OT: Big Ten discussing $2 billion private capital deal

[HooperScooper]

Remember when college sports were just students playing sports? Yeah, either do I. Lol

The Big Ten is in discussions about a private capital deal that would infuse at least $2 billion into the league and its schools, sources told ESPN on Wednesday.

The discussions include a 10-year extension of the league's grant of rights until 2046, sources told ESPN, which would ensure long-term stability in the Big Ten.

Sources: Big Ten mulling $2B private capital deal

The Big Ten is in talks about a private capital deal, which includes a 10-year grant of rights extension through 2046, that would infuse at least $2 billion into the league and its schools, sources told ESPN.

www.espn.com

 

[Flipside]

College sports were never really amateur

www.extrapointsmb.com

 

[Viet Vet]

Adapt or perish.

 

[B1GEast]

Really surprised they don't have a tiered structure around payouts.

 

[UConnTrumbull]

Apparently Ohio St and Michigan are not totally onboard. Not sure if that matters.

 

[Flipside]

 

[pj]

It doesn't seem like there should be competitive reasons for the highest-revenue league to need to mortgage its future to bring even more money in now.

A hard deal to understand.

 

[CTFAN4LIFE]

It doesn't seem like there should be competitive reasons for the highest-revenue league to need to mortgage its future to bring even more money in now.

A hard deal to understand.

Not all that surprising given the huge increased operating costs for athletic departments given revenuesharing, student demographic trends, reduced federal research grants, etc. and a desire to invest in athletic departments in order to grow future top-lines. Athletic departments are basically a marketing department that fuels donations and student applications.

 

[BullDawg]

Wondering about the role of ROI for private equity investors. Seems like a pig in a poke opportunity.

 

[husky8273]

A hard deal to understand.

agreed - how do the PE funds cash out in 5-7 years?

 

[UConnJim]

agreed - how do the PE funds cash out in 5-7 years?

Here is the math. Take the cash upfront, invest it, and then pay a negotiated return to PE, say 8%. Then PE leverages that to get a relatively risk free 12%. How does PE cash out? If they want, they can then sell the deal to another PE group, a group of high net worth individuals, or a family office. There is great demand for cash flow deals.

Personally, I don't understand why the Big 10 needs the money as they are making more than everybody except the SEC. And, the Big 10 endowments dwarf the SEC with the exceptions of Texas, Texas A&M, and Vanderbilt.

 

[superjohn]

Private Equity will be the final nail in the coffin and it's just around the corner.

Some people will celebrate it, we're living in strange times.

 

[HooperScooper]

It doesn't seem like there should be competitive reasons for the highest-revenue league to need to mortgage its future to bring even more money in now.

A hard deal to understand.

Agree. You're selling yourselves to the devil bringing in private equity. They'll regret this later on. The deal must give the PE certain decision making power and I'm sure most people in the B1G aren't going to like when decisions are made that they don't like. PE doesn't make $2 billion investments without decision making power.