Big 12 considering selling 20% of its league to private equity firm

[Sean Miller Fan]

Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

The proposed deal with a Luxembourg-based firm would bring a massive influx of cash to the league

www.cbssports.com

This isnt a pro sport, right?

Maybe SMFN should put a bid in for a slice of the ACC.

 

[pittdan77]

Why does such a valuable property that will soon be absorbing the ACC need to do this?

 

[Dointhatrag]

$1B for 20% stake in a dying brand. Who in their right mind thinks the B12 brand is worth $5B

 

[pafootballguy]

Why does such a valuable property that will soon be absorbing the ACC need to do this?

Because college athletics is about to get really expensive

 

[pittchagg]

Why does such a valuable property that will soon be absorbing the ACC need to do this?

Man, the ACC isn’t perfect, but I’m certainly glad that it’s not this garbage.

 

[ratking17]

Mark Cuban declined the offer leaving only one shark, Mr. Wonderful, left to invest

 

[Sean Miller Fan]

Why does such a valuable property that will soon be absorbing the ACC need to do this?

I have no doubt that Greg Swaim and that Baylor student who has that Locked On Podcast are saying this is the greatest thing since 3rd Tier TV rights

 

[TIGER-PAUL]

Jim Phillips should go on Shark Tank...

 

[Dointhatrag]

The article is hilarious. It points to great upside on the next media contract with the thought the B12 could double their current contract.

 

[Sean Miller Fan]

The article is hilarious. It points to great upside on the next media contract with the thought the B12 could double their current contract.

I am on record saying they are going to take a massive haircut in their new deal for 2030-2031. These sports rights fees are through the roof which in one hand you can say benefits the Big 12 but ESPN already has the ACC and SEC and may make a play for the Big Ten. Fox lost the Pac 12 but also didnt want to pay for it. Would they really pay for a "new" Pac 12 replacing USC, UCLA, Washington, and Oregon with Oklahoma St, TT, Baylor, and TCU? Replacing Ore St and WSU with BYU and Kansas?

 

[pittdan77]

Because college athletics is about to get really expensive

So bringing in an entity whose sole purpose is to milk every last dollar possible out of an organization for its shareholders gain helps with that?

 

[pafootballguy]

 

[~IRWT~]

Adapt or die. This is sounding like a formerly PAC 12 board. Hubris is not your friend in this climate.

 

[pafootballguy]

So bringing in an entity whose sole purpose is to milk every last dollar possible out of an organization for its shareholders gain helps with that?

It depends on the terms of the deal and what kind of voting rights that comes with it, if any.

Schools and conferences are getting desperate because $22 million will be the cap on revenue sharing but schools paying collectives for "marketing" is coming fast.

 

[pittdan77]

It depends on the terms of the deal and what kind of voting rights that comes with it, if any.

Schools and conferences are getting desperate because $22 million will be the cap on revenue sharing but schools paying collectives for "marketing" is coming fast.

Private equity doesn't join any party they can't exploit.

 

[pittdan77]

Adapt or die. This is sounding like a formerly PAC 12 board. Hubris is not your friend in this climate.

Someone from the Big12 lecturing about hubris is hilarious.

 

[pittchagg]

The article is hilarious. It points to great upside on the next media contract with the thought the B12 could double their current contract.

The Big 12’s funny money projections strike again!

 

[WillyDavis33]

So this firm is potentially putting a 5B cap value on the Big12. Not sure I agree!

 

[pafootballguy]

The Big 12’s funny money projections strike again!

If you read the article that evaluation did not come from the Big 12

 

[Sean Miller Fan]

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I so hope the Big 12 is renamed the Bucee's League or O'Reilly Auto Parts Conference. Its not without precedent as foreign soccer league's sell the naming rights. Its not the English Premier League, its the Barclays Premier League. And I posted on here during the first Big East raid that the Big East should auction off the naming rights to its league to raise money to keep Miami and VT happy. Back then I said The Verizon League.

 

[Sean Miller Fan]

Man, the ACC isn’t perfect, but I’m certainly glad that it’s not this garbage.

