The University of Kentucky AD is now a corporation

[TRU]

The apocalypse is upon us. UK has split its athletic department off from the university and formed an LLC, according to The Athletic. The LLC is being bankrolled by a letter of credit from UK. According to The Athletic, UK feels the LLC provides many advantages
1. Freedom from the administrative complexities of a state university, e.g. easier hiring and firing.
2. Freedom from pesky sunshine laws, like having to report expenditures for NIL. Quoting from the article “If Alabama knows we are spending $17,000,000 on NIL they will spend $17,000,001”
3 ability to write NIL contracts directly between a donor “like a local car dealership” and the LLC.

I see this as a big step in corporate structuring of college sports. For example, it is a short step from forming an LLC and soliciting investors to put in cash in hope of sharing in future revenues. And if the AD is an LLC how can you ever claim that the athletes are not LLC employees?

 

[Tidewater]

Not surprising, really. What's next? Corporate sponsors logos on uniforms?

What have they done to this sport?

 

[4Q Basket Case]

I actually like the employee part. Could be the first legal step toward a CBA -- which is one of the very few things that will provide a nationally-enforceable fix for the current pay-for-play / portal chaos and stand up in court.

The others -- an anti-trust exemption or governing federal legislation -- require a literal act of Congress. Trouble there is that Congress has shown zero interest in doing either.

Regarding Kentucky's Athletic Department going to an LLC, it's true they can get investors. But that would be an interesting and risky move.

If the investors are individuals, they might pay for the ability to brag to their friends about being a shareholder in Kentucky basketball, not really expecting a financial return. Kind of like stock in the Green Bay Packers.

Or they could demand a financial return. Or maybe a seat at the table for administrative decisions -- certainly hiring and firing coaches, but maybe also playing time for specific athletes and even offensive or defensive philosophy. While UTw's and aTm's athletic departments aren't LLCs (yet), ask them how big money donors investors work.

If Private Equity buys in, it's a huge cash infusion. But those guys have one concern and one concern only -- financial return. And they will without an atom of doubt get several seats at the table on all sorts of issues, large and small. You're selling your organizational soul.

Corporate sponsors could get interesting, especially if gambling interests are included -- "Ladies and gentlemen: YOUR Churchill Downs Kentucky Wildcats...."

It's impossible to predict where taking on investors and/or sponsors would send collegiate sports. But experience says it'll be places nobody ever anticipated.

 

[JDCrimson]

The apocalypse is upon us. UK has split its athletic department off from the university and formed an LLC, according to The Athletic. The LLC is being bankrolled by a letter of credit from UK. According to The Athletic, UK feels the LLC provides many advantages
1. Freedom from the administrative complexities of a state university, e.g. easier hiring and firing.
2. Freedom from pesky sunshine laws, like having to report expenditures for NIL. Quoting from the article “If Alabama knows we are spending $17,000,000 on NIL they will spend $17,000,001”
3 ability to write NIL contracts directly between a donor “like a local car dealership” and the LLC.

I see this as a big step in corporate structuring of college sports. For example, it is a short step from forming an LLC and soliciting investors to put in cash in hope of sharing in future revenues. And if the AD is an LLC how can you ever claim that the athletes are not LLC employees?

They likely opened themselves up to a whole bunch of other regulations they did not contemplate...

- How do they justify their income tax exemption? Other taxes?
- How do they offer a tax free scholarship to their players?
- Do they think they can shield themselves from Title IX going this route?
- Their exposure to litigation just went way up. The University was a state actor that shielded it or limited its damages in a lot of cases.
- Their credit rating and cost of capital dramatically changes with this move.

 

[Elefantman]

Here's where I see this all going. A new league of football teams associated with universities will be formed. The each team will be a corporation that hires players and conducts all operations of supporting the team. The league with a CBA will decide how the pay, trading of players, ect will work. The league will make TV deals and disburse revenue to the teams. Each team will lease from their associated university the stadium and practice facilities. The price of the lease will be based on the team's TV revenue and other income such that at the end of the year, the team will have little to no profit. The university will sell tickets.

One of the benefits of being a team player will be employee paid tuition if the player wishes to attend classes. The league will set NIL limits for each team.

Like it or not, it's going to be a pro sport. Get ready for "Regions Bank Bryant Denny Stadium"

 

[AlexanderFan]

Here's where I see this all going. A new league of football teams associated with universities will be formed. The each team will be a corporation that hires players and conducts all operations of supporting the team. The league with a CBA will decide how the pay, trading of players, ect will work. The league will make TV deals and disburse revenue to the teams. Each team will lease from their associated university the stadium and practice facilities. The price of the lease will be based on the team's TV revenue and other income such that at the end of the year, the team will have little to no profit. The university will sell tickets.

