Florida State Taps J.P. Morgan For Institutional Money as Talks Advance With PE Firm

[FfldCntyFan]

To dissolve the ACC as a North Carolina non profit...a majority vote.

As the B1G just went to 18 far sooner than they initially planned can any current ACC schools that appeared to be candidates for the B1G be confident that the B1G will take them on immediately?

Does ND get a full or partial vote?

How does Wake, Syracuse, BC & Pitt vote?

Can you be sure that Duke, NC State, & Va Tech would vote to dissolve?

Even with the new rumor I'm not sure Louisville would be willing and I can see Ga Tech sitting on the fence.

I'm confident that FSU, Miami and Clemson would leave in a heartbeat if possible but is there a better home available for them right now?

I'm very confident that both UVA and UNC will get phone calls seconds after the announcement but are you sure they would be in a rush to end a conference that they started?

I also imagine that if the conference dissolves, the NCAA would get to keep any undistributed credits from prior tournaments (as the conference that they would be due to no longer exists).

This could be a treacherous path.

 

[JohnFSilver]

Back in the old days of Jan 1 bowl games and voted on titles, I never imagined things would get this insane. I really miss being able to just watch games and not constantly hear about money.

That bowl game and vote was so much better for the sport. They ruined the sport.

 

[nelsonmuntz]

Jeez...where did you go to law school ? If a PE is providing a loan, it won't illucidate that it specifically to be used to break a GOR...It will just provide the school the money...and that might make that possible.

A long, long stretch to Tortious Interference.

I know a company that lost a tortious interference suit. All it takes is participation or inducement in a plan to break the contract.

FSU would have to negotiate a buyout first, but the conference has no incentive to sell the media rights back. Every discussion of breaking the GOR ends at the same point. The ACC doesn’t need to do spit.

 

[billybud]

Yeah...the GOR and FSU will come to a head butt...

Adelson said it well....

 

[huskymedic]

Yeah...the GOR and FSU will come to a head butt...

Adelson said it well....

Guess we're about to find out how much "smart folks" think this GOR is worth...

 

[billybud]

And it doesn't take much acumen to see what is coming.

This year, FSU has a good team and can compete.

But the future....when programs are getting $30-50 million more per year.

That money will free up booster money to put into NILs....buying the best athletes.

 

[billybud]

If you focus the free up of booster money that the $30-50 million infusion will give into NIL, you can purchase 3-4 top basketball guys, a good QB and receivers, etc.

 

[ctchamps]

As the B1G just went to 18 far sooner than they initially planned can any current ACC schools that appeared to be candidates for the B1G be confident that the B1G will take them on immediately?

Does ND get a full or partial vote?

How does Wake, Syracuse, BC & Pitt vote?

Can you be sure that Duke, NC State, & Va Tech would vote to dissolve?

Even with the new rumor I'm not sure Louisville would be willing and I can see Ga Tech sitting on the fence.

I'm confident that FSU, Miami and Clemson would leave in a heartbeat if possible but is there a better home available for them right now?

I'm very confident that both UVA and UNC will get phone calls seconds after the announcement but are you sure they would be in a rush to end a conference that they started?

I also imagine that if the conference dissolves, the NCAA would get to keep any undistributed credits from prior tournaments (as the conference that they would be due to no longer exists).

This could be a treacherous path.

I’m sure the remaining schools in the PAC did not believe today’s events would happen last week.

 

[FfldCntyFan]

I’m sure the remaining schools in the PAC did not believe today’s events would happen last week.

Yeah, but it wasn't as if Oregon State, Washington St and Cal voted to allow it to happen.

 

[ctchamps]

Yeah, but it wasn't as if Oregon State, Washington St and Cal voted to allow it to happen.

The BIG was forced to make a move because a desperate Oregon and Washington could have gone to the B12 and probably threatened them with that action.

No one can be certain of outcomes when events which have taken place this week unfold.

It’s possible the SEC is contemplating accelerating their timetable. I’m not sure all the dominoes have fallen yet.

 

[The Yakk]

A PE firm won't try to break it. They'll work out a value to buyout of it, offer a lesser number to the ACC, negotiate to some agreement and then overcharge FSU for their trouble.

Even worse.

FSU will likely agree that in the event the private equity choads are not made whole from AD revenues, the choads will get an interest in FSU's other revenues. FSU will agree to cut academic expenses and raise tuition to pay them back. FSU students are about to become chattel.

No different than any other firm the PE idiots purchase and ruin.

 

[hoopsfan22]

Sounds like something they'd do in Florida.

 

[businesslawyer]

I wonder if any of the decision makers at these schools understand how PE firms work.

Before they hand over a penny of the $300 million to FSU there will be thousands of hours devoted to how this investment will give the firm a desirable return (with the federal funds rate at 5.5% I imagine they'll be looking at a minimum return between 16%-18%) with every potential source of income listed in full detail.

My question: is this a loan or is FSU selling something to the PE firm?

If this is a loan, how does FSU pay the required return and the principal back (more of a concern if rates drop to where they were a couple years ago)?

If the PE firm is purchasing something, what is it that they are purchasing?

This could become quite dangerous for a not for profit, state run institution for higher education.

So I'm speculating, but I'm speculating as one who works with PE firms for a living.

