B1G considering $2B private equity deal

[BamaNation]

Sources: Big Ten mulling $2B private capital deal

The Big Ten is in talks about a private capital deal, which includes a 10-year grant of rights extension through 2046, that would infuse at least $2 billion into the league and its schools, sources told ESPN.

www.espn.com

If this is the way, P4 need to immediately remove themselves from NCAA and create their own structure and go for $10+B. The cash is out there. But no way should one conference be allowed to do this on its own.

 

[CB4]

Sources: Big Ten mulling $2B private capital deal

The Big Ten is in talks about a private capital deal, which includes a 10-year grant of rights extension through 2046, that would infuse at least $2 billion into the league and its schools, sources told ESPN.

www.espn.com

If this is the way, P4 need to immediately remove themselves from NCAA and create their own structure and go for $10+B. The cash is out there. But no way should one conference be allowed to do this on its own.

I think we knew this would be the next beast to raise its head in college athletics.

 

[smokies1]

has private equity ever improved a product?

 

[Elefantman]

That's what this sport needs. More money grubbing jackwagons who's only interested in preserving the amateur aspect of competition.​

 

[4Q Basket Case]

$2 Billion for a 5% share.

If you assume a 9% cost of capital and a 4% growth rate, that values the B1G’s athletic departments at a total of $2B/(.09-.04).

Or $2B/.05. Or $40 Billion dollars.

Each school gives up 5% of what they would have otherwise received, in perpetuity, in exchange for a one-time payment today of $2B/19, or roughly $105M

Each.

Yeah, that’s a game-changer. The good news is that the SEC is the only other conference that can truly play that game at that level.

The bad news is that the suits are at the table. And even though they have only a 5% interest, they know how to play the legalities to have an outsized influence.

This makes the NFL look simple.

 

[KrAzY3]

If I understand the math correctly, this essentially values Big 10 teams programs at an average of 2 billion each? That part doesn't make sense. The financials aside though, there's another huge potential complication here.

I think this could really complicate future expansion for the conference. First off, the private equity investor is not going to want to have their share diluted. So, they're going to want to own 5% no matter if there's 18 other programs or 30 other programs. This would become a bigger deal the more programs join, as the piece of the pie shrink even further.

On the other end, most major programs are not going to want to join a conference where the other teams have that 100 million windfall advantage over them while their piece of the pie remains 95% of what it otherwise would be.

Also, the 100 million isn't really as big a deal as it sounds like at first glance, at least not for a major program. Alabama football alone makes more than that in one year, so if a program is desperate it's a big deal but otherwise it's basically a coaches buyout or something.

 

[RammerJammer14]

I hate that Supreme Court decision more and more every week. Just nuked collegiate everything.

 

[CaliforniaTide]

has private equity ever improved a product?

Has private equity ever cared if it improved a product?

 

[mdb-tpet]

Has private equity ever cared if it improved a product?

No, and no. The next thing you know, they’ll be liquidating the athletic departments for cash.

My rule of thumb is if someone comes to me with a “great deal”, it’s usually a great deal for them and a really crappy deal for me, so this is probably what’s going on with private equity.

 

[KrAzY3]

The more I think about this, the more this moves looks like a sign of weakness from the Big 10. What are they scared of? What's the problem?

FSU was discussing going the private equity route, but we all know what the problem was there. They have financial issues and also wanted out of the ACC.

What's the problem here? They also were talking about including a 20 year grant of rights. That's exactly what the ACC did, but the ACC did it because they were the hunted (it's what has forced FSU and others to stay). The top Big 10 programs don't like this, and why would they? A bit of cash that really one major fundraiser for a major program can provide and in return you sign away 5% of all future earnings and also have to sign a grant of rights?

I say let them do it, go ahead with the selling the logo on the jersey idea too. Notre Dame will love all the changes. To me if you're the SEC you just stand by and let them do this, weather the storm, you come out looking better in the long run.

