The Private Equity College Sports Hellscape Thread

[uconndogs]

To be clear, before the b-school geniuses jump in to correct me: yes, I know Boeing's merger with McDonnell Douglas was not strictly a "private equity" deal.

But the principal was the same. Excess/windfall returns were unlocked for the investors, while the quality of the products--which include aircraft that carry human passengers at ludicrous altitudes and speeds--went down the toilet.

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

 

[AzHusky]

In 1934, after the Air Mail Act of 1934 stipulated that all existing aviation holding companies had to break up, United Aircraft and Transport Corporation split into its three parts, Boeing, Pratt & Whitney, and United Air Line.

 

[JohnFSilver]

I was thinking who needs an environmental study, just build it

To be clear, before the b-school geniuses jump in to correct me: yes, I know Boeing's merger with McDonnell Douglas was not strictly a "private equity" deal.

But the principal was the same. Excess/windfall returns were unlocked for the investors, while the quality of the products--which include aircraft that carry human passengers at ludicrous altitudes and speeds--went down the toilet.

PE, sorry Wall Street bros, only is concerned with efficiency and profit. They don’t take into account the purpose of the business and its customers.

Customers have to be the center of your business, not process and management.

PE is best when they give money and go away, they are at their worst like what they did to sears and Toys R Us.

 

[gioff2323]

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?

 

[Ha Who]

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?

Give it 20 minutes

 

[giddyup]

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.

 

[Kolumbo]

PE, sorry Wall Street bros, only is concerned with efficiency and profit. They don’t take into account the purpose of the business and its customers.

Customers have to be the center of your business, not process and management.

PE is best when they give money and go away, they are at their worst like what they did to sears and Toys R Us.

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.

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.

"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

 

[gioff2323]

PE firms are mean. Boo hoo

 

[CTFAN4LIFE]

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.

 

[UConnTrumbull]

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.

I’ve wondered this too. Every power conference has/had a network.

 

[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 providing a full suite of solutions designed to improve the operational efficiency and scalability of mutual insurance carriers. The Mutual Group is being created through an acquisition of the operational assets of GuideOne Insurance...

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?"