The ACC is stuck in a very bad TV deal. It might be smart to get, say $20 million more per year per school and in return, give up X% of its new TV deal which would start in 2036-37.

 

[HailtoPitt]

ACC will do the same thing. Get ready for the Mellow 14!

 

[Pitt79]

I so hope the Big 12 is renamed the Bucee's League or O'Reilly Auto Parts Conference. Its not without precedent as foreign soccer league's sell the naming rights. Its not the English Premier League, its the Barclays Premier League. And I posted on here during the first Big East raid that the Big East should auction off the naming rights to its league to raise money to keep Miami and VT happy. Back then I said The Verizon League.

Turkish Airways Euroleague in basketball.

 

[HailToPitt725]

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Pretty smart honestly. The Big 12 doesn’t even have 12 members and is a shell of its original iteration; might as well rip the bandaid off and earn an additional $50M to distribute.

The Atlantic Coast Conference is no longer exclusive to the Atlantic Coast… we should get in on this as well.

 

[ratking17]

Pretty smart honestly. The Big 12 doesn’t even have 12 members and is a shell of its original iteration; might as well rip the bandaid off and earn an additional $50M to distribute.

The Atlantic Coast Conference is no longer exclusive to the Atlantic Coast… we should get in on this as well.

The In and out burger conference has a nice ring to it

 

[pittchagg]

If you read the article that evaluation did not come from the Big 12

That doesn’t make the numbers any less funny, and there are so many sources in this article that are clearly out of the Big 12 headquarters that it’s hard to separate.

Here’s the verbatim quote: “The Big 12’s current rights deal is worth $2.3 billion total. … A doubling of the Big 12’s media rights would put the total value of the league at approximately $5 billion in its next negotiation. A 100% increase in value was deemed as reasonable by a media industry source contacted by CBS Sports.”

They’re using *total* money, without regard for the number of years or how much money it’s worth per year. A $2.3B deal that spans six years can easily be “doubled” by making the new deal go for…twelve years. You’re not actually making any more money, though, but the value has doubled!

 

[pittdan77]

That doesn’t make the numbers any less funny, and there are so many sources in this article that are clearly out of the Big 12 headquarters that it’s hard to separate.

Here’s the verbatim quote: “The Big 12’s current rights deal is worth $2.3 billion total. … A doubling of the Big 12’s media rights would put the total value of the league at approximately $5 billion in its next negotiation. A 100% increase in value was deemed as reasonable by a media industry source contacted by CBS Sports.”

They’re using *total* money, without regard for the number of years or how much money it’s worth per year. A $2.3B deal that spans six years can easily be “doubled” by making the new deal go for…twelve years. You’re not actually making any more money, though, but the value has doubled!

Here's the thing. PE isn't going to take chances and assume that the growth will happen. The goal is to buy low and sell high. Private equity does that by making something more profitable. While it's natural to assume that just means growth which creates an "everybody wins" scenario, it always ends up meaning that every last expense that can be cut, is cut in order to make sure every last penny of profit happens. Ask any nurse that works in an ER that is leased out to a management firm that is owned by PE. You're welcome to work out what kind of expenses a conference has and consider the implications. This has a lot of potential for dubious downsides because no matter what happens, the PE firm is going to make its money or rip something to shreds to minimize losses.

 

[pittchagg]

Here's the thing. PE isn't going to take chances and assume that the growth will happen. The goal is to buy low and sell high. Private equity does that by making something more profitable. While it's natural to assume that just means growth which creates an "everybody wins" scenario, it always ends up meaning that every last expense that can be cut, is cut in order to make sure every last penny of profit happens. Ask any nurse that works in an ER that is leased out to a management firm that is owned by PE. You're welcome to work out what kind of expenses a conference has and consider the implications. This has a lot of potential for dubious downsides because no matter what happens, the PE firm is going to make its money or rip something to shreds to minimize losses.

Here’s the other thing, and why this is such a bad deal.

The Big 12’s new TV deal is worth an average of $31.7M per school, right? That’s what’s been reported consistently. It’s also been reported that the deal had a pro rata clause that increased the contract’s total value by one share for the four new additions from the PAC 12. That turned a $380M annual deal into a $507M deal overnight. Nobody’s getting more money, but the overall deal is worth 33% more! Wow!

