As things move from the traditional 4 years as a student, I thought this would be interesting
https://www.cnbc.com/2024/12/19/college-sports-programs-valuations.html
https://www.cnbc.com/2024/12/19/college-sports-programs-valuations.html
CNBC makes comparative valuation of college sports programs
- Thread starter mdk01
- Start date
In the future Private Equity will own the licensing rights for many of these schools and operate the football and basketball programs like semi-pro teams. The universities will prob get lump sum for rights plus rev share for use of facilities.
Without even looking ND came in first with double the value of SEC and BIG schools combined.
GO RU
Pre season. ND and FSU were top 2 in value. Post season they fell out of the top 25.
It’s an interesting evaluation. Would love to see the real guts of the underwriting there. Lots of assumptions would have to be made to get to these headline numbers.
Not a surprise where RU is. Really should be higher given our alumni base, big ten affiliation, and upcoming big ten revenue. For example if you take history and brand recognition out of it, I’d expect nearly all the ACC schools to be lower than any big ten program. Especially a program like Pitt where they don’t even own their own stadium and the future ACC cash flows are tens of millions less than the big ten. Those are major assets missing from their balance sheet if you’re considering what they’re worth from a business standpoint.
Not a surprise where RU is. Really should be higher given our alumni base, big ten affiliation, and upcoming big ten revenue. For example if you take history and brand recognition out of it, I’d expect nearly all the ACC schools to be lower than any big ten program. Especially a program like Pitt where they don’t even own their own stadium and the future ACC cash flows are tens of millions less than the big ten. Those are major assets missing from their balance sheet if you’re considering what they’re worth from a business standpoint.
Don’t see how it’s possible. As we know, college sports is a money loser for almost all colleges. Now with revenue sharing it is a bigger money loser. No profits. What are they buying? How do they sweep cash flow? What is the exit?
Upcoming Big 10 revenue would have to be discounted because it's not happening yet.
This isn’t venture capital. You don’t price off revenue. Its profit. There is no profit.
Any school who agrees to get in bed with Private Equity will eventually see their athletic programs sold off for parts.
Always been their name.
UT Austin is just stupid.
An argument you can’t win.
Do we go by Rutgers New Brunswick?
Ok so what does that mean for the pro sports like football and men’s basketball ?
It means something totally different because they make money. Maybe the owner wants to take something off the table. Maybe he’s seeking capital to build a new stadium and doesn’t want to fund himself. Totally different. No private equity is buying a college sports team. It’s dumb.
I don't know of any pro sports whose owners are Private Equity firms. Basically, what's been pitched is Private Equity Firms would come in, give a lump sum of cash of say $500 mil. to purchase 51% of a Universities athletics. The Firms will recoup that investment and then some for their shareholders/investors in the shortest time possible.
Just look at what Private Equity does in other areas of business, if profit doesn't cover the investment they start siphoning off from other areas of that business. Reduce quality, smaller portions, sell off locations for land value, it's all about the bottom line. They're not there to build long term brands rather look to make as much money as they can in the shortest term possible.
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Was listening to an interview in CNBC and the guest was like since colleges are nonprofits the colleges would have to roll athletics into an SPV and that would be the investable entity. I think they mentioned Clemson has already created an entity called Clemson Ventures with the assumption it is for private capital investment. They mentioned something about 10% cap on investment but there aren’t any rules on that. Also talked about a lot of bloat in ADs which would lead one to believe they’d look to run things more efficiently.
Private equity looks to buy in to college sports
Schools with the most valuable athletic programs, and the strongest football performance, sit in the best position to capitalize.
www.cnbc.com
I don’t disagree as an outsider from Texas, however I traveled there a lot for work and never hear of UT San Antonio or UT Dallas before. I just knew that UT was in Austin. Those branch or whatever you cal them campuses are massive. So to Texans that distinction matters. Those satellite or whatever you call them are like 30k person schools and they of course take pride in their own version of UT. It seems very different from like a Penn state Altoona or behrend or a Rutgers Camden.
So rutgers can’t raise enough money to compete …but if someone came in with the infusion of $500 million , you wouldn’t at least listen to the pitch ?
