The Private Equity College Sports Hellscape Thread

[JMick]

With the looming $20m+ salary floor coming against the back drop of decreasing student population, wouldn't the Big12 be the expected conference to use private money to invest and have it be via a conference tv/media network? It would seem that of all the power conferences, they'd stand to drive the most accretive revenue with the launch of a Big12 Network. And of course, UConn would be a sugar plum brand of a new Network and it's penetration into the lucrative northeast corridor.

That's basically been the rationale for why Yormark and their consulting group find us interesting. There was chatter about sponsorships and potential PE being interested in a more national brand for the Big XII

I don't think PE makes sense in college sports but I do think selling off naming rights and tie ins with sponsors makes a ton of sense.

 

[FfldCntyFan]

Can we get back to the regularly scheduled programming of key tweets or stick with the scintillating commercials around the pros and cons of PE?

Good point. We don't want this thread to get too long and cumbersome.

 

[NowInStorrs]

Good point. We don't want this thread to get too long and cumbersome.

Too heavy, too light, too black or too white, too wrong or too right. Today or tonight, cumbersome.

 

[JohnFSilver]

PE is the absolute worst kind of money to take. It is highly exploitive because it is structured to ensure they are 1st money out on any side of the outcome with a guaranteed minimum return of 2x (sometimes 3x and even 4x) plus an interest or dividend accrual. If the company does well they make even more with participation on the upside. The only way a PE deal works for the owners of a business is if the business can generate more value than the cost of capital, which has to happen at a ferocious growth rate. This is how PEs blow-up companies. They mandate fast growth (scaling) and most break while a few do very well which covers their overall return. It’s a we win big if you win, and if you lose, we still win. It’s actually poisonous to free enterprise and PEs and Hedge funds are the reasons driving the increasing wealth divide. They latch on and control new wealth creation, and gamble with it. The unicorn phenomena is a symptom of this behavior. On the whole PEs are run by greedy, amoral people steeped in worshipping money through B schools and social clicks.

I love the show Industry. That’s what Happened this year with Jon Snow’s character.

Anyone who has dealt with bankers laughs their ass off. While it isn’t that simple, it is funny how big a dipstick people are that get thrown gobs of money.

 

[The Yakk]

PE firms are mean. Boo hoo

LOL I get that you're tired of the PE discussion and want it to stop, but you are missing the point a little bit.

PE firms are doing exactly what they are supposed to do. There is no "meanness" about it at all; given the rules of our capitalistic system, it is only natural they should exist and do what they do.

The question here is, why exactly should a not-for-profit educational institution, or athletic conference, let them into the tent?

At first, the PE defenders talked about how these firms would improve the business of college sports and bring more money for everyone.

When that fantasy was blown up, the justification switched to "Well, the colleges are already greedy so the greedy PE firms will be a natural partner for them."

But that makes even less sense than the altruistic-investor fantasy. Yes, the colleges have been made greedy by the massive amounts of money coming to college sports; and yes, the behavior of the P2 and schools like FSU could well kill the golden goose, but none of that explains why financial firms should be allowed in to grab some of the cash with both fists. The money will not stop coming after the schools tell Wall Street to take a hike.

In the end, I doubt there will be any deals done that are of any consequence. I wouldn't put it past some of the school presidents to sign up for the grift; their heads can be way up their own asses. But the Boards of Trustees usually have people who are sufficiently financially astute to avoid these deals.

Here is good rule to live by: if a college ever does a deal like this, do not send your kids there.

 

[The Yakk]

Anyone who has followed CR knows that the customer is already not anywhere close to the center of the business.

College football has become all about profit. If what many of you anti-PE folks say is true, good. Let the PE piranhas come for their pounds of flesh, let them tear apart the system, let it blow up to smithereens, and let college football start all over again. Everyone wins the hard way.



"On the whole PEs are {/ college football is} run by greedy, amoral people steeped in worshipping money through B schools and social clicks." It's a perfect match really.

