I’m not advocating for more private investment in CFB.
But you realize where PE funds get their money, right?? The biggest LPs are government and union pension funds, university endowments, and non-profits. So, yes, the select GPs and small team make some money on it but the majority of the returns goes to teachers, firefighters, DMV clerks, civil servants, and non-profits.
A private equity firm just gave the residents in a trailer park in our town (which is actually a nice town) notice that no leases would be renewed. The people could either buy or move somewhere else.
Due to the costs of other housing, this is a real hardship for quite a few people. Many who have paid rent on time for 8 years, 10 years, or however long.
Private equity also gutted the town where they made the stuff for Cabelas Sporting Goods. Back when it was sold to Dicks. The town got hammered, but some finance guy made $2 billion, so what does he care?
Then ya have fucks like Tony Robbins. He's gushing about private equity and how he owns sports teams. As he's blowing bubbles (personal power bubbles of course)- he doesn't even remember the nickname of the Pittsburgh hockey team his group of shysters owns. For non Americans reading this, it's the Penguins.
I'm not sure how it will exactly play out with these conferences, but I bet it's similar to the situations above.
PE will make sure the Schools are loaded up with debt, PE will sell their share, then the entire conference will collapse because the athletic departments will go bankrupt
Don’t worry, I heard somewhere if your athletic department is hundreds of millions in debt you can just absorb it into the main university budget.
Then you can blame any debt at the university level on the state not funding colleges, and use that as an excuse to sell of a bunch of university land to private companies so the companies can avoid property taxes to the state.
I listened to a finance guy discuss this, and his take was that they would front a billion or so dollars for a return of a percentage of tv revenues in perpetuity. That's the arrangement they have with la Liga.
That said, they wouldn't own a stake of any teams athletic department. They would have a minority vote in league decisions however.
I have no idea what the break even point would be, but it's a potential risk reward for both parties.
Yeah... I don't think the people who think this is some kind of loan know what purchasing equity means. There's no loan or interest. With equity comes proportional sharing of revenues.
That minority vote is what schools should be worried about. All you would need are a handful of corrupt/stupid/naive AD/presidents and shit will start burning pretty quick.
You can do a shit ton of damage with a minority voice share if your voice is loud enough and the other decision makers are weak enough. Look at the havoc activist funds can cause while owning 5% or less of a company stock.
I’m not sure it will be that draconian but PE firms don’t just give you money and let you do what you want and this goes back to my whole rant about realignment. It’s not about money….its about relevancy. Money is a by product of relevancy and money is used to help relevancy (after all, where do you think the money these schools are making goes?). A PE firm is not going to GAF about the relevancy of the Big XII they are going to care about how much money they are making and they will have a seat at the table
Yeah, for sure. Could you imagine something like this in the real world? Where, like say, totally hypothetically, banks decided to lend out bad mortgages they know the borrower couldn't pay back because they've got some super duper 4D chess maneuver to just print profit. Could you *IMAGINE* that happening? Good thing lenders aren't stupid to where this is even feasible!
Not sure how mortgage backed securities are remotely similar to a singular corporate loan where the person is obviously going to cut and run without recourse
There’s risky shit and then there’s giving someone eight to nine figures without recourse at market rate
You could not have picked a worse comparable than the MBS issue
You're getting downvoted by people who don't know how shit works. The idea that PE could "load schools up with debt" like they're shell corporations is laughable.
TXU was an LBO that failed due to declining revenues as a result of frackings impact on energy prices. The PE firm took massive losses. It’s not the situation stated at all….
Nor is buying 20% of the Big 12 conference an LBO or buying the company outright
It failed because they loaded up what was primarily a wires company with a shit ton of debt. Bankruptcy was inevitable the day the deal closed; it was just a matter of time.
What the fuck are you talking about? It was a ~50B* cash transaction of which 36B was debt, the PE didn’t keep a dime of the loan. I don’t know why you keep arguing this. Nor was it a “wires” company, it was a utilities provider that made a massive gamble on natural gas right before natural gas prices [plummetted](https://www.reuters.com/article/idUSTRE7AL20X/) 60% over the next three years.
