Can Private Equity benefit college sports?

[Forza Azzurri]

Assume that Congress finally figures it out and legislates a league, with salary caps, collective bargaining, etc. Does that cool the overall market for new revenues? In the current environment there is little or no control so money is being thrown left and right. Once regulated, does some of that wild-west cash tornado go away?

I don't know.

I stay in my lane.

Private Equity, I know something about.

Forecasting what might happen if there is the legislation you suggest above, I have no idea. Not sure even Nostradamus would have the answer to that one.

Theoretically, it sounds like it would, right?

Reality? Who knows.

 

[Forza Azzurri]

I would worry that they would try to squeeze more money out of STHs, which IMO won't work. I think SU FB is overpriced already. I believe a few years ago they used consultants to guide these prices and it was obvious that they didn't understand the market. If prices go up much more, I am out. I can watch on TV and just go to a game or two.

I think that is the case all over college FB. In professional sports the ticket prices are crazy. But there is plenty of demand. That doesn't exist as much in college.

In the NFL you don't want to give up tickets for fear of not being able to ever get them again. There is also parity in the league, thanks to the cap and draft. When at least half the P4 is well under avg capacity, you cannot treat it like an NFL ticket.

There was actually an article on Florida State football (I forget where) and this is exactly what Florida State is doing. They are catering to wealthy STHs and your average STH is being squeezed out.

 

[Forza Azzurri]

Agreed, that is why I am generally against PE involvement. A loan has a payback schedule and an end. PE ownership is indefinite and will include a buyback/buyout.

This is also why I am not sure how the B1G schools were conned into the scheme to begin with. My only guess is that they intentionally avoided including finance and accounting professionals from the review as well as the now known providing only high level glossy reports to the BoTs. People responsible to actually weigh in on the deal broke it up.

Compares to UU, I have no clue how anyone can consider that the UU personnel are properly and faithfully exercising their fiduciary duties.

It is not a "scheme" and nobody is getting "conned" into it. Now, whether whoever at Utah evaluated this proposal and signed off on has the expertise to do so is a legitimate question. If they don't, that is on Utah, not the PE firm.

The 64,000 question is whether the PE can raise Utah's revenues enough to justify selling a percentage of them. Only time will tell with that.

Remember the PE firm also has a strong incentive to make this work. They have an opportunity cost by allocating their scarce capital to Utah's LLC instead of the myriad other ways they could deploy it and they have fund shareholders to answer to. If this goes south, it isn't just bad for Utah, it is bad for the PE firm also.

 

[HRE Otto IV]

There was actually an article on Florida State football (I forget where) and this is exactly what Florida State is doing. They are catering to wealthy STHs and your average STH is being squeezed out.

The commercialization during TV timeouts has already made games worse IMO. Concession prices are crazy too. Over $5 for a bottle of water?

This isn’t the NFL. The teams are supposed to exist for the community not for profit.

College sports are supposed to be about purity and the love of the game. We are moving further and further away from that. At which point why buy in when there is a better commercial product in the NFL?

Part of me rather see SU play FCS FB than be a minor league franchise with no shot at a title while milking every penny out of the fans.

I guess I can always follow Army FB instead. Or even Fordham.

 

[FloridaCuse]

 

[HRE Otto IV]

I think the best thing that PE can do is stop overpaying HCs and stop giving them these lengthy contracts. Schools have more leverage than they realize yet they give out these contracts that they either cannot get out of, or have to waste large sums of money to buy out.

How was Moore who was likely making less than $1M before becoming HC getting paid over $6M? It was an internal hire. There was no competition for him to sign on. He had (and still has) no track record.

Why did Franklin and Kelly have such long contracts? Obviously they were not so great that tney were significantly better than alternatives.

Why are contracts not incentive backed?

Why is there such a huge gap from being a G6 HC to being a P4 HC? Just because the P4 schools have a lot more money to spend, doesn't mean that you should pay a guy twice as much to do the same job.

Napier was making around $2M before Florida and $7.5M at Florida. Explain that?


I think PE will stop all of this nonsense and save the schools millions in costs.