I would think that FSU would create a subsidiary to which it transfers the rights to all FSU Athletic Department revenue. It then sells some percentage of that new subsidiary to PE for a purchase price. There is a deal on what the funds put in by the PE Group will be used for, material changes to running the Athletic Department will have to be approved by the PE firm, but the University will retain ultimate control, and then going forward the PE firm takes its share of the revenue pie. (And the PE firm would pay taxes on is share of the annual income, but the university, because it's a non-profit, would not.)

Something like that, I'm guessing, but it's pure speculation.

 

[DarthGrumpy]

It's more like LIV Golf. The only reason you need the PE $ is the GOR and conference buyouts have to be funded. But the PE people would take a portion of the TV deal. The Conference wouldn't really just be a partnership of schools, it would be privately owned. Schools would lose a lot of control.

The lawyers will make a lot of money with this idea and 99% of 'student atheltes' will be screwed. Bowl game in Dubai anyone?

 

[businesslawyer]

The lawyers will make a lot of money with this idea and 99% of 'student atheltes' will be screwed. Bowl game in Dubai anyone?

Stop making a bad thing sound so damn appealing!

 

[FfldCntyFan]

So I'm speculating, but I'm speculating as one who works with PE firms for a living.

I would think that FSU would create a subsidiary to which it transfers the rights to all FSU Athletic Department revenue. It then sells some percentage of that new subsidiary to PE for a purchase price. There is a deal on what the funds put in by the PE Group will be used for, material changes to running the Athletic Department will have to be approved by the PE firm, but the University will retain ultimate control, and then going forward the PE firm takes its share of the revenue pie. (And the PE firm would pay taxes on is share of the annual income, but the university, because it's a non-profit, would not.)

Something like that, I'm guessing, but it's pure speculation.

I get that. One sticking point however is how will the PE firm get their return on the proposed $300 million cost to buy out of the GOR? PE firms don't throw around nine figure dollar amounts to be nice.

 

[businesslawyer]

I get that. One sticking point however is how will the PE firm get their return on the proposed $300 million cost to buy out of the GOR? PE firms don't throw around nine figure dollar amounts to be nice.

They will have to be projecting a certain annual return on revenues, maybe with a return of capital in 20 years. Who knows. You really have to see the deal -- there is no limit on how it could be structured. But I can tell FSU this -- with Private Equity there is no free lunch, and the schools will only make money on the deal if there is a way for PE to run the revenue stream in a much better way than FSU was able to.

 

[FfldCntyFan]

They will have to be projecting a certain annual return on revenues, maybe with a return of capital in 20 years. Who knows. You really have to see the deal -- there is no limit on how it could be structured. But I can tell FSU this -- with Private Equity there is no free lunch, and the schools will only make money on the deal if there is a way for PE to run the revenue stream in a much better way than FSU was able to.

I bolded the pertinent parts. I'm not sure that FSU officials realize this and I am very confident that few of their fans realize this but PE firms won't play games. If they throw that kind of money around they are expecting a very good return. As I pointed out earlier, with the current fed funds rate (5.5%) they'll likely be looking at a return of triple that to get involved.

In a half dozen years FSU's whining could well be that in spite of the massive payouts their athletic departments are getting from their new conference, they aren't receiving enough money to stay afloat.

 

[HuskyHawk]

They will have to be projecting a certain annual return on revenues, maybe with a return of capital in 20 years. Who knows. You really have to see the deal -- there is no limit on how it could be structured. But I can tell FSU this -- with Private Equity there is no free lunch, and the schools will only make money on the deal if there is a way for PE to run the revenue stream in a much better way than FSU was able to.

Exactly. The Dodds article suggested that doing this for FSU would be pointless. They have to sell those media rights and so they’d do that for multiple schools that are perceived to be more valuable than the median member of the conference they are in. Essentially a way for those schools to break away from subsidizing the Wake Forests of college sports. A collective would be formed to sell those rights like a conference. It’s ultimately an arbitrage play.

 

[billybud]

FSU's Seminole Boosters are pretty innovativr...they parlayed some donared property into a development called College Town...Apartments, a hotel, shopping and eating establishments, bars, etc.

Partnered with a development company.

Eat, Drink, Shop & Stay | FSU Collegetown

Come eat, drink, and shop at the many retail shops in FSU Collegetown.

fsucollegetown.net

 

[traitor71]

Except the corruption that took place by local officials running those games was about money. Lots of it. What you didn’t have back then was the internet with its twenty four seven in your face exposure that you have today.

The people running the Liberty Bowl, or whatever, making some money didn't take away from the game itself. What we have now is destroying rivalries, leagues, and any sort of competitive balance. It's not even in the same universe as what we have now.

 

[Drew]

 

[upstater]

This reminds me of the great deals Goldman Sachs used to give nations in financial distress. It would swap their debt for immediate payouts, while taking a future cut in the form of a balloon payment. The countries ended up much worse for it, but they were very rich for about a year or two.

 

[Vowelguy]

If I were filthy rich and an ACC fan, I'd be buying up billboards all around Tallahassee highlighting all of their many failures this past year, and titling each one "Still think you're too good for us?"

 

[noeynox]

Talks reportedly stalled when FSU folks asked, "what does recoup your investment mean?"