But if I’m reading this right, it would appear that PE would be getting a 20% cut of the conference’s revenue in exchange for this lump sum payment. So they’re basically getting, what, $100M a year from that $500M TV deal? Which, if my math is right, basically turns each school’s $31.7M share into a $25M share?

 

[pittdan77]

Here’s the other thing, and why this is such a bad deal.

The Big 12’s new TV deal is worth an average of $31.7M per school, right? That’s what’s been reported consistently. It’s also been reported that the deal had a pro rata clause that increased the contract’s total value by one share for the four new additions from the PAC 12. That turned a $380M annual deal into a $507M deal overnight. Nobody’s getting more money, but the overall deal is worth 33% more! Wow!

But if I’m reading this right, it would appear that PE would be getting a 20% cut of the conference’s revenue in exchange for this lump sum payment. So they’re basically getting, what, $100M a year from that $500M TV deal? Which, if my math is right, basically turns each school’s $31.7M share into a $25M share?

I mean, I don't know what share of revenue they'll get but it's certainly not going to be zero.

No idea if this comes to fruition or if it's even a part of the deal but what if PE decides a school isn't pulling its weight and wants to divest in order to raise profits and increase it's own cut of the revenue? That's not off the table.

 

[HailToPitt725]

The In and out burger conference has a nice ring to it

That’s 1000x better than the Bojangles Conference…

 

[pafootballguy]

 

[pittdan77]

That’s 1000x better than the Bojangles Conference…

Pretty much is, now.

 

[pittdan77]

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MAYHEM LIVES!!!!!

 

[pittchagg]

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Keeping the “12” for a conference that has sixteen teams is a delightfully absurd touch to this.

 

[Sean Miller Fan]

Keeping the “12” for a conference that has sixteen teams is a delightfully absurd touch to this.

Yea, why would they keep 12 in the name? The Allstate Conference or the Allstate 16 is better. FWIW, the word "Allstate" is about as good as you can get from what the conference sounds like. "Who will win the Allstate" sounds a whole heck of a lot better than who will win the O'Reilly's.

 

[ratking17]

Yea, why would they keep 12 in the name? The Allstate Conference or the Allstate 16 is better. FWIW, the word "Allstate" is about as good as you can get from what the conference sounds like. "Who will win the Allstate" sounds a whole heck of a lot better than who will win the O'Reilly's.

You clearly forget that "oh oh oh O'Reillys...auto parts" is far superior than "you're in good hands with Allstate." It's not even comparable

 

[Gunga_Galunga]

The Massengill 12 Conference.

 

[~IRWT~]

Here's the thing. PE isn't going to take chances and assume that the growth will happen. The goal is to buy low and sell high. Private equity does that by making something more profitable. While it's natural to assume that just means growth which creates an "everybody wins" scenario, it always ends up meaning that every last expense that can be cut, is cut in order to make sure every last penny of profit happens. Ask any nurse that works in an ER that is leased out to a management firm that is owned by PE. You're welcome to work out what kind of expenses a conference has and consider the implications. This has a lot of potential for dubious downsides because no matter what happens, the PE firm is going to make its money or rip something to shreds to minimize losses.

An owner with 20% stake and rip the 80% owner to shreds?

 

[HailToPitt725]

Yea, why would they keep 12 in the name? The Allstate Conference or the Allstate 16 is better. FWIW, the word "Allstate" is about as good as you can get from what the conference sounds like. "Who will win the Allstate" sounds a whole heck of a lot better than who will win the O'Reilly's.

Agreed, but an even better option would be Southwest Airlines… long live the SWC!

 

[Manster]

Man, the ACC isn’t perfect, but I’m certainly glad that it’s not this garbage.

If you think the ACC won't be entertaining this same thing, then you're clueless. My expectation is that the ACC will do what the ACC does best....they will sit with their thumbs up their ass while other conferences take actions to solidify their financial well-being.

Same as with the recent conference realignment, by the time the ACC wakes up from their slumber, they'll be left with scraps.