 

[Forza Azzurri]

I think the best thing that PE can do is stop overpaying HCs and stop giving them these lengthy contracts. Schools have more leverage than they realize yet they give out these contracts that they either cannot get out of, or have to waste large sums of money to buy out.

How was Moore who was likely making less than $1M before becoming HC getting paid over $6M? It was an internal hire. There was no competition for him to sign on. He had (and still has) no track record.

Why did Franklin and Kelly have such long contracts? Obviously they were not so great that tney were significantly better than alternatives.

Why are contracts not incentive backed?

Why is there such a huge gap from being a G6 HC to being a P4 HC? Just because the P4 schools have a lot more money to spend, doesn't mean that you should pay a guy twice as much to do the same job.

Napier was making around $2M before Florida and $7.5M at Florida. Explain that?


I think PE will stop all of this nonsense and save the schools millions in costs.

I don't think PE is going to play a role in that.

Using Utah as an example, unless the coaches' (meaning the entire staff) compensation is partially or totally coming out of the revenues going into the LLC, then PE would play no role in determining how much coaches get paid.

 

[HRE Otto IV]

I don't think PE is going to play a role in that.

Using Utah as an example, unless the coaches' (meaning the entire staff) compensation is partially or totally coming out of the revenues going into the LLC, then PE would play no role in determining how much coaches get paid.

If they are only looking to increase revenue and not cut costs, this will all fall on the fans. Even cutting costs a lot will fall on the fans. That isn’t why programs exist. It could kill the sport.

 

[orange79]

I think the best thing that PE can do is stop overpaying HCs and stop giving them these lengthy contracts. Schools have more leverage than they realize yet they give out these contracts that they either cannot get out of, or have to waste large sums of money to buy out.

How was Moore who was likely making less than $1M before becoming HC getting paid over $6M? It was an internal hire. There was no competition for him to sign on. He had (and still has) no track record.

Why did Franklin and Kelly have such long contracts? Obviously they were not so great that tney were significantly better than alternatives.

Why are contracts not incentive backed?

Why is there such a huge gap from being a G6 HC to being a P4 HC? Just because the P4 schools have a lot more money to spend, doesn't mean that you should pay a guy twice as much to do the same job.

Napier was making around $2M before Florida and $7.5M at Florida. Explain that?


I think PE will stop all of this nonsense and save the schools millions in costs.

 

[SUinNWE]

The commercialization during TV timeouts has already made games worse IMO. Concession prices are crazy too. Over $5 for a bottle of water?

This isn’t the NFL. The teams are supposed to exist for the community not for profit.

College sports are supposed to be about purity and the love of the game. We are moving further and further away from that. At which point why buy in when there is a better commercial product in the NFL?

Part of me rather see SU play FCS FB than be a minor league franchise with no shot at a title while milking every penny out of the fans.

I guess I can always follow Army FB instead. Or even Fordham.

I've been thinking about this a lot with Syracuse.

Loved following players as freshman, seeing their development until they moved on. I think NIL and the transfer portal helps Syracuse be competitive but rooting for a jersey rather than players has been chipping away at my interest. Feels like a lost cause to get excited about players because they'll move on for more money, which I don't blame them.

I think 3-4 years at a school is dead and it's undoubtedly hurt my fandom.

 

[bnoro]

If they are only looking to increase revenue and not cut costs, this will all fall on the fans. Even cutting costs a lot will fall on the fans. That isn’t why programs exist. It could kill the sport.

It's going to kill the sport. Period.

There is no possible way to turn college sports into a wildly profitable business. If anything it's already maxed out.

 

[rocklloyd]

They pull a page from the consultant playbook. Increase prices on everything. Sells ads everywhere. Monetize everything

 

[Forza Azzurri]

If they are only looking to increase revenue and not cut costs, this will all fall on the fans. Even cutting costs a lot will fall on the fans. That isn’t why programs exist. It could kill the sport.

I don't believe that is a 100% true. They may try to squeeze additional revenue out of TV, streaming, etc. They may even have new revenue streams in mind that don't come from fans.

But I suspect you are mostly correct. A lot will likely come from the fans who are the consumers of the product.

