Private Equity Funding of College Sports

[oldude]

In response to the final court decision requiring colleges to pay D1 athletes, UCLA has just joined Penn State in securing private equity funding of up to $500 million from a sports management company by the name of Elevate. Despite losing millions every year, UCLA’s athletic program is one of the highest funded programs in the country.

While private equity funding may sound like a viable way around the challenge posed to large universities by the requirement to pay athletes directly, there are several serious concerns with this option. Private Equity companies are not funding universities like alumni, to see their alma mater win championships. Private Equity firms are in it to make money. Typically, such companies squeeze the blood out of a stone to earn a profit. What that means to the UCLA & Penn St athletic departments remains to be seen.

 

[Skeets]

In response to the final court decision requiring colleges to pay D1 athletes, UCLA has just joined Penn State in securing private equity funding of up to $500 million from a sports management company by the name of Elevate. Despite losing millions every year, UCLA’s athletic program is one of the highest funded programs in the country.

While private equity funding may sound like a viable way around the challenge posed to large universities by the requirement to pay athletes directly, there are several serious concerns with this option. Private Equity companies are not funding universities like alumni, to see their alma mater win championships. Private Equity firms are in it to make money. Typically, such companies squeeze the blood out of a stone to earn a profit. What that means to the UCLA & Penn St athletic departments remains to be seen.

As everyone in Connecticut knows, private equity is a disaster for hospitals. I would be very wary of selling UConn sports to a private equity company. If there was ever a "wait and see" situation, this is it.

 

[oldude]

The absolute worst abuse of the private equity model involves the purchase of 1,000+ mobile home parks from sole proprietors. These parks are typically home to senior citizens who are on fixed incomes. They own their mobile homes, but not the land underneath. They typically pay a modest monthly fee to the mobile park owner for maintenance and fees.

Once private equity firms take over, they start jacking up rental rates to the point where the residents are forced out. That’s no picnic as the cost to move a mobile home runs anywhere from $30-$50 K depending on the size of the mobile home and the distance moved.

Once the private equity firms have chased all the seniors away, they sell the former mobile home parks to commercial developers for a tidy profit.

Private Equity = sharks & snakes……