The Private Equity College Sports Hellscape Thread

[huskymedic]

 

[upstater]

Private Equity sucks the joy out of youth sports. One firm that bought up youth hockey forbids parents from recording their kids unless the parents pay a monthly subscription fee.

Wall Street Is Paywalling Your Kids’ Sports

Private equity-owned Black Bear Sports Group is buying up youth hockey — and icing out parents who want to record their kids’ games.

www.levernews.com

 

[JohnFSilver]

Private Equity is gonna want to make money and get ROI. This is such a bad idea.

 

[JohnFSilver]

Private Equity sucks the joy out of youth sports. One firm that bought up youth hockey forbids parents from recording their kids unless the parents pay a monthly subscription fee.

Wall Street Is Paywalling Your Kids’ Sports

Private equity-owned Black Bear Sports Group is buying up youth hockey — and icing out parents who want to record their kids’ games.

www.levernews.com

How about buying those high school streams where it makes FloSports look like a Scorese film?

Pay $10, and it doesn't work. Newspapers is a good example.

The perfect newspaper customer for private equity is one who pays for the subscription but actually doesn't get delivery or or go the website.

It's the same for almost everything in PE and content. They aren't in the business of taking less money for customer experience

 

[Kolumbo]

Private Equity sucks the joy out of youth sports. One firm that bought up youth hockey forbids parents from recording their kids unless the parents pay a monthly subscription fee.

Wall Street Is Paywalling Your Kids’ Sports

Private equity-owned Black Bear Sports Group is buying up youth hockey — and icing out parents who want to record their kids’ games.

www.levernews.com

Here's an idea. Maybe the PE would consolidate all of the various social media sites and charge for that. Instead of programs each having multiple message boards and social media pages, they all get rolled into one PE/Conference controlled app. If you want to follow your team with news articles, message boards, facebook and twitter posts, you need to subscribe. I would imagine the revenue generated would be significant.

It's irritating when I search for another programs message board and some are only accessible to subscribers. The benefit is it would be easier to find message boards. Imagine a very active conference message board where not only are we arguing with each other, but talking smack with our competitors. The Big East board would include the Boneyard and the BlueJay Underground.

 

[WrenchFan69]

It has begun

 

[CL82]

They created a for-profit entity, which houses "athletic personnel". So pretty much this model surrenders, any pretense that college athletics are anything other than professional sports. The article says they're the six schooled, give or take, to have done this, but the first two partner within an outside equity firm.

 

[huskymedic]

 

[JVN]

This could be favorable for UConn. I remember reading (somewhere?) that RedBird was advising the B12 that inviting UConn would add value to the conference.

 

[Hoophound]

This could be favorable for UConn. I remember reading (somewhere?) that RedBird was advising the B12 that inviting UConn would add value to the conference.

If that’s the case, it will happen very soon. I doubt they’d work out a deal like that and then add schools shortly after. We’d probably be in the formula right now.

 

[CL82]

If that’s the case, it will happen very soon. I doubt they’d work out a deal like that and then add schools shortly after. We’d probably be in the formula right now.

We'll see. I have mixed feelings whenever we talk about joining the big 12. A P4 membership for us is absolutely critical financially, so obviously I'm excited about the possibility, on the other hand, I like playing teams that are drivable road games with which we have some modicum of history. But, on the other hand, annual home in aways with Kansas would be a blast.

 

[Hoophound]

We'll see. I have mixed feelings whenever we talk about joining the big 12. A P4 membership for us is absolutely critical financially, so obviously I'm excited about the possibility, on the other hand, I like playing teams that are drivable road games with which we have some modicum of history. But, on the other hand, annual home in aways with Kansas would be a blast.

I’m very torn too but honestly, I think the ACC is a total drag. I don’t watch any ACC sports except for the occasional Duke (I like their improvement) or FSU (family fans) football game.

Their basketball is dreadful most of the time outside of Duke. I’d love to see the ACC and Big East merge and trim some serious fat on both sides in the process. Short of that, I think I prefer the B12.

 

[jostar1]

Was reading on CSNBBS that Will Weatherford is the Managing Partner of Weatherford Capital and is the chairman of the USF Board of Trustees. He pushed for the new USF stadium.