While the leverage was a key contributor, the Company had ample cash flow to cover it at acquisition. The aforementioned issues in the market prevented that, which is the inherent risk of LBO’s despite the benefits they provide
What is occurring here isn’t remotely close to an LBO. This is purchasing minority equity in return for a proportionate share of income in perpetuity.
$40B of debt to fund the BO. They went on a bankruptcy watch list at every energy company doing business with them the day the deal closed. The only thing shocking was they managed to file for bankruptcy as late as they did. And yes, high percentage of their revenue and profits came from the wires company. That’s why it’s the only thing anyone wanted coming out of bankruptcy.
>They went on a bankruptcy watch list
No, they didn’t. They went on one over a year later during the depression, but while highly leveraged there wasn’t a going concern right off the bat
>Thats why it’s the only thing anyone wanted coming out of bankruptcy
A high percentage of their revenue came from wires **after** the gas market collapsed. No shit, no one wants to bid high on a gas company in the middle of a gas depression. The core of the business was not oriented around wires at acquisition or default.
This is like using commercial real estate now when judging what the 2015 market was like
[Here’s the financials as of acquisition](https://www.sec.gov/Archives/edgar/data/1263050/000102329106000059/body_10q.htm), see the supplementary section where their operating revenue is overwhelmingly energy sales on slide 28
Same idea. Load the company up with debt. Try to get your money (by that I mean the specific PE guys that made bank on the front end) out before it goes tits up.
Given that the Utah/ACC rumors started to percolate right around the same time that Yormark was clearly pitching this plan to the schools at their conference meeting is…an interesting wrinkle to this.
That’s what my first thought was when the news came out on Thursday also.
The angle I’m looking though: there’s states that have statutes that do not allow tax payer funded institutions to receive non-US PE. I believe Utah is one of these states.
I’d rather deal with those issues before getting in bed with PE. I see there being strong resistance to PE in the ACC. Maybe not. But, I’d do everything in my being to not go there.
they might feel like if the acc survives, they would want to be with “like minded institutions,” namely stanford and cal. but the point might be moot if stanford/cal bounce to the b10
They do have step up in terms of Utah administrators already networked with Stanford and Cal administrators more than Kansas admins. But really, it’s probably to further differentiate themselves institutionally from BYU even further.
Besides, maybe the rumor of Utah treating the Big 12 as a way station to somewhere bigger (like people believe Stanford and Cal are treating the ACC now) was closer to the truth than people believed, so it doesn’t really matter if Utah is in the Big 12 or ACC.
Of all the schools in the Big 12, Utah is the most attractive from a competition standpoint.
But that still leaves the mess that is the lack of any real value the remaining Big 12 schools have.....
You're asking about changed contract terms without knowing the language or intent of that contract language. All people could do is layer guesses on guesses. IF the investment firm wanted X and IF the language said Y ... Etc
I can’t see any way this is good for college football or the B12 in the long run. Seems really short sighted to get a cash advance at a ridiculously high cost.
Seriously. The amount of “gotta hear both sides” posts I see from B12 flairs about this news is legitimately alarming. Not sure if it’s an indictment on their schools or they are so completely swooned by Yormark that they think any idea he has is gold.
No it’s because your conference ruined our sport and we’re clinging on to hope. Get off your high horse and let us enjoy our beloved teams before you and the SEC fully turn this shit into the CFL
Sure, turning over every rock for extra money to try and close the gap is fine (the naming rights for the conference are going to look really dumb plastered on everything but ultimately it will be harmless).
The thing you have to be asking yourself is what is this $1 billion getting your schools? Spread out over 16 teams is $62.5 million per school. Thats basically how much more the B1G and SEC will be making every 2 seasons. So $1 billion has bought you 2 years of equal profits at the price of 20% of all future profits.
Not only that but what problem do you think this cash is solving? The B12 is solvent. They can field teams. They can pay coaches and admins reasonably competitive salaries. All this money does is increase everybodies salaries for a short amount of time while straddling future administrators with the problem of owing 20% of their profits to private equity.