One of the benefits of being a team player will be employee paid tuition if the player wishes to attend classes. The league will set NIL limits for each team.

Like it or not, it's going to be a pro sport. Get ready for "Regions Bank Bryant Denny Stadium"

This is about the only way to force the players to the table to change what has been going on. Burn college football down, see what rises from
the ashes.

 

[Isaiah 63:1]

Several points:

• The UK LLC was created a year ago.
• The early results are promising from a revenue generation/flexibility standpoint, according to what those with a vested interest are saying. Believe or not believe; that is the question. I have no insight on that either way.
• Money - in NIL or in life - doesn't necessarily solve your problems; it tends to make you more of what you already are (credit: Tony Robbins). If you're:
  • Good at evaluating talent, NIL will get you more of the talent you evaluated correctly.
  • Not good at evaluating talent, NIL will let you throw money at a flawed process and fail more expensively.
• I'd suggest UK has been the latter. Their most recent:
  • MBB championship was 2012.
  • Final four was 2015.
  • Elite Eight was 2019.
  • SEC tournament title was 2018
  • SEC regular season title was 2020
• If they don't fix their systemic problem, money and governance structure are unlikely to.

 

[Isaiah 63:1]

... Believe or not believe; that is the question ...

I asked ChatGPT to convert Hamlet's "To be or not to be" soliloquy to fit whether to believe or not believe the early reports of the success of UK's Champions Blue LLC:

To believe, or not believe—that is the question:
Whether ’tis wiser in the mind to suffer
The early praises and the polished claims
Of Champions Blue’s swift-working enterprise,
Or take up arms against a sea of hype
And, by opposing, doubt them? To distrust—to wait—
No more; and by a wait to say we end
The heart-ache and the thousand bold projections
That first reports are heir to: ’tis a pause
Devoutly to be wish’d. To trust—to doubt—
To doubt, perchance to see the numbers plain—ay, there’s the rub:
For in that doubt what truths may yet emerge,
When time has stripped the gloss from present news,
Must give us pause—there’s the respect
That makes short triumphs of so brief a life.

For who would bear the claims and counterclaims,
The analyst’s pride, the booster’s certainty,
The pangs of missed expectations, the law’s delay,
The insolence of headlines, and the spurns
That patient merit of the model takes,
When he himself might quietus make
With a bare balance sheet? Who would these burdens bear,
To grunt and sweat under a narrative’s weight,
But that the dread of something yet unseen—
The undiscovered verdict of full seasons’ time—
Puzzles the will and makes us rather bear those claims we have
Than fly to others that we know not of?

Thus caution does make skeptics of us all,
And thus the native hue of early praise
Is sicklied o’er with the pale cast of proof;
And enterprises of great pitch and moment
With this regard their currents turn awry
And lose the name of action.

Soft you now,
The fair experiment—Champions Blue—
Be all my doubts remember’d.

 

[dtgreg]

Here's all I need to know:

The current system pays the players <= to 20% of gross revenue.

Pro systems with collective bargaining pays the players => 50% gross revenues.

The colleges may squeal but they will never agree to a fair system. They know they have it made currently.

 

[crimsonaudio]

College sports died a few years ago, we're only now seeing the actual decay.

I'm not sure what my interest / involvement will be going forward. I watched most but not all FB games last season, didn't watch a single BB game this year...

It's hard to care about free-agency players who will ditch your alma mater for the next school offering more cash...

The upside is I've had way more time to do productive things with my family and around the house / business.

All good things must come to an end...

 

[UAH]

College sports died a few years ago, we're only now seeing the actual decay.

I'm not sure what my interest / involvement will be going forward. I watched most but not all FB games last season, didn't watch a single BB game this year...

It's hard to care about free-agency players who will ditch your alma mater for the next school offering more cash...

The upside is I've had way more time to do productive things with my family and around the house / business.

All good things must come to an end...

All that is left for me is dealing with the withdrawl symptoms after a lifetime of living and dying with Alabama football. My break with basketball has been much easier.

 

[mdb-tpet]

Bless their hearts.

 

[NoNC4Tubs]

They likely opened themselves up to a whole bunch of other regulations they did not contemplate...

- How do they justify their income tax exemption? Other taxes?
- How do they offer a tax free scholarship to their players?
- Do they think they can shield themselves from Title IX going this route?
- Their exposure to litigation just went way up. The University was a state actor that shielded it or limited its damages in a lot of cases.
- Their credit rating and cost of capital dramatically changes with this move.

