We've got Grey Duck beer sales for NIL, meanwhile...University of Utah nearing landmark private equity deal expected to generate $500 million

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minnyrules11 said:
Try at on tap at Baldy's in Lakeville. I'm not sure if they have it anywhere. I did my part last Friday but you are correct in the can is not as good.
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I thought it was decent.
 

forever a gopher said:
It seems this has a high likelihood of going really poorly. If private equity is giving hundreds of millions of dollars, they're going to want a return, and quick. PE isn't exactly known for taking a calculated, slow, and long-term view on investments. Most athletic programs either break even or run a deficit. Even tOSU runs a deficit and pulls from the general fund. So where is this monetary return going to come from? Jacking up the prices? There is only so high they can go. Cut programs down to only the ones that make money?

My guess is Utah fans will see ticket prices, concessions, parking, increases by a fair amount, and money losing programs cut to make the PE people happy. The only people coming out ahead will be private equity investors and the athletes in the money making sports, until the golden goose has been fully strangled, when the pyramid scheme will come tumbling down.
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The company I work for was recently purchased by PE and all they did was gut the organization and take away benefits from employees. It will be interesting to see how this plays out. PE only cares about themselves.
 


BleedGopher said:
Per Yahoo Sports:

Private equity has officially arrived in college athletics.

The University of Utah is on the cusp of striking the industry’s first partnership with an equity firm in a marriage that features a nine-figure capital infusion and the creation and shared ownership of a for-profit entity to operate athletics outside of the university.

The new venture is expected to generate as much or more than $500 million in capital — a groundbreaking and innovative move that may pave the way for more schools and conferences to pursue such a concept.

Finalization of the project is expected soon pending authorization on Tuesday from the University of Utah Board of Trustees. The board is granting the university permission to move forward with the agreement with Otro Capital, a New York-based sports private equity firm.

Multiple officials with knowledge of the project spoke to Yahoo Sports under condition of anonymity.

The endeavor with Otro Capital is more than just a nine-figure infusion of cash.

At the center of the project is the creation of a private, independent offshoot of the athletic department — Utah Brands & Entertainment LLC — in a first-of-its-kind partnership between a university athletic department and an equity partner. An executive team from Otro Capital, combined with athletics department personnel, will lead the creation and operation of the new company.

The university retains majority ownership and decision-making authority of Utah Brands & Entertainment. Otro marries the capital infusion with a team of experienced operators. A president from outside the university will preside over the company and report to a board, chaired by Utah athletic director Mark Harlan, with seats for trustees and Otro executives.

The project includes a fascinating wrinkle. The university is offering a prominent group of donors the ability to purchase a stake in Utah Brands & Entertainment. Already, university officials have culled a small donor base to generate millions in purchase agreements. The more than $500 million capital figure includes both the nine-figure cash infusion from Otro as well as those capital commitments from donors.

Utah Brands & Entertainment will house most of the components traditionally held within the university’s athletic department, including many athletic personnel and divisions. However, fundraising will remain with the school.

The new company’s primary goal is to generate more revenue across an assortment of areas, including ticketing, concessions, corporate sales and sponsorships. Charged with overseeing and operating the revenue-share pay system for Utah athletes, the new entity provides the department with more flexibility and freedom considering it will operate separate from a public university.

sports.yahoo.com

Sources: University of Utah nearing landmark private equity deal expected to generate $500 million

The new venture would generate a massive amount of money for the school in a groundbreaking move that may pave the way for more schools and conferences to do the same.
sports.yahoo.com sports.yahoo.com

Go Gophers!!
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If they really need to raise capital….just sell public equity shares, bonds.

This is a mistake they will come to regret.
 



The new company’s primary goal is to generate more revenue across an assortment of areas, including ticketing, concessions, corporate sales and sponsorships. Charged with overseeing and operating the revenue-share pay system for Utah athletes, the new entity provides the department with more flexibility and freedom considering it will operate separate from a public university.
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Their “expertise” will be equivalent at best to the in-house employees and consultants and very likely much worse, borderline incompetent. Smoke and mirrors without any accountability or real numbers or any credible plan to raise revenue that University employees and existing consultants couldn’t already enact. A BS factory.

Flexibility and freedom..to do what? Invest in other PE ventures, form partnerships with other PE companies, escape expensive public employee compensation packages.

If the entity is for-profit one would expect a new tax drag. How do they plan to weasel out of that.

Costs can theoretically be cut by headcount reduction, benefit reduction, pooling resources in personnel, divisions, operations with other programs they trick into signing on and, revenue juiced by squeezing fans but you don’t need PE for any of that.
 






I'm not smart enough to know how this works. So an investment firm give the school a pile of money then gets a yearly return on that investment?
 



If I'm reading this correctly, it looks a lot like an expansion and consolidation of the rights granted to companies like Learfield, Legends, concessionaires, etc. with a payment to the school coming up front rather than over a term. Utah has also looped their major donors into the arrangement as investors, meaning that a portion of any annual dividends that come to the company can then be re-directed to the school as a donation and/or to their NIL fund. The athletic department will principally handle administration and fundraising and the new company will oversee all commercial aspects of their sports rather than 3-5 different companies.