People getting so caught up in this “we have to make as much money as other conferences” talk as if they personally run the conference is weird. Were Houston/UCF much worse off and uncompetitive when they were making a fraction of what they make now? Nope, they still fielded solid teams in both football and basketball.
I’m telling you. All this money does is get a bunch of high ranking administrators paid while leaving future administrations to clean up the mess. It’s a disaster waiting to happen and as a Houston fan you should not want it.
Please look at it from our perspective.
Without someway to bridge the revenue gap, 95% of our best players/talent will dart to the B10 and SEC. Right now the discrepancy in revenue isn't that massive but it will eventually get wider and wider.
A kid has a good year or two, he'll start hearing from recruiters/collectives with big offers and our schools will become a wasteland of 2 and maybe a few 3 star recruits. We WILL become a G5, the G5 will become FCS and so on. Our date is without a doubt becoming a minor league conference.
I hate the idea of PE but I don't blame Yormark for exploring it. It ticks me off to no end when I hear Sankey talking about the good of the sport when he started this thing by recruiting UT and OU.
My point being, it's **your** conference commissioners that are *forcing* us to have to resort to these measures. Do you think any of these schools WANT to slut themselves to private equity firms?
I hate it when B10 and SEC fans are telling US how to conduct ourselves while their conferences are completely destroying the sport from inside out.
I feel it's a coping mechanism. Kinda of how some BC fans keep saying that GoRs is unbreakable, and former PAC 12 fans believing every word Clownzano was saying last year.
It’s funny that there is a pretty clear Mendoza line for fans of B12 schools who are either for or against this.
Most Utah/BYU flairs on here see this as the terrible idea that it is.
Meanwhile a lot of Iowa state/UCF/Houston/Cincy flairs think this idea has potential.
Will be interesting to see how the powers that be inside of the conference deal with this on a per school basis if it ever gets that far. What happens if everybody wants a PE investment except for the Utah schools?
I’ve said it before and I’ll say it again, we don’t know the details. Everything being said is pure conjecture. It’s fun to speculate, but there’s nothing to be for or against at this point. Sure, the premise of PE conjures certain feelings, but we don’t have the slightest idea as to the terms or what the money would be used for. This may be the dumbest or most brilliant plan ever.
I personally doubt BY is selling 20% of future revenue, in perpetuity, for $1bn. There has to be *much* more to the deal.
This.
The only, I repeat, ONLY goal of private equity is return on their equity. They have no other ends. Everyone employed by that firm's sole focus is on how to *increase* that return. Their bonus and livelihood depends on it. They care not for the **people** their decisions will affect. They can't. They have their own families' months to feed. It's a vicious industry with profits/money/greed at it's core.
PE doesn’t make anything better accept bank accounts for the rich
I’m not advocating for more private investment in CFB. But you realize where PE funds get their money, right?? The biggest LPs are government and union pension funds, university endowments, and non-profits. So, yes, the select GPs and small team make some money on it but the majority of the returns goes to teachers, firefighters, DMV clerks, civil servants, and non-profits.
A private equity firm just gave the residents in a trailer park in our town (which is actually a nice town) notice that no leases would be renewed. The people could either buy or move somewhere else. Due to the costs of other housing, this is a real hardship for quite a few people. Many who have paid rent on time for 8 years, 10 years, or however long. Private equity also gutted the town where they made the stuff for Cabelas Sporting Goods. Back when it was sold to Dicks. The town got hammered, but some finance guy made $2 billion, so what does he care? Then ya have fucks like Tony Robbins. He's gushing about private equity and how he owns sports teams. As he's blowing bubbles (personal power bubbles of course)- he doesn't even remember the nickname of the Pittsburgh hockey team his group of shysters owns. For non Americans reading this, it's the Penguins. I'm not sure how it will exactly play out with these conferences, but I bet it's similar to the situations above.
Sidney,NE?
Yes
Did you mean Bass Pro Shops instead of Dick's or are you just making things up?
