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Big 12 Considering $1B in Private Equity

ClubCy said:
This seems potentially and eventually bad in my simple brain. Can anyone smarter than me explain how this could end up a good thing?
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Potential benefits:
-Short term allows BXII to directly compete with SEC and B1G when the new NIL Legislation takes effect. BXII schools would likely be able to spend the full 22M on NIL as opposed to maybe 10-15M
-This theoretically means the BXII is more competitive, gets more playoff spots&wins, etc
-This improves long-term health of league, and makes it more appealing if/when ACC schools need a home
-Long term it requires the league to commit to staying together and foreshadows a big boost in revenue from the next media rights deal
-According to the article, the PE offer is only on the table because the prognosis is that the BXII is currently undervalued. Prognisticators are bullish on value in the future.
 
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Jer said:
All conferences will do it. The question is are you looking for the long-term revenue or a short-term huge cash investment. In the end private equity companies make their money when they sell their shares/interest in the entity - or by capturing a percentage of the annual revenue. That means either somebody else has to pay an average of 20% more than the initial investment or the league would be buying it back - which would cost about 20% more than the initial cash infusion.

It's complicated and there are pros/cons just like everything else. There's no such thing as free money - with the exception of the media rights deals.
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Thank you for the insight. I'm curious what the goal of the B12 would be in taking the money. Just to get enough money to keep up with the P2 in the next few years leading up to the next tv contract? Would argue the media rights deal is not free money either, given the compromises that have been made with scheduling/realignment.

Long term the investors are going to want a return, which means taking more money from the schools over time than they are giving now.
 
Can anyone describe a time when involving private equity firms has ended in a positive situation for the borrower? Seems every time we hear about private equity firms, it ends in breaking up companies to sell the parts.

Just seems like an extremely short sighted solution to an issue that’s not going away anytime soon.
 
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Clonehomer said:
Can anyone describe a time when involving private equity firms has ended in a positive situation for the borrower? Seems every time we hear about private equity firms, it ends in breaking up companies to sell the parts.

Just seems like an extremely short sighted solution to an issue that’s not going away anytime soon.
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It can be beneficial with start up companies who need cash / funds to build up their business. Similar concept to Shark Tank show.
 
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Clonehomer said:
Can anyone describe a time when involving private equity firms has ended in a positive situation for the borrower? Seems every time we hear about private equity firms, it ends in breaking up companies to sell the parts.

Just seems like an extremely short sighted solution to an issue that’s not going away anytime soon.
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While I completely agree with this, I believe this situation may be unique. BY has proven to be an out-of-the-box thinker/doer. I suspect more stadium/field branding type stuff, offsetting any advertising costs paid directly to the media. I also suspect a 'rights' to things like 'Olympic Sports' and what not, which can then be marketed to outside media. I'm sure we can put our heads together and come up with all kinds of stuff these folks can make money on.
 
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NWICY said:
If it would stop the never ending realignment carousel it would be worth it. (Maybe)
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It's not done though. The SEC and B1G will be grabbing their teams from the ACC and the Big 12 would be in line to grab what's left.
 
Clonehomer said:
Can anyone describe a time when involving private equity firms has ended in a positive situation for the borrower? Seems every time we hear about private equity firms, it ends in breaking up companies to sell the parts.

Just seems like an extremely short sighted solution to an issue that’s not going away anytime soon.
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I share the concerns but if we are looking short term with hope of ISU being part of one break away Super Conference in 10ish years getting money now to bridge the gap from the Big 10 and SEC to be competitive could be the right move. Especially now with the upcoming 22mil NIL cost for each school.
 
Cloneon said:
While I completely agree with this, I believe this situation may be unique. BY has proven to be an out-of-the-box thinker/doer. I suspect more stadium/field branding type stuff, offsetting any advertising costs paid directly to the media. I also suspect a 'rights' to things like 'Olympic Sports' and what not, which can then be marketed to outside media. I'm sure we can put our heads together and come up with all kinds of stuff these folks can make money on.
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This PE group has ownership in many other sports leagues/teams. This isn't their first venture into sports, which is somewhat reassuring.
 
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Malty Flannel said:
Potential benefits:
-Short term allows BXII to directly compete with SEC and B1G when the new NIL Legislation takes effect. BXII schools would likely be able to spend the full 22M on NIL as opposed to maybe 10-15M
-This theoretically means the BXII is more competitive, gets more playoff spots&wins, etc
-This improves long-term health of league, and makes it more appealing if/when ACC schools need a home
-Long term it requires the league to commit to staying together and foreshadows a big boost in revenue from the next media rights deal
-According to the article, the PE offer is only on the table because the prognosis is that the BXII is currently undervalued. Prognisticators are bullish on value in the future.
Click to expand...

Don't a lot of these potential benefits hinge on the Big 12 being the only conference to get into bed with PE? As soon as the B1G or SEC follows suit - and they can afford to sit back for a year or two and learn from our inevitable mistakes as a first mover - the financial advantage they have over us returns.

How can the Big 12's media rights be so vastly undervalued when they were just renegotiated?
 
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Cloneon said:
While I completely agree with this, I believe this situation may be unique. BY has proven to be an out-of-the-box thinker/doer. I suspect more stadium/field branding type stuff, offsetting any advertising costs paid directly to the media. I also suspect a 'rights' to things like 'Olympic Sports' and what not, which can then be marketed to outside media. I'm sure we can put our heads together and come up with all kinds of stuff these folks can make money on.
Click to expand...

I followed WBB and wrestling waaaaay more when it was made easier to follow. Varsity app did as much for me as espn+.
 
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