Big 12 considering selling 20% of its league to private equity firm
- Thread starter Sean Miller Fan
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SMF has a plan some weeks back with unequal revenue sharing. Maybe that plan toned down and a new plan with conference naming rights would keep FSU and Clemson around. $50 million for the Atlantic Coast CapitalOne Conference. $15 million to FSU, $15 million to Clemson, $5 to NC and $15 million split with the rest. With both plans, FSU and Clemson could be right in line with the Big 10 and SEC.
You're onto something. The Southwest Conference would be cool. Personally, I'm hoping Lume buys the naming rights. The Lume League.
Then we need USAA to sponsor Conference USA… alas, it’s too good to be true.
Absolutely. PE firms buy entities and then either restructure them or include them in a roll up with the ultimate goal of selling for a profit. I just don't see who they will sell a 20% stake to.
And the Securities & Exchange Commission to buy the naming rights to the SEC
Allstate is a better fit for the ACC because of the name. They can call it the Allstate Coastal Conference (still ACC) and with Cal, Stanford and SMU being in coastal states, it makes sense.
But they are liking putzing away an opportunity and will react a year from now with the Mellow Mushroom Conference with payment being free pizza.
But they are liking putzing away an opportunity and will react a year from now with the Mellow Mushroom Conference with payment being free pizza.
Oh my, yes. You first have to consider how the other 80% is really "owned". The conference is a managing entity that serves the voting members. How many members do you have now and how is that voting interest split? Technically Texas and Oklahoma each had less than 10% stake in the conference and look how they demanded and received a larger cut and bullied around everyone else.
I just don't get nor understand how these survive the "non profit" smell test anymore. Every single decision made by any college football program over the last 25 years have been strictly economic. Not money. Not the ability to win championships. Not competition. Not geography. Strictly revenue.
No. They're investing 20% in the current model and hoping to make it profitable enough to sell, at some number much larger than what they paid for the 20% stake. You have to understand that they need to make a lot of money in order to outperform other investments to justify the risk. They feel confident they can do that but they're not going to sit idly by and just hope the value grows.
There isn't any rule against a non profit seeking to grow revenue. It only becomes a problem when they compete with "for profit" businesses or benefit the individuals in charge in obscene ways. College football isn't exactly impacting the NFL's revenue so nobody cares. Plus, conferences function well in this model because they "donate" those revenues, minus expenses and fees, to the schools athletic funds that belong to them. Since most of those schools operate athletics at a loss, it all works out.
They have to get a return though, you would think. I cant imagine this is a long-term plan to sell their 20% share in 10 years. I really think the play here is to get 20% of B12 revenue forever or until they sell.
The private capital discussions have been about getting a piece of future revenue
That seems worse because the percentage will have to offset smaller returns in the short term.
I am not sure if I read this or if I heard it on the Yahoo College Football Podcast but it was something like 10% of AD revenue until the investment was recouped and then a smaller amount for a set time.
Will be interesting to see if we find out what the terms are. 10% seems pretty low for the numbers being tossed around.
Good comparison. However, Barcelona was essentially bankrupt. That was more a bail-out than anything.
I dont understand this desperate need for more football revenue. They still aren't allowed to pay the players. More expensive coaches, weightrooms, and facilities dont add many more wins. This revenue still can't buy players.
Of course it can buy players. They can spend $22M a year to buy players next year.
This is to do two things: (1) try and close the gap between the Big 12 and the ACC where the Big 12 will be behind the ACC by about $10M this year, and close to $15M next year. So they’ve gotta close that gap because Yormark and the Big 12 Extended YouTube/Twitter Universe have spent the past two years beating their chests about how they’ll make more money than the ACC, and it turns out that that’s not true. So this will help remedy that PR problem. Then, (2), which is related to (1), is that Big 12 schools need to cook up $22M a year to pay players, and this will help them do that for a few years. They have a short term cash flow problem, and Yormark wants to sell equity to solve it.
The sharing of $22 million is coming and schools getting creative with "marketing" dollars and funneling money to NIL is also coming. If you think the $22 million will be a magic pill for college football parity you will be disappointed.
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It's not like $22 million is some kind of a hard cap and makes the NIL stuff vanish.
