Want to buy a stake in Pac-12 Conf? It’s exploring taking on private equity partners

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BleedGopher

BleedGopher

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per Oregon Live:

Want to own a piece of a major college football conference?

There may be one for sale shortly.

Pac-12 Conference leadership pitched university presidents and chancellors a strategic plan aimed at bailing out the struggling conference and helping it keep pace with its Power Five Conference peers.

The “Pac-12 NewCo” plan was introduced to the conference presidents and chancellors at their mid-November meeting and was subsequently discussed in a conference call in December, per sources. Private investors would own 10 percent equity in the newly formed entity in exchange for a $500 million investment.

A six-page document obtained by The Oregonian/OregonLive outlines the plan presented by conference commissioner Larry Scott to his bosses during the November meeting of the “Pac-12 CEO Group.”

The document outlines the conference’s current lagging media rights projections and introduces an ambitious plan that involves taking on a strategic private investor.

The Pac-12 members currently operate at a financial disadvantage to its peers. The Southeastern Conference, for example, distributed $11 million more than the Pac-12 to each of its members in the last fiscal year. The Big Ten’s new media rights deal will give each of its conference members more than $15 million in excess of what the Pac-12 will distribute to the universities it represents.

Under the “Pac-12 NewCo” plan, a cash infusion of $500 million would be available for immediate distribution to the Pac-12 members.

https://www.oregonlive.com/sports/o...loring-taking-on-private-equity-partners.html

Go Gophers!!
 


BleedGopher said:
per Oregon Live:

Want to own a piece of a major college football conference?

There may be one for sale shortly.

Pac-12 Conference leadership pitched university presidents and chancellors a strategic plan aimed at bailing out the struggling conference and helping it keep pace with its Power Five Conference peers.

The “Pac-12 NewCo” plan was introduced to the conference presidents and chancellors at their mid-November meeting and was subsequently discussed in a conference call in December, per sources. Private investors would own 10 percent equity in the newly formed entity in exchange for a $500 million investment.

A six-page document obtained by The Oregonian/OregonLive outlines the plan presented by conference commissioner Larry Scott to his bosses during the November meeting of the “Pac-12 CEO Group.”

The document outlines the conference’s current lagging media rights projections and introduces an ambitious plan that involves taking on a strategic private investor.

The Pac-12 members currently operate at a financial disadvantage to its peers. The Southeastern Conference, for example, distributed $11 million more than the Pac-12 to each of its members in the last fiscal year. The Big Ten’s new media rights deal will give each of its conference members more than $15 million in excess of what the Pac-12 will distribute to the universities it represents.

Under the “Pac-12 NewCo” plan, a cash infusion of $500 million would be available for immediate distribution to the Pac-12 members.

https://www.oregonlive.com/sports/o...loring-taking-on-private-equity-partners.html

Go Gophers!!
Click to expand...

Why would any conference need an infusion of capital? I've been told here many times that all of the major conference schools are swimming in excess cash and can easily afford to pay all of their athletes a comfortable salary.
 

dpodoll68 said:
Why would any conference need an infusion of capital? I've been told here many times that all of the major conference schools are swimming in excess cash and can easily afford to pay all of their athletes a comfortable salary.
Click to expand...

I want money, it doesn't mean I don't have it....
 

Unless they add some big name schools, how could anyone see this as a wise investment? Not sure how splitting up a potential $500M would do anything but put off the inevitable if they don't change anything else to become viable long term.
 


I find it unethical for a "private" entity to seek private capital when that "private" entity is comprised of bodies dependant on public funds. If the colleges themselves were privatized that is a different story, but how can you rationalize spending taxpayer dollars to further the private investments of others? Such is our system...I guess. Where it is socialism for everyone else and no real access to capitalism.

Sent from my LGMS428 using Tapatalk
 

So_Money said:
I find it unethical for a "private" entity to seek private capital when that "private" entity is comprised of bodies dependant on public funds. If the colleges themselves were privatized that is a different story, but how can you rationalize spending taxpayer dollars to further the private investments of others? Such is our system...I guess. Where it is socialism for everyone else and no real access to capitalism.

