Big Ten Discussing $2 Billion Private Capital Deal

[SU68]

Not necessarily. His Royal Highness Prince Sultan bin Salman is a grad ('99) of the Maxwell School. Schedule a lunch with him.

 

[OrangePA]

Private Equity is a lump-sum term in anything related to putting in money. Not all investment deals look for a 4-6 year outcome In this case it could be:

• PE Conglomerate is buying into a partnership and would get 1/20th of distributions
• It values the Big Ten* at $2 billion post money
• The play for investors is more of a long-term annuity that pays it back $100M+ annually in perpetuity or extended time
• I'd suspect it might get points on net new revenue streams until it gets its original investment back

PE knows how to make money. I bet they would find a way to monetize the non-revenue sports (women's volleyball is surging like crazy now) and I'd bet the house you will see "March Madness"-like events across all sports (e.g. Big X Softball Suaree...live from Las Vegas!) that generate new media opportunities and theoretically cut down bulk travel so Iowa doesn't have to fly to Rutgers, then two weeks later go to Maryland.)

This is a VERY RARE asset, that's the draw to investors. This would be a super minority deal with a number of safeguards.

Do I love it? No. Is it the worst thing ever? Nah. It's another damn symptom of the NIL-with-no-true-cap era...

It just doesn't feel right.

 

[MadNY3]

It just doesn't feel right.

Very little has since we opted to, or needed to, go to the ACC…

 

[FloridaCuse]

 

[FloridaCuse]

Not all B1G teams to get the same percentage ownership! [Odds that Rutgers is at the bottom?]

 

[FloridaCuse]

 

[FloridaCuse]

 

[Cuseregular]

If there’s equal $/investment/revenue sharing etc., this is how Rutgers can finally get good unfortunately, no Bueno for us if so

 

[javadoc]

Threatening the tax-exempt status of their AD revenues. I love love it! The lemmings are full speed ahead off the cliff. Time for Congress to seize control of the whole thing.

 

[HtownOrange]

To be clear, most of the B1G schools cannot succeed well enough with what they presently earn, so they will mortgage future earnings for a one shot cash infusion. These same schools are not managing what they presently have and everyone expects them to manage the cash infusion properly? Shouldn’t they manage their resources properly before giving them money to spend like a drunk sailor on shore for the first time in months?

Then, they pay back the infusion with an ownership stake, which means they earn less for two decades than they would earn without the cash infusion. They can just as easily hire consultants for a fraction of the cost and make more money over time than it will cost them to pay back the cash infusion.

The B1G must believe that the one time infusion will permanently bury the other conferences. This sounds like a the BoTs, presidents/chancellors, and Athletic Directors are breaching their fiduciary duties on bad bet.

Has Maryland or Rutgers proven they can manage money! Does UM, tOSU, PSU, UNL, and Wiscy need a cash infusion? This is more of a payday loan than a serious investment.

Even then, the investors will only receive a 4% ROI on the investment for 20 years. They will not beat the market, they may not beat inflation. Sure, they will have a stake in the B1G but will it be worth that much more in 20 years?

Any tax accountants want to weigh in? Any finance guys want to run the real numbers? Any investors willing to jump on this?

 

[FloridaCuse]

To be clear, most of the B1G schools cannot succeed well enough with what they presently earn, so they will mortgage future earnings for a one shot cash infusion. These same schools are not managing what they presently have and everyone expects them to manage the cash infusion properly? Shouldn’t they manage their resources properly before giving them money to spend like a drunk sailor on shore for the first time in months?

Then, they pay back the infusion with an ownership stake, which means they earn less for two decades than they would earn without the cash infusion. They can just as easily hire consultants for a fraction of the cost and make more money over time than it will cost them to pay back the cash infusion.

The B1G must believe that the one time infusion will permanently bury the other conferences. This sounds like a the BoTs, presidents/chancellors, and Athletic Directors are breaching their fiduciary duties on bad bet.

Has Maryland or Rutgers proven they can manage money! Does UM, tOSU, PSU, UNL, and Wiscy need a cash infusion? This is more of a payday loan than a serious investment.

Even then, the investors will only receive a 4% ROI on the investment for 20 years. They will not beat the market, they may not beat inflation. Sure, they will have a stake in the B1G but will it be worth that much more in 20 years?

Any tax accountants want to weigh in? Any finance guys want to run the real numbers? Any investors willing to jump on this?

I think they care about 2 things: being ahead of the SEC (they don't care about the rest), and locking themselves in to prevent the formation of super leagues.

 

[HRE Otto IV]

If the B1G is creating a for profit asset to sell, will they not have to pay taxes on it?

Even if that answer is no, not every penny is going to the FB teams. The B1G will keep some of that money. The bigger schools will take a bigger share. The schools will keep some of that money for the general fund. The AD will use some of that money for other sports and facilities. By the time this ONE TIME payment gets to the mid to lower level FB programs there won't be a lot of money to make much of a difference. And that difference will be for a year or two.