unsustainable after 3–4 years. One reason is that the demand for higher returns paired with the understaffed and overrun teams creates a negative company culture, and staff turnover becomes a huge operational drag. 

It's true that not ALL private equity firms operate this way, and there are some that seek to be genuine and realistic partners in the long-term growth of the company, but that seems to be the exception rather than the rule.

One of the biggest advantages is they will know how to get money in to create that return. Examples would be naming rights, ads on uniforms on the field just to name a few obvious items. It will be interesting to see who gets the money? Does it go to the AD or the school?

[NT80]

20 minutes ago, Wag Tag said:

One of the biggest advantages is they will know how to get money in to create that return. Examples would be naming rights, ads on uniforms on the field just to name a few obvious items. It will be interesting to see who gets the money? Does it go to the AD or the school?

I would say Conference re-naming revenue, just like revenue from advertising on a field/stadium would go to the school's Athletic Departments.   The Chick-Fil-a Conference is soon to become reality.

That's what so many people forget about college sports...it truly can affect the public perception about a school's quality in other areas.    Most don't know anything about UConn's biology department, but probably think it must be pretty good if the basketball teams are so good...right?    

[DentonStang]

A bunch of people used to dealing with academics and rich people giving you money for their own hubris get involved with some of the most greedy profit-oriented sharks around......what could go wrong?

[Udomann]

1 hour ago, DentonStang said:

A bunch of people used to dealing with academics and rich people giving you money for their own hubris get involved with some of the most greedy profit-oriented sharks around......what could go wrong?

I hate you for making me agree with you. But damned right.

This might end up worse than NIL. "Our new QB has signed a 4 year college deal with Mountain Dew. Please respect our decision while he finishes his free nursing degree and we absorb 10% of your schools student fees for 10 years whether you are good or not"

[Matt from A700]

Selling the naming rights to your own conference name is a new low. So much for the same conference that wanted to honor its history by keeping the "12" in its name after Colorado, Nebraska, A&M, and Mizzou bolted. No more shame, I see.

This sounds like a ridiculous gimmick that our new AAC commish would have came up with when he was spewing at his presser. Maybe we can get Brint Ryan involved again to rename our conference the Ryan Athletic Conference. Love a nice RAC!

[NT80]

30 minutes ago, Matt from A700 said:

Selling the naming rights to your own conference name is a new low. So much for the same conference that wanted to honor its history by keeping the "12" in its name after Colorado, Nebraska, A&M, and Mizzou bolted. No more shame, I see.

This sounds like a ridiculous gimmick that our new AAC commish would have came up with when he was spewing at his presser. Maybe we can get Brint Ryan involved again to rename our conference the Ryan Athletic Conference. Love a nice RAC!

It's all about chasing the $$ right now.  Many new Commish's are talking about new revenue streams and relationships with new media sources and sponsorships with previous untapped industries.   They are tasked to find money for the schools in this NIL era, beyond ticket sales and t-shirt vendors.  

[Wag Tag]

4 hours ago, NT80 said:

I would say Conference re-naming revenue, just like revenue from advertising on a field/stadium would go to the school's Athletic Departments.   The Chick-Fil-a Conference is soon to become reality.

That's what so many people forget about college sports...it truly can affect the public perception about a school's quality in other areas.    Most don't know anything about UConn's biology department, but probably think it must be pretty good if the basketball teams are so good...right?    

The “ Chick Filet AAC Conference”    for a few $$$ million I  don’t have a problem.

[DentonStang]

I can't wait for Gordon Gekko to dismantle and sell off the Big 12 in pieces.

"Why do you need to wreck this conference?"

"Because it's wreckable, all right?"

Edited June 14 by DentonStang

[NT80]

1 hour ago, DentonStang said:

I can't wait for Gordon Gekko to dismantle and sell off the Big 12 in pieces.

"Why do you need to wreck this conference?"

"Because itsy wreckable, all right?"

[MeanGreenZen]

I don’t have a problem with them selling the naming rights to the conference. It is a good idea. You don’t need private equity for that and it is no different than billboards in the stadium, selling ads in the program or stadium naming rights. 

But I really don’t like the idea of some outside investor monetizing me for loving my school. F those guys. What do they get a cut of? I’m certainly not donating to the school if 15% of my donation goes to some private equity a-hole. 

And what else can the athletic program charge me for? I already pay for tickets, parking, concessions, merchandise and NIL. 

Private equity is a short-term band aid and long-term problem. You can’t get in bed with them. 

[Greenrex]

1 hour ago, MeanGreenZen said:

I don’t have a problem with them selling the naming rights to the conference. It is a good idea. You don’t need private equity for that and it is no different than billboards in the stadium, selling ads in the program or stadium naming rights. 

But I really don’t like the idea of some outside investor monetizing me for loving my school. F those guys. What do they get a cut of? I’m certainly not donating to the school if 15% of my donation goes to some private equity a-hole. 

And what else can the athletic program charge me for? I already pay for tickets, parking, concessions, merchandise and NIL. 

Private equity is a short-term band aid and long-term problem. You can’t get in bed with them. 

I agree. Private equity ownership by definition commoditizes the conference allowing it be bought and sold. To anyone. In any nation. What's to prevent or at the very least moderate private equity regarding selling off the most attractive assets to any vulture capitalist group? And, if that turns out not to be fun for them, bankruptcy is always a choice. Then what?

 

 

 

[SMU2006]

Private equity is going to carve the Big 12 to pieces, hollow out anything and everything that doesn't add "value", and inject themselves daily into the operations of the league.

Should be some fun Monday morning calls with the CVC Managing Partner "yeah we've been seeing the TV numbers from last week's Cincinnati-Baylor game and well, we have some questions"  They are going to institute unequal revenue sharing as well as a litany of other caveats we can't even fathom yet.

Also, funny how Yormark can make this deal now but when the bill comes due on that return on invested capital he will be long gone from the Big 12.  Please, please, please let this happen!

[NT80]

55 minutes ago, SMU2006 said:

Should be some fun Monday morning calls with the CVC Managing Partner "yeah we've been seeing the TV numbers from last week's Cincinnati-Baylor game and well, we have some questions"  They are going to institute unequal revenue sharing as well as a litany of other caveats we can't even fathom yet.

This is going to happen in a lot of conferences in the future.  Florida State and Clemson have already been asking for this in the ACC.  Boise gets more revenue in the MWC.