Great questions!

Wonder if they consulted with their attorneys before making this move...or did they come up with this?

 

[NoNC4Tubs]

I asked ChatGPT to convert Hamlet's "To be or not to be" soliloquy to fit whether to believe or not believe the early reports of the success of UK's Champions Blue LLC:

To believe, or not believe—that is the question:
Whether ’tis wiser in the mind to suffer
The early praises and the polished claims
Of Champions Blue’s swift-working enterprise,
Or take up arms against a sea of hype
And, by opposing, doubt them? To distrust—to wait—
No more; and by a wait to say we end
The heart-ache and the thousand bold projections
That first reports are heir to: ’tis a pause
Devoutly to be wish’d. To trust—to doubt—
To doubt, perchance to see the numbers plain—ay, there’s the rub:
For in that doubt what truths may yet emerge,
When time has stripped the gloss from present news,
Must give us pause—there’s the respect
That makes short triumphs of so brief a life.

For who would bear the claims and counterclaims,
The analyst’s pride, the booster’s certainty,
The pangs of missed expectations, the law’s delay,
The insolence of headlines, and the spurns
That patient merit of the model takes,
When he himself might quietus make
With a bare balance sheet? Who would these burdens bear,
To grunt and sweat under a narrative’s weight,
But that the dread of something yet unseen—
The undiscovered verdict of full seasons’ time—
Puzzles the will and makes us rather bear those claims we have
Than fly to others that we know not of?

Thus caution does make skeptics of us all,
And thus the native hue of early praise
Is sicklied o’er with the pale cast of proof;
And enterprises of great pitch and moment
With this regard their currents turn awry
And lose the name of action.

Soft you now,
The fair experiment—Champions Blue—
Be all my doubts remember’d.

Bwuh?!?

So what are you even saying/insinuating?

 

[bamaga]

Not surprising, really. What's next? Corporate sponsors logos on uniforms?

What have they done to this sport?

In the name of The ALL-MIGHTY-DOLLAR!

 

[4Q Basket Case]

In the name of The ALL-MIGHTY-DOLLAR

Not surprising, really. What's next? Corporate sponsors logos on uniforms?

What have they done to this sport?

In the name of The ALL-MIGHTY-DOLLAR!

We've had Nike swooshes and UnderArmor logos for some time now. Oregon's uniforms have been head-to-toe advertisements for Nike since Phil Knight realized the value.

It's a matter of when, not whether, we'll have logos and names of non-athletic corporations.

I wonder only whether there will be any limitations. As in, casinos, "Gentlemen's Clubs," alcoholic beverage makers, payday lenders, etc. My guess is that there'll be initial resistance, but the dollars will win out.

"YOUR Georgia Tech Yellow Jackets, brought to you one dollar at a time by the best-engineered girls in town."

Couldn't decide if that should be blue font or not. Cynicism won.

 

[CrimsonNagus]

If UK split from the university, then they are no longer a college sports team and should be banned from competing in college sporting events.

 

[BearFoot]

College sports died a few years ago, we're only now seeing the actual decay.

I'm not sure what my interest / involvement will be going forward. I watched most but not all FB games last season, didn't watch a single BB game this year...

It's hard to care about free-agency players who will ditch your alma mater for the next school offering more cash...

The upside is I've had way more time to do productive things with my family and around the house / business.

All good things must come to an end...

Your first statement is literary-genius…..and the subsequent monologue is pure prose, worthy of my attention because it amplifies the state of my current emotional detachment from an era of innocent wonder with which I was previously enamored…but no longer long for!!!

Nevermind…carry-on

 

[JDCrimson]

I think universities should sell their arenas to their big 3 sports to their NIL collectives and use the facilities to derive expanded revenue from tickets sales and other event revenue. Schools keep and operate ADs off TV revenue. That would be the extent, for me, of private equity involvement in college athletics.

Morgan Wallen concerts, MLB spring games, NFL preseason games, etc would all be good other event revenue generators.

I think regulating revenue sources might level the playing field more among institutions and avoid anti-trust litigation for the athletes.

 

[mdb-tpet]

I think I only watched 2 games total last year. I prefer reading about, watching clips, and discussing the games though. The powers that be can do whatever they want, but I believe my eyeballs just have better things to do these days that watch semi-pro ball for 3.5+ hours every weekend and whatever basketball is these days. I'm sure I'm in a definite minority (but I usually find myself years ahead of the curve on these types of things), but I'm completely fine with reverting back to the 1970s standards of 2 or 3 amateur style football games a year being televised and the rest being in person or read about in the papers/internet.