 

[Forte]

The takeaway from all of this is that the Big 12 is attempting to position itself for meaningful revenue sharing for top talent in both basketball and football, in an effort to remain relevant alongside the SEC and Big Ten. The divide has already begun, and the Big East as a whole won’t be able to keep pace. Even the Big East president has acknowledged this reality.

The future feels fairly telling for the conference. CBS Sports Network could ultimately end up locking up a larger share of future Big East conference games through an expanded partnership as the media landscape continues to shift. I’ve always loved the Big East and the tradition at MSG, but it will be interesting to see what tune the “UConn belongs in the Big East” crowd is singing a few years from now.

 

[How Sway?!]

This could be favorable for UConn. I remember reading (somewhere?) that RedBird was advising the B12 that inviting UConn would add value to the conference.

All RedBird is doing is a providing a line of credit to all the schools, they are not really investing and so they don't have any decision power. The closest thing to decision making power they are going to get is that they will be the preferred partner for business moving forward.

 

[JVN]

All RedBird is doing is a providing a line of credit to all the schools, they are not really investing and so they don't have any decision power. The closest thing to decision making power they are going to get is that they will be the preferred partner for business moving forward.

That's why I used the word "advising."

 

[greenday61892]

I’m very torn too but honestly, I think the ACC is a total drag. I don’t watch any ACC sports except for the occasional Duke (I like their improvement) or FSU (family fans) football game.

Their basketball is dreadful most of the time outside of Duke. I’d love to see the ACC and Big East merge and trim some serious fat on both sides in the process. Short of that, I think I prefer the B12.

Also there's the sword of damocles hanging over the ACC that is their GoR expiration and I do NOT want to be stuck in another OBE situation.

 

[Kolumbo]

UConn Basketball has already played in packed arenas including Allen Fieldhouse, MSG, PBA, TD Garden. These games blow away many of the other programs in P4 conferences. Meanwhile all college football talk is about the coaching carousel, the portal, opt outs, and scandal. Adding UConn to either of the 2nd tier P4 conferences is a no brainer and I would think the private equity folks know they can squeeze a lot more money out of hoops. Why are Arizona and Kansas playing UCF when they could be playing UConn every year.

 

[huskymedic]

 

[jostar1]

All RedBird is doing is a providing a line of credit to all the schools, they are not really investing and so they don't have any decision power. The closest thing to decision making power they are going to get is that they will be the preferred partner for business moving forward.

They aren't just providing a line of credit. According to the statement released by the Big 12,

"Redbird will work with the Conference to identify complementary investment opportunities inside and outside of the collegiate athletics ecosystem that will create revenue streams and long-term asset appreciation".

So let them identify UConn as a good investment.

 

[How Sway?!]

They aren't just providing a line of credit. According to the statement released by the Big 12,

"Redbird will work with the Conference to identify complementary investment opportunities inside and outside of the collegiate athletics ecosystem that will create revenue streams and long-term asset appreciation".

So let them identify UConn as a good investment.

Hate to break it to you but RedBird is literally talking about investment, i.e. investing into businesses, not about adding schools.

 

[Hoophound]

Hate to break it to you but RedBird is literally talking about investment, i.e. investing into businesses, not about adding schools.

I don’t believe it’s that simple. They were investigating a deal with Verizon Wireless for the B12. They wanted UConn for the NY presence. The business opportunities are a variety of things including marketing deals with companies that want exposure to B12 audiences. The Northeast brings value. That is good for UConn. It won’t help Colorado St.

 

[ZooCougar]

UConn Basketball has already played in packed arenas including Allen Fieldhouse, MSG, PBA, TD Garden. These games blow away many of the other programs in P4 conferences. Meanwhile all college football talk is about the coaching carousel, the portal, opt outs, and scandal. Adding UConn to either of the 2nd tier P4 conferences is a no brainer and I would think the private equity folks know they can squeeze a lot more money out of hoops. Why are Arizona and Kansas playing UCF when they could be playing UConn every year.

You need some non buy game scrub on your schedule so you don’t go 15-15.

But yeah, the idea that crap like Cincy, UCF and Rutgers just to name a few is farcical.