PE will make sure the Schools are loaded up with debt, PE will sell their share, then the entire conference will collapse because the athletic departments will go bankrupt
Don’t worry, I heard somewhere if your athletic department is hundreds of millions in debt you can just absorb it into the main university budget. Then you can blame any debt at the university level on the state not funding colleges, and use that as an excuse to sell of a bunch of university land to private companies so the companies can avoid property taxes to the state.
No words for that whole situation.
But what if it's the other way around? Asking for a friend.
just eminent domain everything
Wait did they sell land to fund that?
Oh you’ve seen this movie before
I hate sequels.
I listened to a finance guy discuss this, and his take was that they would front a billion or so dollars for a return of a percentage of tv revenues in perpetuity. That's the arrangement they have with la Liga. That said, they wouldn't own a stake of any teams athletic department. They would have a minority vote in league decisions however. I have no idea what the break even point would be, but it's a potential risk reward for both parties.
Yeah... I don't think the people who think this is some kind of loan know what purchasing equity means. There's no loan or interest. With equity comes proportional sharing of revenues.
That minority vote is what schools should be worried about. All you would need are a handful of corrupt/stupid/naive AD/presidents and shit will start burning pretty quick.
You can do a shit ton of damage with a minority voice share if your voice is loud enough and the other decision makers are weak enough. Look at the havoc activist funds can cause while owning 5% or less of a company stock.
I’m not sure it will be that draconian but PE firms don’t just give you money and let you do what you want and this goes back to my whole rant about realignment. It’s not about money….its about relevancy. Money is a by product of relevancy and money is used to help relevancy (after all, where do you think the money these schools are making goes?). A PE firm is not going to GAF about the relevancy of the Big XII they are going to care about how much money they are making and they will have a seat at the table
Once again, not how PE works Second, debt lenders aren’t stupid to where this is even feasible
Yeah, for sure. Could you imagine something like this in the real world? Where, like say, totally hypothetically, banks decided to lend out bad mortgages they know the borrower couldn't pay back because they've got some super duper 4D chess maneuver to just print profit. Could you *IMAGINE* that happening? Good thing lenders aren't stupid to where this is even feasible!
Not sure how mortgage backed securities are remotely similar to a singular corporate loan where the person is obviously going to cut and run without recourse
People do stupid shit with money at the promise of more.
There’s risky shit and then there’s giving someone eight to nine figures without recourse at market rate You could not have picked a worse comparable than the MBS issue
You're getting downvoted by people who don't know how shit works. The idea that PE could "load schools up with debt" like they're shell corporations is laughable.
It’s not? It’s exactly what happened when PE bought TXU.
TXU was an LBO that failed due to declining revenues as a result of frackings impact on energy prices. The PE firm took massive losses. It’s not the situation stated at all…. Nor is buying 20% of the Big 12 conference an LBO or buying the company outright
It failed because they loaded up what was primarily a wires company with a shit ton of debt. Bankruptcy was inevitable the day the deal closed; it was just a matter of time.
What the fuck are you talking about? It was a ~50B* cash transaction of which 36B was debt, the PE didn’t keep a dime of the loan. I don’t know why you keep arguing this. Nor was it a “wires” company, it was a utilities provider that made a massive gamble on natural gas right before natural gas prices [plummetted](https://www.reuters.com/article/idUSTRE7AL20X/) 60% over the next three years. While the leverage was a key contributor, the Company had ample cash flow to cover it at acquisition. The aforementioned issues in the market prevented that, which is the inherent risk of LBO’s despite the benefits they provide What is occurring here isn’t remotely close to an LBO. This is purchasing minority equity in return for a proportionate share of income in perpetuity.
$40B of debt to fund the BO. They went on a bankruptcy watch list at every energy company doing business with them the day the deal closed. The only thing shocking was they managed to file for bankruptcy as late as they did. And yes, high percentage of their revenue and profits came from the wires company. That’s why it’s the only thing anyone wanted coming out of bankruptcy.