And for those still insisting on positive results:

Our Portfolio

Everything we do is designed to build better businesses, both for today and for tomorrow

www.cvc.com

It is hilarious to see how your defense of the PE deals has changed over time from "they are going to help everyone make money" to "it's a greedy system and that makes them the perfect partner".

Don't worry Kolumbo, Bain Capital is probably going to hire you for that job. No need to keep auditioning for it here.

 

[The Yakk]

Which is why air travel is about the safest mode of transportation in the world.

LOL, swing and a miss.

Yes, arguably, air travel is the safest form of transportation in the world.

That's completely non-sequitor to the discussion here, which is: did the financial transaction and subsequent takeover of Boeing by bean counters make their products more reliable, or less reliable.

I have no idea whether your comment was meant as some kind of defense of PE deals, or just a random zinger. Either was, you should try harder.

 

[Kolumbo]

It is hilarious to see how your defense of the PE deals has changed over time from "they are going to help everyone make money" to "it's a greedy system and that makes them the perfect partner".

Don't worry Kolumbo, Bain Capital is probably going to hire you for that job. No need to keep auditioning for it here.

I think it's hilarious how you interpret things when losing an argument. 1. I never said they were going to help everyone make money. I did say it's worth exploring because that could be the case. B. Greed is good. Don't you know that Joel? Very often greed and making money go hand in hand. I guess if you are losing an argument one course of strategy is to make things up.

 

[The Yakk]

I think it's hilarious how you interpret things when losing an argument. 1. I never said they were going to help everyone make money. I did say it's worth exploring because that could be the case. B. Greed is good. Don't you know that Joel? Very often greed and making money go hand in hand. I guess if you are losing an argument one course of strategy is to make things up.

I take it back. There is no way Bain Capital would ever let you in the door. There is a certain level of reading comprehension and basic rational thinking that even the most craven PE firm will require.

But take heart, there is perhaps a future for you issuing drivers licenses at the DMV.

 

[uconndogs]

LOL, swing and a miss.

Yes, arguably, air travel is the safest form of transportation in the world.

That's completely non-sequitor to the discussion here, which is: did the financial transaction and subsequent takeover of Boeing by bean counters make their products more reliable, or less reliable.

I have no idea whether your comment was meant as some kind of defense of PE deals, or just a random zinger. Either was, you should try harder.

My comment wasn’t meant to assess PE, it simply addressed YOUR comment on safety.

 

[gsmooth]

It is hilarious to see how your defense of the PE deals has changed over time from "they are going to help everyone make money" to "it's a greedy system and that makes them the perfect partner".

Don't worry Kolumbo, Bain Capital is probably going to hire you for that job. No need to keep auditioning for it here.

LMAO. Reading all of these posts about private equity, especially by you, all I kept thinking about was Bain Capital and Mitt Romney, Gordon Gecko himself. And the question I kept asking about during his time at Bain Capital was "did any company prosper that worked with and took money from Bain Capital?"

 

[The Yakk]

LMAO. Reading all of these posts about private equity, especially by you, all I kept thinking about was Bain Capital and Mitt Romney, Gordon Gecko himself. And the question I kept asking about during his time at Bain Capital was "did any company prosper that worked with and took money from Bain Capital?"

LOL, Bain just happens to be on my mind recently because they have figured out a way to raid money from mutual insurance companies. Not an easy thing to do, given the level of regulation and scrutiny on these companies' balance sheets.

The Mutual Group | Bain Capital Insurance

The Mutual Group is a member-based insurance services platform that provides a full suite of solutions to boost the operational efficiency and scalability of mutual insurance carriers, including deploying permanent capital to help ambitious mutuals thrive. The platform was formed through the...

www.baincapitalinsurance.com

To describe the scheme in simple terms: Bain enters into service agreements with a bunch of these companies; the idea is that by combining the companies to create scale, Bain can do all the insurance stuff (claims, underwriting, investments etc.) much cheaper.

Then they use the fees they charge in the service agreements to bleed the companies dry, which they could never do through the typical heavily-regulated surplus note investments.