I understand why PE involvement rubs many the wrong way, but this otherwise looks like a natural evolution of what schools were already doing. Presumably conferences will continue to investigate selling these rights collectively (as the B1G is already doing) and some may tell members that they may not enter into such agreements on their own.
 


gopherbadgerman said:
I'm not smart enough to know how this works. So an investment firm give the school a pile of money then gets a yearly return on that investment?
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Pretty much, yes. PE gives you a bunch of money now in return for the promise of more money later (collected over time, of course). You don't produce enough money on the schedule they want? Well, that's when the fun stats! They start tinkering with your operation to make it more profitable.
 

MGGopher said:
Pretty much, yes. PE gives you a bunch of money now in return for the promise of more money later (collected over time, of course). You don't produce enough money on the schedule they want? Well, that's when the fun stats! They start tinkering with your operation to make it more profitable.
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Generally, playing with the PE guys is like playing with the devil and I would guess these college folks are out of their league here, but it’s the wild wild West so who knows.
 

MaxyJR1 said:
Already seen some in congress say they will be looking to pull university tax exemption for universities that enter into these agreements.
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Want to buy some oceanfront property in Iowa I have for sale?
 





NateDawgUM said:
Friendly reminder that private equity never enters anything without having the exit mapped out and the way there is usually strewn with dead bodies.
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I worked for a mid-size corp that was purchased by a NY Private Equity firm and those people don't make a $500M investment and truly have a limited say in how things are run. In my company's case, we would have increased annual sales of 9%, but the firm had projected 10%, and they would lay off people to hit their numbers. I think the Univ of Utah academics are likely to get a harsh lesson in what it's like to run with the wolves in Private Equity that are flashing that kind of money. If they make that kind of investment, they'll want their returns. So, if a coach isn't delivering, they'll be gone. Hell, the B12 did their private equity offer on a much smaller scale and after reading the terms, not one school has taken the offer for just $30M. When all is said and done, I think we'll find Utes were the ones who got educated in high finance.

Ohhh.... that mid-size company I once worked for, they couldn't consistently hit their numbers and with the economy at the time, the Equity firm cut it up by product line and sold it off in pieces. It will be interesting to see what happens if the new board gets in there and starts saying things to Utah like, "We should really cut these three other sports to focus resources on more profitable revenue streams, because this is what the numbers tell us and this is a business, right??"
 



balds said:
Utah athletic department meeting in 2031:

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The last sentence should be what every fan and player is asking. Surely no kickbacks or other arrangements were made.



99Gopher said:
I worked for a mid-size corp that was purchased by a NY Private Equity firm and those people don't make a $500M investment and truly have a limited say in how things are run. In my company's case, we would have increased annual sales of 9%, but the firm had projected 10%, and they would lay off people to hit their numbers. I think the Univ of Utah academics are likely to get a harsh lesson in what it's like to run with the wolves in Private Equity that are flashing that kind of money. If they make that kind of investment, they'll want their returns. So, if a coach isn't delivering, they'll be gone. Hell, the B12 did their private equity offer on a much smaller scale and after reading the terms, not one school has taken the offer for just $30M. When all is said and done, I think we'll find Utes were the ones who got educated in high finance.

Ohhh.... that mid-size company I once worked for, they couldn't consistently hit their numbers and with the economy at the time, the Equity firm cut it up by product line and sold it off in pieces. It will be interesting to see what happens if the new board gets in there and starts saying things to Utah like, "We should really cut these three other sports to focus resources on more profitable revenue streams, because this is what the numbers tell us and this is a business, right??"
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This^

Best case scenario. The company entities will be driven into the ditch, and on the other side of the transaction the more gullible limited partner investor returns can range from middling to catastrophic ie 100% losses, with no recourse due to signing of legal docs, layers of shell corps, and NDAs to keep it hush hush. The creditors and general partners do well. You will never hear about these implosions in the nightly news or see them on Google.

Now they are looking at college sports and sure, we can all see why. Don’t do it.
 


WAGopher said:
Hopefully, this shuts down B1G Commissioner Tony Petitti about his similar ideas for the conference. But I doubt it.
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I don’t recall a Big Ten commissioner saying that they’ve seen some offers and they didn’t see an offer that offered anything that they couldn’t just do themselves… and not sell out.
 

A_Slab_of_Bacon said:
I don’t recall a Big Ten commissioner saying that they’ve seen some offers and they didn’t see an offer that offered anything that they couldn’t just do themselves… and not sell out.
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Late last fall, the current Big Ten Commissioner Petitti was in talks with private equity firm UC Investments for a cash infusion of $2.4 billion and to create a stand alone company called Big Ten Investments, similar to the Utah State company.

Talks were far enough along that it caused Michigan to publicly dissent and say that if the PE deal went through they may leave the Big Ten.

After the kerfuffle, UC Investments announced it would wait for "unity of the 18 Big Ten university members" before proceeding.

www.usatoday.com

Could Michigan football leave Big Ten? Private equity deal puts that option on the table

Private equity deal "would be the end of Michigan, as far as I can see, in the Big Ten conference," one member of U-M's Board of Regents said.
www.usatoday.com
 

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