Sent from my LGMS428 using Tapatalk
Click to expand...

I belive the intent is to sell shares in the media rights for their sports.

We already have a deal with Fox who owns a portion of B1G's media in their own way.
 

A_Slab_of_Bacon said:
I belive the intent is to sell shares in the media rights for their sports.

We already have a deal with Fox who owns a portion of B1G's media in their own way.
Click to expand...
The larger implication is the equity for such things were first built on the backs of the taxpayer, selectively privatizing for fundrasing ignores the intial fundraising that took place via taxes. If anyone is entitled to a stake it is the taxpayer. When government funded corporate welfare is accepted this is what we get. The government props up things that should fail or opportunity is taken from some to give to another. Classic saving of the X industry. But like I said this is the world we live in and it is not likely to change...I am going to call it out when it happens though.

Sent from my LGMS428 using Tapatalk
 

So_Money said:
The larger implication is the equity for such things were first built on the backs of the taxpayer, selectively privatizing for fundrasing ignores the intial fundraising that took place via taxes. If anyone is entitled to a stake it is the taxpayer. When government funded corporate welfare is accepted this is what we get. The government props up things that should fail or opportunity is taken from some to give to another. Classic saving of the X industry. But like I said this is the world we live in and it is not likely to change...I am going to call it out when it happens though.

Sent from my LGMS428 using Tapatalk
Click to expand...

I get what you're saying, but I don't think this /= that.
 




A_Slab_of_Bacon said:
I get what you're saying, but I don't think this /= that.
Click to expand...
How would you view a private company filming publicly funded... classrooms (as an example) and then profiting from that access on things that only exist because of taxpayer "investment"?

Sent from my LGMS428 using Tapatalk
 

dpodoll68 said:
Why would any conference need an infusion of capital? I've been told here many times that all of the major conference schools are swimming in excess cash and can easily afford to pay all of their athletes a comfortable salary.
Click to expand...

The TV deal alone is sending $15 million, annually, to each school in the Big 10.

The infusion of capital is that they can send the money to the institutions immediately. They need it because it's really difficult because all of the money made by the athletic departments is already earmarked.

I can understand arguing against paying the players, but it's odd to me when people want to make the financial argument.
The football teams, in P5 conferences, make significantly more money for the school than what they cost. Even when people attempt to redefine "cost", they still make a boatload of money.

If the Big 10 made all of the football teams a publicly traded company, people would flock to invest.
 




Part of the consequence of the facilities bling-bling wars? After watching the Wizard of Odd video of the Oregon Ducks facility, I believe the other PAC 12 schools are behind.
 

Guys I've been reading stuff on B1G expansion, and I think in the next 5 years there is going to be another conference expansion. I've heard the Big 12 is having difficulty and the Pac 12 seems to as well from this article. Seems so weird to call them the Big 12 because there are only 10 teams in the league. I remember when it used to be the Big 8. Anyway, I was reading about expansion last night, and they were speculating that Oklahoma holds a lot of the cards, and that Delany will probably want to want to expand once more before he retires....and he is 69 years old. It seems that Oklahoma is not an AAU school, but they were going to applying for AAU status, and maybe they already have since the article was from last summer. This would allow them to join the B1G, because we haven't allowed a non-AAU school admission into our conference. Nebraska is not an AAU school as of now but they were when they were admitted to the B1G. The SEC was thought to get involved, but they haven't expanded to two schools in the same state, and if Oklahoma moves away from OSU, they sound like they would prefer the B1G. Here is what I think will happen before 2025...B1G expands to 18 teams, adding Oklahoma, Kansas, Missouri, and Notre Dame. Everyone talks about expanding to 16 teams, but I think they go to 18 teams if they can get Notre Dame to finally join the conference. Maybe there will just be 4 conferences with 16 teams each, with Notre Dame joining the ACC, Missouri staying in the SEC and Texas, Texas Tech, going out west with the PAC12. Schools like Iowa State and Oklahoma State would be scrambling for a conference....I can see OSU going to the SEC, but I'm not sure what you do with ISU if that happens.