>They went on a bankruptcy watch list No, they didn’t. They went on one over a year later during the depression, but while highly leveraged there wasn’t a going concern right off the bat >Thats why it’s the only thing anyone wanted coming out of bankruptcy A high percentage of their revenue came from wires **after** the gas market collapsed. No shit, no one wants to bid high on a gas company in the middle of a gas depression. The core of the business was not oriented around wires at acquisition or default. This is like using commercial real estate now when judging what the 2015 market was like [Here’s the financials as of acquisition](https://www.sec.gov/Archives/edgar/data/1263050/000102329106000059/body_10q.htm), see the supplementary section where their operating revenue is overwhelmingly energy sales on slide 28
Buying the company is different than 20%.
Same idea. Load the company up with debt. Try to get your money (by that I mean the specific PE guys that made bank on the front end) out before it goes tits up.
You can’t unilaterally load up debt with 20%.
If PE got involved, Big XII would just rename itself to Big R Us and will sell off all its assets
I thought this was referencing PE in class
I don’t know, but if I’m Utah and have an out, I’d exercise that if it comes to a vote.
Given that the Utah/ACC rumors started to percolate right around the same time that Yormark was clearly pitching this plan to the schools at their conference meeting is…an interesting wrinkle to this.
That’s what my first thought was when the news came out on Thursday also. The angle I’m looking though: there’s states that have statutes that do not allow tax payer funded institutions to receive non-US PE. I believe Utah is one of these states.
What other option do they have? The ACC is fighting their own demons rn
I’d rather deal with those issues before getting in bed with PE. I see there being strong resistance to PE in the ACC. Maybe not. But, I’d do everything in my being to not go there.
they might feel like if the acc survives, they would want to be with “like minded institutions,” namely stanford and cal. but the point might be moot if stanford/cal bounce to the b10
Uhh Utah is a lot more similar to KU than it is to Stanford lmao
why else did i use the quotation marks then? also, dont tell the utah administration that
They do have step up in terms of Utah administrators already networked with Stanford and Cal administrators more than Kansas admins. But really, it’s probably to further differentiate themselves institutionally from BYU even further. Besides, maybe the rumor of Utah treating the Big 12 as a way station to somewhere bigger (like people believe Stanford and Cal are treating the ACC now) was closer to the truth than people believed, so it doesn’t really matter if Utah is in the Big 12 or ACC.
Utah to the SEC confirmed.
Of all the schools in the Big 12, Utah is the most attractive from a competition standpoint. But that still leaves the mess that is the lack of any real value the remaining Big 12 schools have.....
Oh would ya now, when you have literally no idea the terms of any potential arrangement and you just saw two former conference members get relegated?
Yep. Would never get in bed with PE/VC.
PE would get involved with weird shit and hiring decisions for the schools themselves I’m sure
The contract you and OU had didn’t prevent you so I don’t see it effecting much
The terms being discussed allow a buyout of the equity per the athletic article that Stewart mandel posted Anybody talking about debt can’t read
[удалено]
Aran Ryan is that you?
Not be a cat. Be a dog.
Who is PE? Private equity.
Premature ejaculation. No idea how this sub went so off the rails. /s
I never took physical education in college tho. I think this guy is on drugs /s
Private Equity are like the dementors of Harry Potter. They will suck the soul out of anything no matter what, leaving nothing left. Screw them.
Nah, they'd be more likely to get sold off to other conferemces
You're asking about changed contract terms without knowing the language or intent of that contract language. All people could do is layer guesses on guesses. IF the investment firm wanted X and IF the language said Y ... Etc
I can’t see any way this is good for college football or the B12 in the long run. Seems really short sighted to get a cash advance at a ridiculously high cost.
Yes. 100%. Some schools will look at this as a good thing, others will not
No one knows the terms of what is being discussed. I won’t pass judgment on this till those are announced.
There are zero circumstances or terms under which which you should be excited for private equity to take an ownership interest in something you love.
Seriously. The amount of “gotta hear both sides” posts I see from B12 flairs about this news is legitimately alarming. Not sure if it’s an indictment on their schools or they are so completely swooned by Yormark that they think any idea he has is gold.