Can you link this $22 million salary cap that you speak of. I seriously cant keep half of this stuff straight. That doesn't sound right.
I still want the link though. You are saying they can spend up to $22 million on players. If they can spend no more than $22 million, why wouldn't it be a "salary cap." I mean I get they dont call it that but isnt that what it basically is?
NCAA, Power Five conferences vote to approve $2.8B settlement in House, Hubbard and Carter cases
In a landmark agreement that will transform the course of major college athletics, the NCAA has left behind its archaic rules and changed the way it's going to do business.
sports.yahoo.com
It wasn’t bankruptcy that was the problem. They needed to either sell off players or find another way to book a ton of revenue in a short period of time to avoid breaking the spending rules they have to follow. But either way, I was only comparing the transactions, not the reasons for the transactions.
NCAA, Power Five conferences vote to approve $2.8B settlement in House, Hubbard and Carter cases
In a landmark agreement that will transform the course of major college athletics, the NCAA has left behind its archaic rules and changed the way it's going to do business.
Thanks. So, this will be a $22 million salary cap in terms of what universities can pay players. Its not yet known if they would have to pay all athletes or an equal amount of female athletes. Either way, this is chump change. Cut programs, cut staffing, get more from the general university fund. There is not this desperate need for more revenue that FSU and the B12 think they need. FSU can pay their athletes $22 million without batting an eyelash.
Title IX will be settled in the coming months.
Schools will distribute the $22 million differently with the lower revenue schools counting many expenses they already have against that money. Also, the $22 million is just the beginning because we are rapidly closing in on athletic departments directly funding NIL, which will not be part of the $22 million.
It will be interesting to see what the appetite will be for cutting sports and using more generally university funds if those funds are to be used to pay athletes.
Guess it depends on where the P&L curve falls for keeping a football program when you have to start sharing larger percentages of your TV revenue with students. Like, the dozen and a half basketball players aren't nearly as hard to fund as the 120 odd football players that are in your program. Makes you wonder if Creighton and Gonzaga aren't in better shape since they don't have to participate in an arms race to have national exposure.
The football number will be closer to 95. It will be interesting to see what schools do that really care about basketball but also want to be good at football.
The 120 number comes from the numbers the NCAA reported as the average number of kids in a program in 2020. I know walk-ons and gray shirts don't get scholarships but they're still kids that need to be included in program numbers. Here nor there but it better illustrates the numbers involved.
My point was more towards the schools that aren't big money and that don't have the boosters to close the difference. The big boys with money will keep all of their programs.
One of the big things to come from the settlement will be doing away with scholarship limits and the setting of hard roster limits. There are going to be schools that start fully funding sports that have been limited in the number of scholarships available, most SEC schools will be giving out 30 plus baseball scholarships in the coming years.
Maybe? There are a lot of ways this can go. Could see programs getting cut in order for a school to devote more resources towards winning football games.
Didn't most if not all colleges use the general university funds for sports way back before tv took off say 30 years ago? Plus, every G5 team uses university funds so the P4 can too (probably just ACC and Big 12 though). Thought I read Connecticut was like $40 million per year which is way too high. One positive of this $22 million "cap" is the likely scaling back of coaches' salaries which were taking off way too much, even before the additional responsibilities of the transfer portal.
The majority of programs still use student fees to help fund the athletic department.
Here’s a late night thought I have on this subject:
We should be actively rooting for the Big 12 to sell its soul to private equity. I think there’s a non-zero chance this ends up imploding in their faces. If that happens and groups begin coming after the conference for their money (perhaps through the media revenue deal if that’s possible), that’d give us a great opportunity to deliver a fatal blow and poach a few schools from them.
We’ve maintained our status quo up to this point by waiting it out… might as well continue doing so.
We should be actively rooting for the Big 12 to sell its soul to private equity. I think there’s a non-zero chance this ends up imploding in their faces. If that happens and groups begin coming after the conference for their money (perhaps through the media revenue deal if that’s possible), that’d give us a great opportunity to deliver a fatal blow and poach a few schools from them.
We’ve maintained our status quo up to this point by waiting it out… might as well continue doing so.