How are these for Divisions:

B1G West:

Oklahoma
Kansas
Nebraska
Iowa
Minnesota
Wisconsin
Illinois
Northwestern

B1G East:

Ohio State
Michigan
Michigan State
Penn State
Indiana
Maryland
Rutgers
Purdue

If Notre Dame and Missouri (or Iowa State) move into the conference, Notre Dame would move to the East and Missouri/Iowa State would move into the West.

I already know this post is going to be greeted with the, "I want to contract back to 10 teams!" but I think the change is coming. It even makes more sense to have only 4 major conferences if you keep the Football playoff at 4 teams. Just some thoughts.
 

Bob_Loblaw said:
The TV deal alone is sending $15 million, annually, to each school in the Big 10.

The infusion of capital is that they can send the money to the institutions immediately. They need it because it's really difficult because all of the money made by the athletic departments is already earmarked.

I can understand arguing against paying the players, but it's odd to me when people want to make the financial argument.
The football teams, in P5 conferences, make significantly more money for the school than what they cost. Even when people attempt to redefine "cost", they still make a boatload of money.

If the Big 10 made all of the football teams a publicly traded company, people would flock to invest.
Click to expand...



I've read that the TV deal gives $40 million annually to each school. This is an old article (2012), but it states that it's $40 million annually to each school. The $15 million the article in this post talks about is the amount more that the B1G gives its members than the Pac12. That would mean the Pac12 gives there schools $25 million annually.

Here is that article about the B1G giving their schools $40 million annually.
 

Is there an instrument to short sell the PAC12?
 

So_Money said:
How would you view a private company filming publicly funded... classrooms (as an example) and then profiting from that access on things that only exist because of taxpayer "investment"?

Sent from my LGMS428 using Tapatalk
Click to expand...

Is that supposed to be inherently bad?

The Big 10 partnered with Fox because it could make them more money rather than the B1G going alone, and they both make money.
 

The slides in the link said cash flow to the 10% investor is about $27 million. The $500 million figure means the PAC12 is asking for 18.5 times cash flow in a risky proposition. That's terribly expensive. Plenty of better options that are lot more liquid. They'll be lucky to get half their asking price unless they can land a vanity investor who simply wants to own part of a sports media business.
 

Panthadad2 said:
The slides in the link said cash flow to the 10% investor is about $27 million. The $500 million figure means the PAC12 is asking for 18.5 times cash flow in a risky proposition. That's terribly expensive. Plenty of better options that are lot more liquid. They'll be lucky to get half their asking price unless they can land a vanity investor who simply wants to own part of a sports media business.
Click to expand...

Good luck when he starts calling into the replay booth... but then again Pac-12 already has that problem.
 

The business dealings of college football are already gross enough without bringing in private equity money in such a way. Obviously the leagues (AFAIK?) and schools have been able to keep their non-profit status thus far based on current law but someone schooled in that area must wonder what might happen if it’s a slippery slope and NewCo sells off larger and larger chunks of the business in desperation. The “management” of such an entity would be awful in a variety of ways.

If the goal is simply a desperate move to raise a bolus of money for distribution to the schools why not sell shares or other instruments directly to the general public and fans. Surely tens or hundreds of thousands of sports fans would be interested in getting a piece of the sports business action even if it proves to be a dud investment rather than the current “donation” scenario which is purely out of the goodness of one’s heart.
 

Bob_Loblaw said:
The TV deal alone is sending $15 million, annually, to each school in the Big 10.

The infusion of capital is that they can send the money to the institutions immediately. They need it because it's really difficult because all of the money made by the athletic departments is already earmarked.

