Further proof that college sports are a business (as if anyone didn't already know)

[Wrestleknownothing]

The Big 12 is in preliminary talks to take an $800 million to $1 billion investment from a private equity fund in exchange for 15% - 20% ownership of the conference, according to The Athletic.

The Big 12 is also considering selling naming rights. Allstate is considered the front runner, making the potential future name of the conference the Allstate 12. It is believed the naming rights could sell for nine figures.

If it happens (still an if at this point, but doesn't it feel inevitable?) it will set up some interesting conflicts.

On the one hand, you have more money. Hurray. Wrestling is saved. On the other hand, you have a new partner, who cares not at all for things like the educational mission of the member schools or money losing sports like not-football/basketball. Uh oh.

That the money moves from the conference to the schools and the schools get to decide how to use it, presumably takes care of the second scenario, but no one is better at creatively structuring contracts than private equity funds and hedge funds. As a matter of fact, I could argue that the real value add of private equity has nothing to do with their assets and everything to do with how they structure and finance their assets (i.e. contracts).

[1032004]

The private equity thing scares me.  Seems like they like to simultaneously kill businesses and enrich themselves.  Could certainly see them doing away with many non revenue sports.

[Crotalus]

But please, oh please, don't let us tarnish the sanctity of our beloved "amateur" sports by letting athletes get a piece of the pie.

[ionel]

1 hour ago, Wrestleknownothing said:

The Big 12 is in preliminary talks to take an $800 million to $1 billion investment from a private equity fund in exchange for 15% - 20% ownership of the conference, according to The Athletic.

The Big 12 is also considering selling naming rights. Allstate is considered the front runner, making the potential future name of the conference the Allstate 12. It is believed the naming rights could sell for nine figures.

If it happens (still an if at this point, but doesn't it feel inevitable?) it will set up some interesting conflicts.

On the one hand, you have more money. Hurray. Wrestling is saved. On the other hand, you have a new partner, who cares not at all for things like the educational mission of the member schools or money losing sports like not-football/basketball. Uh oh.

That the money moves from the conference to the schools and the schools get to decide how to use it, presumably takes care of the second scenario, but no one is better at creatively structuring contracts than private equity funds and hedge funds. As a matter of fact, I could argue that the real value add of private equity has nothing to do with their assets and everything to do with how they structure and finance their assets (i.e. contracts).

Given yesterday's payout I've already suggested selling the naming rights to Elon for a cool 10% or $5.6B and name it the Great Big SpaceX conference.  Still awaiting a response.

[flyingcement]

14 minutes ago, 1032004 said:

The private equity thing scares me.  Seems like they like to simultaneously kill businesses and enrich themselves.  Could certainly see them doing away with many non revenue sports.

that is the classic private equity approach.  identify the core value of the business - and strip everything else away.  We all love wrestling, but that doesn't quite come through in the way private equity investors would prefer ($$$)

[Wrestleknownothing]

55 minutes ago, ionel said:

Given yesterday's payout I've already suggested selling the naming rights to Elon for a cool 10% or $5.6B and name it the Great Big SpaceX conference.  Still awaiting a response.

Elon is not out of the woods yet on the pay package. The accounting is different now than it was back then.

[boconnell]

4 hours ago, Wrestleknownothing said:

On the one hand, you have more money. Hurray. Wrestling is saved. On the other hand, you have a new partner, who cares not at all for things like the educational mission of the member schools or money losing sports like not-football/basketball. Uh oh.

Do you think the Athletic Directors and athletic departments cared about the educational mission of the member schools?  The people making decisions 20 years ago cared exactly as much about money as the people at Allstate do.  

[Wrestleknownothing]

8 minutes ago, boconnell said:

Do you think the Athletic Directors and athletic departments cared about the educational mission of the member schools?  The people making decisions 20 years ago cared exactly as much about money as the people at Allstate do.  

It is hard to say how much they care, but this much I know. You get what you measure, but only exactly what you measure. If ADs are measured on winning then they will spend whatever it takes to win. Combine that with the fact that live sports entertainment is the world's most valuable broadcast commodity and it really is inevitable that private equity and advertisers will take notice.

[boconnell]

4 minutes ago, Wrestleknownothing said:

It is hard to say how much they care, but this much I know. You get what you measure, but only exactly what you measure. If ADs are measured on winning then they will spend whatever it takes to win. Combine that with the fact that live sports entertainment is the world's most valuable broadcast commodity and it really is inevitable that private equity and advertisers will take notice.

I would agree.  I would also say that every AD has fully believed that more money equals more winning, and they have pursued money as a means of winning.

[ionel]

3 hours ago, Wrestleknownothing said:

Elon is not out of the woods yet on the pay package. The accounting is different now than it was back then.

But he does have some money correct?

You don't seem to be a "fan." 

https://www.reuters.com/business/autos-transportation/musks-small-investor-army-cheers-apparent-approval-56-billion-tesla-pay-package-2024-06-13/

[billyhoyle]

6 hours ago, Wrestleknownothing said:

The Big 12 is in preliminary talks to take an $800 million to $1 billion investment from a private equity fund in exchange for 15% - 20% ownership of the conference, according to The Athletic.

The Big 12 is also considering selling naming rights. Allstate is considered the front runner, making the potential future name of the conference the Allstate 12. It is believed the naming rights could sell for nine figures.

If it happens (still an if at this point, but doesn't it feel inevitable?) it will set up some interesting conflicts.

On the one hand, you have more money. Hurray. Wrestling is saved. On the other hand, you have a new partner, who cares not at all for things like the educational mission of the member schools or money losing sports like not-football/basketball. Uh oh.

That the money moves from the conference to the schools and the schools get to decide how to use it, presumably takes care of the second scenario, but no one is better at creatively structuring contracts than private equity funds and hedge funds. As a matter of fact, I could argue that the real value add of private equity has nothing to do with their assets and everything to do with how they structure and finance their assets (i.e. contracts).

Just when you think things can't get any worse, they always do.  How could they possibly retain nonprofit status if they do this?

[Wrestleknownothing]

1 hour ago, ionel said:

But he does have some money correct?

You don't seem to be a "fan." 

https://www.reuters.com/business/autos-transportation/musks-small-investor-army-cheers-apparent-approval-56-billion-tesla-pay-package-2024-06-13/

I am a huge fan of the drama. And a Tesla shareholder.

The issue with the comp is highly technical. The Delaware Chancery court ruled that the first shareholder vote was flawed in that it failed to correctly disclose the inherent conflicts in granting massive amounts of options to an effectively controlling shareholder. Tesla's theory is that by having a second vote they can address the flaw, role back time to 2018, and re-issue the options. But it is not at all clear they can. If they cannot then his option grants are very in-the-money, causing Tesla to have a huge tax liability. And to make him whole (sort of) they would need to issue many more options given the decline in stock price.

At the end of the day, he did what they asked in order to earn the options (and then some), so I am sympathetic to his argument, but that does not mean the court will be.