It keeps getting worse: Big 12 in discussions w/Allstate on a naming rights deal to change league's name

[Tidewater]

CBS Sports is reporting that the Big 12 is also exploring the sale of 15% - 20% of the league to a private equity firm out of Luxembourg.

Luxembourgers have long been known for their fanatical love of college football.

 

[crimsonaudio]

I’m assuming part of it is because I’m spoiled as a Bama fan. But I’m assuming a bigger part of it is that I’m tired of the orchestrated drama of it all

For me, it's really a matter of why I watch(ed) CFB in the first place.

If I want to watch the best in the world play football, I'm watching the NFL. They are across the board the best and college is no comparison. I watch CFB because the players (historically) represented the universities. They were generally there for their entire career and most of them loved the school.

Now we have a huge percentage of 'hired guns' wearing the uniform this year, but they may well be wearing a different uniform next year. It's like the NFL without the regulation and with poorer quality players. It's basically becoming an analog to the XFL or USFL - most players aren't good enough to play on Sundays but they don't have any real connection to the school other than it was the one that paid them the most.

I just don't really care as much any more. And no amount of success on the field will change that, I don't think. What made CFB interesting to me has fundamentally changed and it's not going back.

 

[JDCrimson]

I think this is just dumb. Why not just borrow the money from a bank? The cost of capital would be much less than the cost of PE investment. If the conference becomes insolvent the PE firm will probably absorb full ownership of the conference as a bailout. Credit financing offers bankruptcy protection.

CBS Sports is reporting that the Big 12 is also exploring the sale of 15% - 20% of the league to a private equity firm out of Luxembourg. Other media outlets have also picked up the story.

Note that this is separate and apart from selling naming rights.

Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference - CBSSports.com

The terms of the cash injection, the percentage of the league that the PE firm would own, and whether the Big 12 would get anything else of value are still under negotiation.

The article doesn't say whether the PE firm's ownership would be in perpetuity, for the period of the current grant of rights, whether a new extended grant of rights might be in the works, or whether the PE firm could sell some or all of its ownership to another entity.

That last part's a huge big deal. Absent prohibitions, the PE firm could sell to, say, an entity owned by gambling magnate Steve Wynn. No conflict of interest there....move along....Mr. Wynn is a legitimate businessman operating a perfectly legal business. Nothing to see here.

It also doesn't say whether the PE firm's ownership rights would include receiving a pro-rata share of any monies from the sale of naming rights.

So the terms, conditions, representations and warranties of what would be sold, for what consideration, with what strings attached, are murky. I'm guessing the Big 12 and the PE firm themselves probably don't yet know.

Still, the basic idea is that the PE firm gives the Big 12 a bunch of cash of an amount and on a schedule TBD. Plus maybe some other stuff. The Big 12 gives the PE firm a percentage of ownership.

I don't know whether to laugh or cry.

 

[4Q Basket Case]

I think this is just dumb. Why not just borrow the money from a bank? The cost of capital would be much less than the cost of PE investment. If the conference becomes insolvent the PE firm will probably absorb full ownership of the conference as a bailout. Credit financing offers bankruptcy protection.

Due to the high risk / low return nature of the business, the security of which is effectively guaranteed by the US Government, banks have to abide by some strict regulations, risk ratings, attendant accounting treatment, and capital allocation.

All that centers on an incredibly fundamental banking tenet: You have to have both a documented Primary Source of Repayment (PSOR) and a documented Secondary Source of Repayment (SSOR).**

Which PE firms do not. Not at inception. Not at any point until the asset is removed from the books — via repayment, sale or writeoff.

For example, there’s no such thing as a Criticized, Classified or Non-Accrual PE stake.

Whereas, for banks, those are HUGE considerations, materially affecting profitability long before charge-off is even on the table. Plus banks have to deal with avoiding ”unsafe and unsound banking practices,” for which there is a regulatory definition. PE funds have no such worries.

A PE firm might might eventually have to write the asset off, but it’s a 1s and 0s treatment. No effect until there’s a big one.

Long story short: For reasons revolving around legal and regulatory requirements, as well as prudent practice and profitability considerations, banks would require terms and conditions that PE firms wouldn’t.

** Yes, I know that in 2008 and 2021 several institutions violated these tenets. There were regulations on the books at the time that would have avoided all the ensuing fallout. In the years leading up to the [mud] hitting the fan, the Feds chose not to enforce them. The 2008 - 2011 Great Recession and the 2021 banking scare in Silicon Valley were both at least as much failures of regulation as they were suits trying to make big bonuses.

