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Can Private Equity benefit college sports?
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[QUOTE="HtownOrange, post: 5304036, member: 622"] Can you develop your idea further? I think I have an understanding of your overall position but am not seeing how the PE, taking a sizeable profit from the pot, will benefit the schools or the conference. First, I don't see what they offer that properly run school ADs and conferences can't do for themselves. Sure, the Rutgers example proves that some schools are inept in every facet of AD management, but most B1G are run properly and successfully. Second, one of three things must occur to warrant the expense of the PE: 1) New revenues cover the cost of the PE money (loan payment or share of revenues); 2) Expenses must be cut to cover the return to the PE, they are not loaning money or making an investment for free; or 3) a combination of both. That said, once analyzed, it must then be considered in light of the item #1. Third, assuming Item #s 1 and 2 are satisfied, is it worth the school and/or conference making such a deal? Ex. Even now, with the ACC in third pace among the conferences, there are many concerns that ESPN, our partner, and while not PE, they are in a very tight relationship with the ACC. This will always be with TV partners, why would it be any less when a third party is inserted between the schools/conferences and the TV partner? If this is really about money, which may promoters state as the primary driver, why not simply hire consultants as needed to improve the ADs? How is this arrangement sustainable over time? Serious question as a loan with PE rates would be excessive under most, if not all financial analyses. This is only compounded if the school/conference sells a share to the PE, who will continuously take a large profit. [/QUOTE]
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