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Hovadipo

College Football Thread

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14 minutes ago, eddy4iu said:

My opinion is that bringing Tino back in any capacity would undermine Whitmer in his role as QB coach. Just no good reason to take that risk. Tino will land on his feet and Cig can be instrumental in helping him do just that. - but elsewhere.

100% agree

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40 minutes ago, eddy4iu said:

I will admit that I don’t quite understand what that means.

I'd guess it works like this:  B1G gets $2B now (~$110M per school).  In exchange the investor gets some portion of future B1G media rights, sponsorships, licensing, etc. such that they get a return on their investment.  Basically, more money for the conference now and less later.  Is that a good deal?  I have no idea, would depend on the all the deal specifics and what the next media deal looks like blah blah blah.

One part of this I definitely like is this would extend the B1G grant of rights through 2046, which keeps the conference together for a long time and reduces the chances of the big football schools forming some "super league."  Though personally I never thought that was likely.

Whatever happens, the B1G is a good place to be.  Fire up that stadium renovation Scott!

 

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Sounds like they will get a huge cash in fusion to make upgrades immediately but then that group will get a cut of Revenue going forward to make a lot of sense to me if they see the opportunity to seize control from the SEC

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7 hours ago, cbp4iu said:

Very wary of this. Private equity seems to make everything it touches worse through the "profit over everything" vulture capitalism. The model itself doesn't sound horrible on paper but I'm not sure I buy the spin team's PR. 

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If I had a guess on why this investment is being considered, as I am sure many people noticed, athletic depts are struggling with the introduction of rev share, in addition to athletic dept donors needing to focus on paying players NIL over the past few years, which to some extent reduces their athletic dept donations.  Or put differently, athletic depts one way or another now have to, depending on the school, fund $25-50M per year in player comp costs they didn't have four years ago.  That is a lot!  Plus think about how much coaches cost nowadays -- for example the IU football staff now costs $12M+ more per year than it did under Allen.

Some examples of financial pressures at ADs: IU AD took a $30M loan from IU to help with the football staff investment (note we have donations secured to pay that back).  Last year the Ohio State AD recorded a $38M loss.  Michigan is projecting a $27M loss this year.  The Washington AD is broke because they spent too much on their stadium reno and they won't have a full media rights share for awhile.  There are stories like this at many schools.  Athletic depts are often not very financially disciplined...

Media rights have a lot of room to increase, so most schools will be fine as media rights revenue goes up over the next few years, including in my view IU.  But, this $2B would help fix a lot of the near term financial pressure a lot of schools have.

I don't really care if this $2B deal happens or not.  Private equity is not necessarily bad.  Some firms are very good, some are mediocre, some are bad.  You only hear about the bad.  Petetti isn't dumb and they have three competing investors with no need to do a deal, so I'd be optimistic the terms are favorable to the B1G, but I can only guess.

One positive of this deal happening is it would probably cause SEC-land to panic, which would be funny: $2B to the B1G and $0 to the SEC?!  The SEC is broke!

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7 hours ago, BtownStrength said:

Very wary of this. Private equity seems to make everything it touches worse through the "profit over everything" vulture capitalism. The model itself doesn't sound horrible on paper but I'm not sure I buy the spin team's PR. 

I share your skepticism about private equity in college sports. But, private capital does not necessarily equate to private equity. PE is a subset of private capital (the most popular by far!). All PE is a form of private capital, but not all private capital is PE in the way we traditionally think of it. 

IMO the important part of the reporting is the bit below, because it means they're not doing something crazy like a leveraged buyout and restructuring of all the school's athletic departments.

"The setup being discussed, sources said, is that this will essentially be the formation of a new commercial entity within the Big Ten that would house all revenue generation such as media rights, sponsorships and league revenue streams. The working title for the new entity is Big Ten Enterprises, sources told ESPN.

The private capital company would get money back through the new entity through annual distribution in proportion to its financial stake. The Big Ten will essentially have 20 equity shares, comprising the 18 schools, the league and this investor. Sources told ESPN that this setup eliminates the need to give an outside investor a specific portion of control over decisions or board seats, something that college presidents have generally been uncomfortable with.

"Think of it this way -- the conference is not selling a piece of the conference," a league source told ESPN. "Traditional conference functions would remain 100 percent with the conference office -- scheduling, officiating and championships. The new entity being created would focus on business development, and it would include an outside investor with a small financial stake."

The example the article gives is that this new entity would help with something like negotiating jersey patch sponsorships, and that doing that for 18 schools is going to get a better price than doing it individually.

I like the way it's set up... get an infusion of cash to modernize and upgrade. Pay back a small piece of a larger pie over time. 

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