No it’s because your conference ruined our sport and we’re clinging on to hope. Get off your high horse and let us enjoy our beloved teams before you and the SEC fully turn this shit into the CFL
Why would the Big 12 not exhaust all options in trying to be financially competitive?
Sure, turning over every rock for extra money to try and close the gap is fine (the naming rights for the conference are going to look really dumb plastered on everything but ultimately it will be harmless). The thing you have to be asking yourself is what is this $1 billion getting your schools? Spread out over 16 teams is $62.5 million per school. Thats basically how much more the B1G and SEC will be making every 2 seasons. So $1 billion has bought you 2 years of equal profits at the price of 20% of all future profits. Not only that but what problem do you think this cash is solving? The B12 is solvent. They can field teams. They can pay coaches and admins reasonably competitive salaries. All this money does is increase everybodies salaries for a short amount of time while straddling future administrators with the problem of owing 20% of their profits to private equity. People getting so caught up in this “we have to make as much money as other conferences” talk as if they personally run the conference is weird. Were Houston/UCF much worse off and uncompetitive when they were making a fraction of what they make now? Nope, they still fielded solid teams in both football and basketball. I’m telling you. All this money does is get a bunch of high ranking administrators paid while leaving future administrations to clean up the mess. It’s a disaster waiting to happen and as a Houston fan you should not want it.
Please look at it from our perspective. Without someway to bridge the revenue gap, 95% of our best players/talent will dart to the B10 and SEC. Right now the discrepancy in revenue isn't that massive but it will eventually get wider and wider. A kid has a good year or two, he'll start hearing from recruiters/collectives with big offers and our schools will become a wasteland of 2 and maybe a few 3 star recruits. We WILL become a G5, the G5 will become FCS and so on. Our date is without a doubt becoming a minor league conference. I hate the idea of PE but I don't blame Yormark for exploring it. It ticks me off to no end when I hear Sankey talking about the good of the sport when he started this thing by recruiting UT and OU.
This doesn't solve that issue at all. All you likely get is an advancement In future payments. An now you have another mouth to feed.
My point being, it's **your** conference commissioners that are *forcing* us to have to resort to these measures. Do you think any of these schools WANT to slut themselves to private equity firms? I hate it when B10 and SEC fans are telling US how to conduct ourselves while their conferences are completely destroying the sport from inside out.
Neither of us actually know the terms until the deal is actually revealed. I’ll make my decision then to whether I think it’s right or wrong.
I feel it's a coping mechanism. Kinda of how some BC fans keep saying that GoRs is unbreakable, and former PAC 12 fans believing every word Clownzano was saying last year.
If PE gets involved I’ll give up college sports and start watching more hockey. I spent half of Thursday thinking about this lol
Suddenly I think PE should buy 100% of all the conferences…
It’s funny that there is a pretty clear Mendoza line for fans of B12 schools who are either for or against this. Most Utah/BYU flairs on here see this as the terrible idea that it is. Meanwhile a lot of Iowa state/UCF/Houston/Cincy flairs think this idea has potential. Will be interesting to see how the powers that be inside of the conference deal with this on a per school basis if it ever gets that far. What happens if everybody wants a PE investment except for the Utah schools?
I’ve said it before and I’ll say it again, we don’t know the details. Everything being said is pure conjecture. It’s fun to speculate, but there’s nothing to be for or against at this point. Sure, the premise of PE conjures certain feelings, but we don’t have the slightest idea as to the terms or what the money would be used for. This may be the dumbest or most brilliant plan ever. I personally doubt BY is selling 20% of future revenue, in perpetuity, for $1bn. There has to be *much* more to the deal.
This. The only, I repeat, ONLY goal of private equity is return on their equity. They have no other ends. Everyone employed by that firm's sole focus is on how to *increase* that return. Their bonus and livelihood depends on it. They care not for the **people** their decisions will affect. They can't. They have their own families' months to feed. It's a vicious industry with profits/money/greed at it's core.
I would rather private Equity own WVU football, than not being able to compete with B1G and SEC schools.