 

[bamajas]

The more I think about this, the more this moves looks like a sign of weakness from the Big 10. What are they scared of? What's the problem?

FSU was discussing going the private equity route, but we all know what the problem was there. They have financial issues and also wanted out of the ACC.

What's the problem here? They also were talking about including a 20 year grant of rights. That's exactly what the ACC did, but the ACC did it because they were the hunted (it's what has forced FSU and others to stay). The top Big 10 programs don't like this, and why would they? A bit of cash that really one major fundraiser for a major program can provide and in return you sign away 5% of all future earnings and also have to sign a grant of rights?

I say let them do it, go ahead with the selling the logo on the jersey idea too. Notre Dame will love all the changes. To me if you're the SEC you just stand by and let them do this, weather the storm, you come out looking better in the long run.

Might be more bluffing for leverage against the SEC in CFP and expansion/consolidation talks

 

[NoNC4Tubs]

If I understand the math correctly, this essentially values Big 10 teams programs at an average of 2 billion each? That part doesn't make sense. The financials aside though, there's another huge potential complication here.

I think this could really complicate future expansion for the conference. First off, the private equity investor is not going to want to have their share diluted. So, they're going to want to own 5% no matter if there's 18 other programs or 30 other programs. This would become a bigger deal the more programs join, as the piece of the pie shrink even further.

On the other end, most major programs are not going to want to join a conference where the other teams have that 100 million windfall advantage over them while their piece of the pie remains 95% of what it otherwise would be.

Also, the 100 million isn't really as big a deal as it sounds like at first glance, at least not for a major program. Alabama football alone makes more than that in one year, so if a program is desperate it's a big deal but otherwise it's basically a coaches buyout or something.

Yeah, I think that overall deal would probably mean that the league never expands beyond 18 members...

 

[OakMtn4Bama]

When I first saw the headline, I thought it was talking about "our" B1G, and I was thinking ...wow.

Haven't heard from him lately. Miss his input.

 

[colbysullivan]

Sources: Big Ten mulling $2B private capital deal

The Big Ten is in talks about a private capital deal, which includes a 10-year grant of rights extension through 2046, that would infuse at least $2 billion into the league and its schools, sources told ESPN.

www.espn.com

If this is the way, P4 need to immediately remove themselves from NCAA and create their own structure and go for $10+B. The cash is out there. But no way should one conference be allowed to do this on its own.

I highlighted the correct part

 

[NoNC4Tubs]

I highlighted the correct part

Who would/could stop them...? (Seriously)

 

[colbysullivan]

Who would/could stop them...? (Seriously)

The SCOTUS destroyed collegiate athletics because people bought into the ridiculous notion that the players have been oppressed for decades. We never should have allowed it to get that far to begin with.

 

[BhamToTexas]

Has private equity ever cared if it improved a product?

I don’t understand these questions. Private equity invests in companies, grows (tries to grow maybe) the companies, and sells them for more. Of course they have improved companies and cares if it is improved. That is how they make money.

 

[crimsonaudio]

I hate everything about this. They're ruined CFB.

 

[BamaNation]

The latest:

Sources: Big Ten closes in on $2 billion capital deal

The Big Ten is approaching a vote on a capital agreement and the formation of Big Ten Enterprises, which would infuse league schools with more than $2 billion, according to sources.

www.espn.com

 

[KrAzY3]

I hate everything about this. They're ruined CFB.

Still seems like good news for the SEC. Let the Big 10 do this because some of their programs are struggling to keep up (a program like UCLA is incurring an additional 30 million annual expense with 100 million annual revenue, less than half what Alabama or Ohio State takes in). With Title IX this means 50 million to men's sport in one a time payment. Not moving the needle much frankly (Alabama spent about that much on a golf practice facility), but it will mean they can't expand again until the 2040s and they'll give up 5% of their revenue in perpetuity. The only way this bothers me if if the SEC foolishly copies them.