I can understand arguing against paying the players, but it's odd to me when people want to make the financial argument.
The football teams, in P5 conferences, make significantly more money for the school than what they cost. Even when people attempt to redefine "cost", they still make a boatload of money.

If the Big 10 made all of the football teams a publicly traded company, people would flock to invest.
Click to expand...

If the world were magic and businesses could just pretend that unprofitable components (products, business lines, segments, etc.) of their company didn't exist, almost every business would be wildly successful. If football or men's basketball were available as a standalone product, they would be making money hand over fist. Unfortunately, they exist in the context of supporting a number of unprofitable, money-losing non-revenue sports (for both men and women), and we can't just wish those away. The fact is that a small percentage of athletic departments in the country are profitable, even under the current model in which they don't pay athletes a salary. The Pac 12 seeking external private funding is real, slap-you-in-the-face evidence that this is true.

If this link is accurate: https://www.collegefactual.com/colleges/university-of-minnesota-twin-cities/student-life/sports/, there are 993 student-athletes at the University of Minnesota. If the NCAA implemented a salary structure, and each student-athlete was paid (on average) a modest salary of $30,000, that's an extra $30M per year. Where is that money going to come from? The answer is - it doesn't exist, and the idea of paying student-athletes is neither realistic nor sustainable. I wish people would stop pretending that it is.
 

ethomasp31 said:
Guys I've been reading stuff on B1G expansion, and I think in the next 5 years there is going to be another conference expansion. I've heard the Big 12 is having difficulty and the Pac 12 seems to as well from this article. Seems so weird to call them the Big 12 because there are only 10 teams in the league. I remember when it used to be the Big 8. Anyway, I was reading about expansion last night, and they were speculating that Oklahoma holds a lot of the cards, and that Delany will probably want to want to expand once more before he retires....and he is 69 years old. It seems that Oklahoma is not an AAU school, but they were going to applying for AAU status, and maybe they already have since the article was from last summer. This would allow them to join the B1G, because we haven't allowed a non-AAU school admission into our conference. Nebraska is not an AAU school as of now but they were when they were admitted to the B1G. The SEC was thought to get involved, but they haven't expanded to two schools in the same state, and if Oklahoma moves away from OSU, they sound like they would prefer the B1G. Here is what I think will happen before 2025...B1G expands to 18 teams, adding Oklahoma, Kansas, Missouri, and Notre Dame. Everyone talks about expanding to 16 teams, but I think they go to 18 teams if they can get Notre Dame to finally join the conference. Maybe there will just be 4 conferences with 16 teams each, with Notre Dame joining the ACC, Missouri staying in the SEC and Texas, Texas Tech, going out west with the PAC12. Schools like Iowa State and Oklahoma State would be scrambling for a conference....I can see OSU going to the SEC, but I'm not sure what you do with ISU if that happens.

How are these for Divisions:

B1G West:

Oklahoma
Kansas
Nebraska
Iowa
Minnesota
Wisconsin
Illinois
Northwestern

B1G East:

Ohio State
Michigan
Michigan State
Penn State
Indiana
Maryland
Rutgers
Purdue

If Notre Dame and Missouri (or Iowa State) move into the conference, Notre Dame would move to the East and Missouri/Iowa State would move into the West.

I already know this post is going to be greeted with the, "I want to contract back to 10 teams!" but I think the change is coming. It even makes more sense to have only 4 major conferences if you keep the Football playoff at 4 teams. Just some thoughts.
Click to expand...

If 18 teams is good then 20 teams has to be much better, plus Oklahoma & Kansas won't join with their Oklahoma St and Kansas St. 2 Divisions:

Big 10 Classic
Ohio St
Michigan
Michigan St
Indiana
Purdue
Illinois
Northwestern
Wisconsin
Minnesota
Iowa

New Big 10
Penn St
Rutgers
Maryland
Nebraska
Oklahoma
Oklahoma St
Kansas
Kansas St
Missouri
Notre Dame
 

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