 

[Lassr4Bama]

So we will have the Geico Div Champion vs the Progressive Div Champion facing each other in the Allstate Big 12 for the Allstate trophy...runner up gets The General Trophy

 

[Tidelines]

Wonder if All-State would still be involved with the Sugar Bowl.

 

[Ole Man Dan]

Only time till we see the HORMEL SPAM STADIUM...

 

[CajunCrimson]

Only time till we see the HORMEL SPAM STADIUM...

It’s $4 a can now. So, yeah maybe

 

[Redwood Forrest]

It's just fascinating watching the rapid destruction at this point. There's little eft of what I actually loved about CFB anymore, so watching this train crash is the next best thing.

But as I've stated may times recently I'm not sure how much CFB I'll actually watch this fall. I wouldn't be surprised if I found myself out camping, working on my old truck, etc. instead of watching TV all day.

I understand the sentiment because I have the same feelings myself. College football is my secular passion, but my interest has taken a hit since NIL & Portal took the helm. A big part of me wants to retire with The Goat and sit on the sidelines. Bummer.

 

[Redwood Forrest]

I had rather laugh than cry. Arby's Big 10. We got the monies!

 

[TRU]

Why worry? It is clear that PE firms exist primarily for charitable purposes. Money is a distant second to their mission.

Reminds me of Faust. Sell your soul to the devil. I'll pay you something now, but then I will own you forever.....

I sure hope the PE firm knows enough to negotiate a percentage of the revenues and not the profits. The people that run college football have decades of practice in being "not for profit".

I agree the fun now is in watching the whole edifice collapse. College athletics was build on two pillars - hypocrisy and exploitation. Both collapsed under the assault of NIL and the portal. What is coming is not yet clear, but I am certain it will mean much less money for the universities and especially the athletic departments of the power 4 schools. Revolutions are indeed messy. And those in the ancient regime often lose their heads.

I really lost interest in the game when the NCAA changed the rules to make it basketball on grass anyway. I was one of those people who watched as many games as I could on Saturdays - using the remote to switch between two games on the main screen and two on the PIP. I do not think I watched a single complete game last season. What I loved about the game is long gone.

 

[TideEngineer08]

Where do we go to watch the ducks poop in the yard again?

 

[CajunCrimson]

If it’s Allstate, at least call it “The Conference of Mayhem”

 

[Crimson1967]

I remember when the Sun Bowl became the John Hancock Sun Bowl and people laughed.

 

[Krymsonman]

How about, "Allstate conference that ain't winning no championships" as their new name?

And all of you Allstate customers, remember that your 20% premium increase is for a just cause. We're helping those poor mistreated athletes in our new conference.

 

[dtgreg]

Only time till we see the HORMEL SPAM STADIUM...

Rainbows renaming their place?

 

[UAH]

CBS Sports is reporting that the Big 12 is also exploring the sale of 15% - 20% of the league to a private equity firm out of Luxembourg. Other media outlets have also picked up the story.

Note that this is separate and apart from selling naming rights.

Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference - CBSSports.com

The terms of the cash injection, the percentage of the league that the PE firm would own, and whether the Big 12 would get anything else of value are still under negotiation.

The article doesn't say whether the PE firm's ownership would be in perpetuity, for the period of the current grant of rights, whether a new extended grant of rights might be in the works, or whether the PE firm could sell some or all of its ownership to another entity.

That last part's a huge big deal. Absent prohibitions, the PE firm could sell to, say, an entity owned by gambling magnate Steve Wynn. No conflict of interest there....move along....Mr. Wynn is a legitimate businessman operating a perfectly legal business. Nothing to see here.

It also doesn't say whether the PE firm's ownership rights would include receiving a pro-rata share of any monies from the sale of naming rights.

So the terms, conditions, representations and warranties of what would be sold, for what consideration, with what strings attached, are murky. I'm guessing the Big 12 and the PE firm themselves probably don't yet know.

Still, the basic idea is that the PE firm gives the Big 12 a bunch of cash of an amount and on a schedule TBD. Plus maybe some other stuff. In return, the Big 12 gives the PE firm a TBD percentage of ownership.

I don't know whether to laugh or cry.

The next logical step is we will see Saudi, Chinese, Russian, gambling, you name it involved in the sport. Live reporting from the casino on the current odds and cash flow.

 

[colbysullivan]

It’s $4 a can now. So, yeah maybe

Did you know you can use the top of the SPAM can to actually cut the meat into slices? That’s about as interesting as what college football has turned into now.

 

[CajunCrimson]

Did you know you can use the top of the SPAM can to actually cut the meat into slices? That’s about as interesting as what college football has turned into now.

Skillet Pork And Mmmmmmmm

 

[Elefantman]

I like Spam