 

[nelsonmuntz]

It has begun

A straight up equity investment looks so stupid for Otro that I can't begin to guess what the structure must be to justify it. My prediction is that both Utah and Otro will regret doing this within 5 years.

 

[B1GEast]

A straight up equity investment looks so stupid for Otro that I can't begin to guess what the structure must be to justify it. My prediction is that both Utah and Otro will regret doing this within 5 years.

They will not regret it at all they'll instantly have NIL funds to compete with the SEC and B1G.

The only way they fail is execution. They better have the right coaches, offensive and defensive that money can buy, cause soon they'll have the athletes

It's going to spill over into basketball and other sports. Give them a year or two, they'll be rolling.

There real problem is how will other conference teams deal with this equity advantage.

 

[FfldCntyFan]

They will not regret it at all they'll instantly have NIL funds to compete with the SEC and B1G.

The only way they fail is execution. They better have the right coaches, offensive and defensive that money can buy, cause soon they'll have the athletes

It's going to spill over into basketball and other sports. Give them a year or two, they'll be rolling.

There real problem is how will other conference teams deal with this equity advantage.

There really is no such thing as free money. Private equity normally have a substantially higher return on their investments than most asset management firms and seldom get a deal off the ground without multi-tier returns with a low end greater than 10% and a high end between 20%-25%.

When a firm advances money, they expect a return close to what would be expected from an advance in a credit card, without any of hhe risk involved. They aren't throwing money around out of kindness.

When the bill comes due I don't think this will be viewed in a positive light by those who are getting upfront cash on this deal.

 

[B1GEast]

There really is no such thing as free money. Private equity normally have a substantially higher return on their investments than most asset management firms and seldom get a deal off the ground without multi-tier returns with a low end greater than 10% and a high end between 20%-25%.

When a firm advances money, they expect a return close to what would be expected from an advance in a credit card, without any of hhe risk involved. They aren't throwing money around out of kindness.

When the bill comes due I don't think this will be viewed in a positive light by those who are getting upfront cash on this deal.

The private equity is going to monetize everything fans experience

Ticketing, pricing etc
Concessions
Corporate sponsorships
Brand licensing and trademarks
Fan engagement

I should clarify, it is a risk for the equity but for Utah it's a win

So my response is changed a bit. It's not win win

The equity firm might make a return, but in order to achieve this, the University has to turn that money into winning programs and win big.

 

[FfldCntyFan]

PE firms are far more risk averse than most people realize. They are also very good at presenting something as a win-win, only to have both wins end up in the PE firm's hands.

Where Utah should have an advantage over most entities that get enticed by PE dollars is that it is a state institution and when reality sets in (and ir becomes apparent that the cost far exceeds the benefit) the state may interfere.

Where i would however be most concerned is that Utah has the most lax usury laws in the country, which is why many higher interest lenders operate out of Salt Lake City.

 

[nelsonmuntz]

The private equity is going to monetize everything fans experience

Ticketing, pricing etc
Concessions
Corporate sponsorships
Brand licensing and trademarks
Fan engagement

I should clarify, it is a risk for the equity but for Utah it's a win

So my response is changed a bit. It's not win win

The equity firm might make a return, but in order to achieve this, the University has to turn that money into winning programs and win big.

Increasing prices will reduce the number of customers. Demand is elastic. And most schools have seen modest declines in attendance over the last 10+ years without big ticket price increases.

College athletics is a mature market where most of the price increases have already occurred. And if there are more price increases to push through, Utah didn't need the PE firm's involvement to do it. Now Utah has a partner that is expecting a 20%+ return on its investment, and I don't see where that is coming from other than out of Utah's pocket. Or Otro takes a bath on this investment. I do not see a magical third option.

 

[nelsonmuntz]

There really is no such thing as free money. Private equity normally have a substantially higher return on their investments than most asset management firms and seldom get a deal off the ground without multi-tier returns with a low end greater than 10% and a high end between 20%-25%.

When a firm advances money, they expect a return close to what would be expected from an advance in a credit card, without any of hhe risk involved. They aren't throwing money around out of kindness.

When the bill comes due I don't think this will be viewed in a positive light by those who are getting upfront cash on this deal.

Otro is an equity fund, so they are looking for 20%+ and 2.5x their money.