Some of these mutuals are clients of mine; to their credit, none of my clients have any interest in the scam. And they didn't need me to tell them; they saw through the con immediately.

 

[uchusky32]

LMAO. Reading all of these posts about private equity, especially by you, all I kept thinking about was Bain Capital and Mitt Romney, Gordon Gecko himself. And the question I kept asking about during his time at Bain Capital was "did any company prosper that worked with and took money from Bain Capital?"

No, asked Toys R US.

 

[gioff2323]

LMAO. Reading all of these posts about private equity, especially by you, all I kept thinking about was Bain Capital and Mitt Romney, Gordon Gecko himself. And the question I kept asking about during his time at Bain Capital was "did any company prosper that worked with and took money from Bain Capital?"

Yup. Decades of fund raises and good returns but zero successes. That’s how it works.

 

[Kolumbo]

LMAO. Reading all of these posts about private equity, especially by you, all I kept thinking about was Bain Capital and Mitt Romney, Gordon Gecko himself. And the question I kept asking about during his time at Bain Capital was "did any company prosper that worked with and took money from Bain Capital?"

 

[Waquoit]

View attachment 104517

Nah, Bob sold at the top of the market. Bain doesn't acquire companies to grow them, they buy companies to harvest them. A high-ranking Bain official was caught saying so on a leaked videotape. And BTW, I don't recall UConn seeing any Bob money since the sale. That's the only reason I would care about that clip joint.

 

[JohnFSilver]

Nah, Bob sold at the top of the market. Bain doesn't acquire companies to grow them, they buy companies to harvest them. A high-ranking Baim official was caught saying so on a leaked videotape. And BTW, I don't recall UConn seeing any Bob money since the sale. That's the only reason I would care about that clip joint.

I don't think people get what Bain and these funds do to businesses.

Their goal is to maximize cash flow. It isn't to grow business, in fact, their expertise is in businesses in secular decline. How do you squeeze as much money out if them and run them lean enough to generate positive cash flow.

They don't take that cash flow to reinvest in growth or product initiatives, they return cash to shareholders through dividends or buybacks if the company is public.

Eventually, the businesses collapse because of lack of investment, and Bain liquidates the property. They take a loss on the purchase price and then sell the damn real estate and holdings.

Think of these hedge funds as hospice care. They are here to extract value until there is nothing left.

Hartford Courant a great example. That hedge fund is monetizing 200 years of brand equity To generate revenue. They aren't tying to sell
News, dominate the market, or increase readership and advertising reach exponentially.

They are trying to extract cash from the business. Content doesn't matter, they are running as lean as possible (don't even have an office space).

If it was a new newspaper, no one would buy it. But it has brand equity (like sports illustrated as another media example) and people default to buying and trusting the brand. Eventually, quality will doom it. But until then the hedge fund is collecting cash.

 

[gioff2323]

This is such a terrible discussion amongst folks who seemingly know nothing about PE, other than their friend’s friend got let go by a mean PE firm. Can we get back to the thread - key tweets about realignment

 

[JohnFSilver]

This is such a terrible discussion amongst folks who seemingly know nothing about PE, other than their friend’s friend got let go by a mean PE firm. Can we get back to the thread - key tweets about realignment

Lol. Why do PE bros get so butt hurt when people criticize their vulture capital tendencies. Embrace who you are. You guys aren't the heroes. And that is OK.

 

[Kolumbo]

Nah, Bob sold at the top of the market. Bain doesn't acquire companies to grow them, they buy companies to harvest them. A high-ranking Bain official was caught saying so on a leaked videotape. And BTW, I don't recall UConn seeing any Bob money since the sale. That's the only reason I would care about that clip joint.

Bain must really suck at harvesting because it has owned Bob's for over 10 years. Bob's has also continued to expand. Damn those leeches!!

 

[gioff2323]

Lol. Why do PE bros get so butt hurt when people criticize their vulture capital tendencies. Embrace who you are. You guys aren't the heroes. And that is OK.