Just my opinion but I don't think it will kill the sport. Pro leagues are thriving despite the fact that ticket prices, and everything else associated with attending a game, are insane.

2026 World Cup tix are by far the most expensive they've ever been but FIFA received 5MM ticket applications in the first 24 hours.

However, unless there is radical change there will be clear winners (the SEC and the Big Ten) and clear losers (everyone else) and that, IMHO, will kill programs.

 

[Forza Azzurri]

There was actually an article on Florida State football (I forget where) and this is exactly what Florida State is doing. They are catering to wealthy STHs and your average STH is being squeezed out.

Found the FSU article.

FSU STH article

 

[bnoro]

I don't believe that is a 100% true. They may try to squeeze additional revenue out of TV, streaming, etc. They may even have new revenue streams in mind that don't come from fans.

But I suspect you are mostly correct. A lot will likely come from the fans who are the consumers of the product.

Just my opinion but I don't think it will kill the sport. Pro leagues are thriving despite the fact that ticket prices, and everything else associated with attending a game, are insane.

2026 World Cup tix are by far the most expensive they've ever been but FIFA received 5MM ticket applications in the first 24 hours.

However, unless there is radical change there will be clear winners (the SEC and the Big Ten) and clear losers (everyone else) and that, IMHO, will kill programs.

The World Cup is going to be an absolute disaster. The FIFA ticket applications were before pricing was announced and most people haven't won the "lottery" to even get in, because most of the "lottery winners" are going to be resellers.

If all that remains in the next few years are the B1G and the SEC, then the sport will be dead, even if those teams survive.

Not to mention all the non-revenue sports that are going to get cut as well.

 

[HRE Otto IV]

I don't believe that is a 100% true. They may try to squeeze additional revenue out of TV, streaming, etc. They may even have new revenue streams in mind that don't come from fans.

But I suspect you are mostly correct. A lot will likely come from the fans who are the consumers of the product.

Just my opinion but I don't think it will kill the sport. Pro leagues are thriving despite the fact that ticket prices, and everything else associated with attending a game, are insane.

2026 World Cup tix are by far the most expensive they've ever been but FIFA received 5MM ticket applications in the first 24 hours.

However, unless there is radical change there will be clear winners (the SEC and the Big Ten) and clear losers (everyone else) and that, IMHO, will kill programs.

TV contracts are all tied up for another 5 years. Why would PE come on now when they cannot do anything to increase TV? Getting in before the next negotiations makes sense, but this seems a bit early for that even.

 

[Forza Azzurri]

The World Cup is going to be an absolute disaster. The FIFA ticket applications were before pricing was announced and most people haven't won the "lottery" to even get in, because most of the "lottery winners" are going to be resellers.

If all that remains in the next few years are the B1G and the SEC, then the sport will be dead, even if those teams survive.

Not to mention all the non-revenue sports that are going to get cut as well.

Maybe. After the World Cup groups were drawn and all the game locations and teams announced, those 5MM applications were received within 24 hours. That was last week, not several months ago. If most of those are resllers, that is a hell of a lot of resellers.

Maybe. Not original thinking but I suspect there will be 2 national conferences (The Big 10 is already national stretching from LA to NYC) with, possibly, NFL style play-offs and a college Super Bowl.

Well, cutting the non-revenue sports would be contrary to what universities are supposed to stand for but that horse left the barn ages ago.

 

[bnoro]

Maybe. After the World Cup groups were drawn and all the game locations and teams announced, those 5MM applications were received within 24 hours. That was last week, not several months ago. If most of those are resllers, that is a hell of a lot of resellers.

Maybe. Not original thinking but I suspect there will be 2 national conferences (The Big 10 is already national stretching from LA to NYC) with, possibly, NFL style play-offs and a college Super Bowl.

Well, cutting the non-revenue sports would be contrary to what universities are supposed to stand for but that horse left the barn ages ago.

I work in soccer, I've had a first hand look at how everything has been working so far for the World Cup. They've been asking us to do their jobs for them because they don't want to pay people to do it. Everything is "volunteer work".