But private equity doesn’t traditionally hold investments long term. I do know of some other fund strategies that are more super long term but PE funds last like 10 to 15 Years and then return the capital to investors and launch new funds and so on. I assume there would be some new type of fund structure? Colleges are all about existing in perpetuity. An investor wants their capital back at some point. Seems incongruent. Once you take private equity money as an owner you are eventually exiting the business once PE wants to sell. Also if things go sideways on the IRR look out. They will try and mitigate losses.
I would say it will be more like consortium ownership. Some ADs going public. The current model is a mess and basically broken. Some coherence and structure will be needed. The NFL has salary caps, shared revenues, and somehow manages to keep star players for more than a year. Phil Knight giving Oregon a blank check will bust things wide open without any controls in place. I don't know what it will look like in a few years but it won't look like the current shitshow. Probably a cash flow business where investors get annual checks and some money is retained for operations, salaries etc...
Ok found maybe an answer to my own question. CNBC had someone on bc the commentator basically brought up what I said above. You can’t just sell and trade the athletic program like a typical private investment. So the answer the expert gave was that Private equity would set up a special purpose vehicle that sits outside the university and that would hold all the revenue generating properties suck as media, licensing, sponsorship etc. and that SPV can be bought and sold numerous times while the athletic program and the teams are not what is actually bought and sold.
Ever watch Shark Tank? Every episode every "shark" mentions.. "how do I get my money out" or "until I get my money back" etc.
Stay away from private equity... especially if you are an established business.. they turn your business into an ATM and they get their money out quick then keep taking cash pr selling everything that was built up over decades.
I saw a CNBC segment yesterday i think.. below.. they actually suggest taking private equity to "compete".. to become competitive with the big money teams... OMG how bad an idea that is.. borrow money to give to athletes that will be gone in 4-5 years.. and what do you get? A championship? A CFP loss? And that is if everything goes right. How long will that boost your ticket and branded product sales? How long will that last? And what would private equity TAKE from you for this? It would be a money drain off your current revenue.
They will paint a conservative picture about what you are "worth" now so they get a good price for their investment... and they will project a rosy future where their fee is just a tiny fraction of some much larger pie slice than they currently get.
And then you have to fear teh private equity folk seducing ADs and other university execs.. getting them and their friends and family in on this deal which will drain sports revenue now and forever.
F'n vampires.
Stay away from private equity... especially if you are an established business.. they turn your business into an ATM and they get their money out quick then keep taking cash pr selling everything that was built up over decades.
I saw a CNBC segment yesterday i think.. below.. they actually suggest taking private equity to "compete".. to become competitive with the big money teams... OMG how bad an idea that is.. borrow money to give to athletes that will be gone in 4-5 years.. and what do you get? A championship? A CFP loss? And that is if everything goes right. How long will that boost your ticket and branded product sales? How long will that last? And what would private equity TAKE from you for this? It would be a money drain off your current revenue.
They will paint a conservative picture about what you are "worth" now so they get a good price for their investment... and they will project a rosy future where their fee is just a tiny fraction of some much larger pie slice than they currently get.
And then you have to fear teh private equity folk seducing ADs and other university execs.. getting them and their friends and family in on this deal which will drain sports revenue now and forever.
F'n vampires.
Exactly. People on this thread talking about 15-20 year time horizon for PE obviously don't know much about PE. Real Estate or infrastructure deals possibly can stretch to that length. But a rev play absolutely not. Time horizon on that is as quick as they can gain critical mass gobbling up like assets iit's packaged sold and onto the next deal.
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I understand Ohio State and Texas as #1 and #2 but was really surprised to see TAMU that high.
Haver a friend in construction.. big government infrastructure stuff.. he's an Electrical Engineer. I mention PE to him re college sports.. then mention I saw a story about PE buying up service industry stuff.. he tells me they have been destroying construction industry for a decade or more. Says they come in, look to cut corners everywhere.. they make their money and the things they build go to crap in 3 years rather than 40 years. He keeps fighting with them over the proper way to do this or that and he is so frustrated.
From the outside.. I chalked this all up to a growing lack of competence.. but it very well just be avaricious interests of the PE guys.
Which goes to show how absolutely stupid these lists are
FSU is not, and will never be, # 2
Nor are they 24th with Kentucky, Arkansas, Wisconsin and Michigan State ahead of them
Agreed. As a p
Professor in college used to say what do you want the data to say. You can make it do whatever you wish.