John

We all expect more from you. You seem to have an ax to grind over PE firms. You seem to think that’s a monolithic term. You seem to think PE doesn’t raise capital, it just magically appears. You seem to think PE firms are in to strip assets and sell them, which captures about 1% of the PE firms.

All that aside, my point was not that PE firms are good or bad, which is a nonsensical binary equation, but to move the discussion back to the thread topic. Some of us actually click on that thread looking for relevant news. Some of u hijacked it to share your philosophical views around PE.

I’m not a PE bro, but thanks for trying to attack the author and not the content. In the end, the mods did the right thing.

Let’s get back to topics that matter to UConn sports.

 

[Patman]

Nah, Bob sold at the top of the market. Bain doesn't acquire companies to grow them, they buy companies to harvest them. A high-ranking Bain official was caught saying so on a leaked videotape. And BTW, I don't recall UConn seeing any Bob money since the sale. That's the only reason I would care about that clip joint.

Yeah bobs will down slide as the authenticity from bobs brand goes away. Most personal businesses are like that. And I grew up in the Massachusetts furniture wars.

 

[JohnFSilver]

John

We all expect more from you. You seem to have an ax to grind over PE firms. You seem to think that’s a monolithic term. You seem to think PE doesn’t raise capital, it just magically appears. You seem to think PE firms are in to strip assets and sell them, which captures about 1% of the PE firms.

All that aside, my point was not that PE firms are good or bad, which is a nonsensical binary equation, but to move the discussion back to the thread topic. Some of us actually click on that thread looking for relevant news. Some of u hijacked it to share your philosophical views around PE.

I’m not a PE bro, but thanks for trying to attack the author and not the content. In the end, the mods did the right thing.

Let’s get back to topics that matter to UConn sports.

I am just being sarcastic. I worked in investor relations after I left sports. I found PE people some of the most overrated people I have ever met.

Axe to grind a bit much, but I hate the narrative and god like status these guys have. They are important, they provide capital.

Anyhow, on college sports, i would
Prefer money gets talent out of it. They waste so much money.

 

[giddyup]

I do a lot financing deals with private equity. It would be insanely stupid. The reason you take that kind of money is to grow faster to create more value, never to survive. I see so many businesses that make decent profit take equity with unicorn stars in their eyes only to end up on the trash heap. The Big12 has plenty of revenue to work with and college sports is a zero sum game with a fully matured market, except around the edges.

 

[CL82]

The reason you take that kind of money is to grow faster to create more value, never to survive.

 

[Samoo]

I'm the farthest thing from an expert on PE, but it sounds to me like it's pretty agnostic. If a PE firm can get better returns for its investors expanding a company, it will do that; if it can get better returns for its investors destroying a company, it will do that. And then there are all the in-between outcomes on that broad spectrum.

 

[KryHavok]

Flugar said in his show yesterday (based on what Ross Dellenger posted) that on Tuesday some of the Big12 and ACC presidents met in Dallas to discuss private equity. Flugar said there were at least 4 ACC teams that were represented: Virginia Tech, Syracuse, North Carolina, and Louisville. He goes on to mention the rumor that the ACC may dissolve to reform with 10 teams that have private equity, that the Big12 is thinking about private equity, and that UConn was a part of these talks (in terms of private equity, this is older news that we're already aware of). Blah blah blah, no decisions have been made and conversations will continue. There are more schools that are interested in privated equity (at a conference level), but Flugar said he'll say which ones later when he gets the OK so as to not burn bridges.

 

[KryHavok]

Flugar said yesterday that apparently West Virginia is ready to go all-in on private equity. After losing to Memphis yesterday, I can see why they think they need the cash.

 

[FfldCntyFan]

If WVU goes the PE route the school will be in significant trouble. Private equity is basically the legitimate half brother of loan sharking.

 

[CL82]

Flugar said yesterday that apparently West Virginia is ready to go all-in on private equity. After losing to Memphis yesterday, I can see why they think they need the cash.

What happened to his prediction that big 12 Connecticut talks would be announced before the end of the year? I mean, I guess the year is over yet.