Anyone involved in that is surely more savvy than I, but I’m just not seeing the numbers work… I don’t think the B12 has enough money to keep FSU happy, much less FSU AND PE!
frontofficesports.com
Do you understand what the ROI is for large PE funding of college athletics? For example, it was reported that FSU was seeking $500 million in PE funds in order to buy their way out of the ACC. PE investors require large returns on their investments and usually want large returns, plus a near term exit. How would FSU be able to pay a 20% return ($100 million per year), offer a way to exit at a highly appreciated amount, and still make more revenue than they get from the ACC? (or even any revenue at all?) Financially it doesn't make any sense to me.I’m not sure how private equity “cut costs and grow margins” fits with the growing deficit spending that AAs are doing. It usually means lots of job cuts and longer hours.
Pro sports have the advantage that you can cash in on the franchise sale value. That’s not something for college teams.
The PE firms are coming, though. They’ll be more organized than the NCAA.
How Sports Became a Private Equity Darling
Once a punchline, sports are now the darling of private equity firms and sitting firmly on Wall Street's radar.
Take the B12. Capitalize the 2024 conference operating profit. Take $1B, buy FSU and Clemson, renegotiate media rights value. Find a few new sources of revenue and pay down conference debt. Exit in 3 years with a much higher operating profit. Guaranteed against media rights. Interesting.
The PE proposal I read said the PE investors would take a declining percentage of the growth in revenue over a 20 year period It started at something like 25%.
I don’t think the legal dust settles until all GOR related issues are resolved. It needs to be defeated or released/ bought out.
Although it could TECHNICALLY happen, there really isn’t a feasible scenario in which the BIG or SEC is engaged with a team that is bound by GOR to another conference… if that’s what you meant.
Now, conferences admitting FSU might have risks to their own GOR! FSU has proven they aren’t fans of these agreements. Wonder if they would sign up again with another conference?
I believe you are correct. The ACC is unlikely to negotiate the validity of GOR and will appeal as far as necessary to to protect this contract. Settlement is far, far off into the future. If at all.
PE is going to do to sports, especially at the college level, what PE does in every industry: Suck up any and all available profit in the short term and leave it in shambles for the long term. PE may be more organized than the NCAA, but they’ll have zero interest in creating or maintaining a fair and working system that operates far into the future.I’m not sure how private equity “cut costs and grow margins” fits with the growing deficit spending that AAs are doing. It usually means lots of job cuts and longer hours.
Pro sports have the advantage that you can cash in on the franchise sale value. That’s not something for college teams.
The PE firms are coming, though. They’ll be more organized than the NCAA.
How Sports Became a Private Equity Darling
Once a punchline, sports are now the darling of private equity firms and sitting firmly on Wall Street's radar.
Zero overlap with FSU athletics.
Sort of… SMU didn’t leave behind their media rights. They paid an exit fee and left whole. Aside from that, just the values of each scenario make it apples and oranges.
What? Nobody is talking about Tech moving to the Big 12.
The likelihood that GT moves to another conference depends on the ACC folding up almost completely. There are a couple of B12 guys on You Tube claiming the ACC will fold on August 15 and six teams are moving to the B12. It's all nonsense.
What gets me is when people describe such diatribes on Twitter or Youtube as "the latest news on expansion". Either I am simply a curmudgeon, or the public understanding of the difference between "news" and -- "gossip", "rumor", "bluster", etc has been completely lost.
