Houston Public Media: Would private equity help or hurt the Big 12?

Would private equity help or hurt the Big 12 and its schools? Experts say it’s hard to predict – Houston Public Media

“The college athletic conference that includes the University of Houston is reportedly considering a partnership with a global private equity firm in what would be the first business arrangement of its kind… According to experts in both the business of sports as well as private equity, the possibilities and ramifications are as uncertain as a college sports landscape where schools frequently switch conferences and student-athletes are getting an ever-expanding piece of the financial pie.”

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So, would it be LIV Big12?

“Let’s say they put some money into the conference in general and the University of Houston gets more money, and let’s say they don’t win and are not able to provide a return on their investment,” Schwartz said. “Does the private equity group say, ‘Look, we’re not giving you the same amount of money next year.’ Then Houston’s back in the same kind of conundrum they were in before (joining) the Big 12. How do they compete? “Private equity likes to get their way. Don’t think that they’re not. If they decide they want to jettison something, they’re going to jettison something.” A public school could not be sold off like a traditional business asset or property, he said.” Welcome to CFB, 21 century style. :rofl::rofl::rofl:

Honestly, if this PE deal goes through, I don’t think it’s going to be set up on a per-school basis.

It’s going to be based on the media revenue of the entire conference.

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I have no problem with that. Private equity firms are all about the bottom line. Give the Universities that preform well, make bowls, draw biggest crowds and highest ratings on TV more $$. We will be at the top of B12 soon and will force us to fill the stadium. We are #39 in recruiting with CWF being here 6 months and not playing a down, we are set to rocket forward if we have a decent season in year one. Our facilities will soon be tops in B12 in all sports.

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Faustian bargain. PE is never your friend or a long term positive for you. In 10 years the big 12 would be sold for parts.

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This! PE firms are a classic example of heads I win tails you lose! They are ruthless!

Every deal they structure puts all risk on the party receiving their money.

I have worked on several deals involving PE and yes many have worked out, but many have not. And those that have not have basically destroyed the company that got PE money.

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I kind of see this as borrowing money now against future income at an aggressive interest rate. Sounds dumb unless it unlocks income streams we don’t currently have access to.

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Do some of you older guys remember the Exxon SWC game of the week on the radio? It wouldn’t bother me a bit if it was the Exxon Big12. I wouldn’t want say, Chico’s Bail Bond B12 though.

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My main concern is that any deal with PE would be structured based on projected gains in
the next media deal.

Well if the projected gains are in fact realized, then the deal will look like it was a stroke of genius! However the gains aren’t realized or even slightly lower than what was projected, the conference will be well and truly ducked!

I’m sure Yormark has engaged advisors and is aware of all the risks. But a conference is not a for-profit company. So it should not be taking the same risks that companies take when they accept PE money.

When the news first broke out about the Big 12 PE deal, it specifically mentioned in the article that only a portion of the money is going to the schools directly.

That leaves the other portion clearly for something else. As of now, my only assumption would be that it could possibly be used to “buy” Florida State and Clemson… i.e. paying their exit fees from the ACC.

The Big 12 is a great conference from a competitive standpoint, but what it lacks is brand power. Throw Florida State and Clemson into the mix, possibly Miami, and you got yourself a conference with a much higher media deal value → This would essentially net the PE stake in the future media revenue for the entire Big 12.

That’s honestly my only logical scenario, otherwise, I don’t see where a PE firm sees value in the conference nor do I understand how the conference can net the PE stake without any significant additions to the conference such as Florida State.

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It can be used for advertising and marketing of the conference to build the brand. Buying other schools is not the only other option.

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The Big 12 doesn’t need a half billion dollars worth of private equity to market themselves

Coke spends $4 Billion annually worldwide and people probably know who coke is.

That’s taking a huge risk! Your ROI isn’t guaranteed on “advertising and marketing” expenditures.

Sure you might get some ROI, but you don’t know just how much.

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Your right companies should not advertise because it does nothing.

Coke also has decades of brand building behind it! When was the last time a new cola brand was able to compete with Coke?

The fact that they have decades of doing it and they still do it shows that it is necessary to build and maintain a brand.

Big 12 is trying to build a bigger brand and without advertising no one will know.

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Coke goes to private equity to advertise?

Private equity seems way too risky to me. Come up a dollar short of projections, and these people will sell your organs to catfood factories.

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