 

[Newhouser]

I work in soccer, I've had a first hand look at how everything has been working so far for the World Cup. They've been asking us to do their jobs for them because they don't want to pay people to do it. Everything is "volunteer work".

I'm surprised at that - FIFA really seems like a professional, everything above board operation (sarcasm font).

 

[HRE Otto IV]

Maybe. After the World Cup groups were drawn and all the game locations and teams announced, those 5MM applications were received within 24 hours. That was last week, not several months ago. If most of those are resllers, that is a hell of a lot of resellers.

Maybe. Not original thinking but I suspect there will be 2 national conferences (The Big 10 is already national stretching from LA to NYC) with, possibly, NFL style play-offs and a college Super Bowl.

Well, cutting the non-revenue sports would be contrary to what universities are supposed to stand for but that horse left the barn ages ago.

It will be hard for the SEC to become national. Without Notre Dame they won't get into the Northeast. Looking West there isn't a lot to add. I would think Arizona State and BYU maybe. Getting into California would be great but there are no fits.

 

[Blanko97]

This is going to fail miserably. There may be interest on the front end but what happens after that? How are you making money on athletic departments that have traditionally ran at barely break even? What are costs you're cutting? How much are companies going to pay for ads on uniforms and fields? And then who do you exit to when you need to turn your fund over, you usually can only sell to another financial 2 times before a strategic has to come in and clean up the pieces... That cant happen in college football.

Worse yet for firms though, what about when the state decides that the punitive funding agreements you put in place arent enforceable and the school decides your minority stake is voided? Just doesnt make sense whatsoever.

 

[Knicks411]

This is going to fail miserably. There may be interest on the front end but what happens after that? How are you making money on athletic departments that have traditionally ran at barely break even? What are costs you're cutting? How much are companies going to pay for ads on uniforms and fields? And then who do you exit to when you need to turn your fund over, you usually can only sell to another financial 2 times before a strategic has to come in and clean up the pieces... That cant happen in college football.

Worse yet for firms though, what about when the state decides that the punitive funding agreements you put in place arent enforceable and the school decides your minority stake is voided? Just doesnt make sense whatsoever.

This is definitely my question. The normal model is to buy in for a few years, do whatever you do, and then IPO it or find another private buyer. I don't really see that here.

Also the model is usually the PE company totally buys the company and has complete control. Which doesn't seem like its the case here?

 

[Blanko97]

This is definitely my question. The normal model is to buy in for a few years, do whatever you do, and then IPO it or find another private buyer. I don't really see that here.

Also the model is usually the PE company totally buys the company and has complete control. Which doesn't seem like its the case here?

Thats why i brought up the financing piece. Normally if you dont get full control of the company you could go the lending route and put up the money with some crazy preference and a high interest rate in an effort to either:

Get your insane pay back if they're successful, or

drive the company to the brink of bankruptcy and then either buy it for next to nothing or take control when they go into default.

States would never allow that (duh) so you're buying a minority of a state owned asset (for public schools) who will always lean toward self preservation and give the financiers the finger. I just dont see how it works at all.

 

[Forza Azzurri]

I work in soccer, I've had a first hand look at how everything has been working so far for the World Cup. They've been asking us to do their jobs for them because they don't want to pay people to do it. Everything is "volunteer work".

Doesn't surprise me. Pretty sure IOC uses same MO.

It is going to be interesting to see if the attendance issues with the Club World Cup carry over.

On the one side, the global futbol appetite is insatiable. In India, people paid over $100 to pile into a stadium to see Messi. Not watch him play. Just to catch a glimpse of him. Nuts.

On the flip side, the exorbitant prices and the xenophobic atmosphere may give traveling fans pause.

I suspect demand will win. It usually does.

What do you do in soccer?

 

[AZOrange]

I don't think PE is going to play a role in that.

Using Utah as an example, unless the coaches' (meaning the entire staff) compensation is partially or totally coming out of the revenues going into the LLC, then PE would play no role in determining how much coaches get paid.

I agree with you. Also what schools are going to guinea pig the “pay coaches less” mantra? Good
Luck. The horse is out of the barn