I would be shocked if the deal goes through after the uproar, and even more shocked if any money is allocated to anything other than football or our debt if it does go through.
College Sports (Football)
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I would be shocked if the deal goes through after the uproar, and even more shocked if any money is allocated to anything other than football or our debt if it does go through.
Only a pleasant 13 mile drive on the 405.
This is true, but not 5-years, it will be less than 2-years.
I'm very comfortable in the Josh Whitman camp. As well as 15 other B1G's.
I'm not sure why this board is so anti-Whitman.
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sbillini
- st petersburg, fl
speaking only for myself, i've seen a fair amount of these types of deals in my career (frankly, probably more than JW has), and more often than not, they usually don't end well. The key question, imo, is "why?". The more i think about the "why?" the more skeptical i become.
you can call that "anti-whitman" if you want.
RabidDawgClassic
- Los Angeles, CA
For comparison, and to put in perspective just how much of a Faustian bargain this is, look at Las Vegas. In 2019, MGM entered into a private equity deal with Blackstone Realty Holdings. Swimming in debt, MGM sold a large share of the Bellagio and Cosmoplitan for $8.5 billion, with the agreement that Blackstone would lease back the day-to-day operations to MGM.
The result: MGM now pays Blackstone $1.4 million dollars PER DAY in rent between those two properties. That doesn’t include the Aria and Vdara, which are under a separate deal made by MGM. This is why we now see resort fees added on your hotel bill outside of the original booking, no free parking and $25 minimum blackjack tables. The casinos now have to cater almost exclusively to whales because they can’t make that rent at $5 per hand.
Caesar’s also has a similar private equity deal.
So while this PE deal with the B1G might be good for the folks who draw fat paychecks and can now afford to make those paychecks even fatter, the fan experience will become more cost prohibitive than it already has become in recent years.
It is indeed a payday loan for the rich.
The result: MGM now pays Blackstone $1.4 million dollars PER DAY in rent between those two properties. That doesn’t include the Aria and Vdara, which are under a separate deal made by MGM. This is why we now see resort fees added on your hotel bill outside of the original booking, no free parking and $25 minimum blackjack tables. The casinos now have to cater almost exclusively to whales because they can’t make that rent at $5 per hand.
Caesar’s also has a similar private equity deal.
So while this PE deal with the B1G might be good for the folks who draw fat paychecks and can now afford to make those paychecks even fatter, the fan experience will become more cost prohibitive than it already has become in recent years.
It is indeed a payday loan for the rich.
Are we really still with this line of thinking?
We don't know the inner details, that's why I so surprised so many take a strong position against it when so many B1G's are for it. But people still don't even understand the basics and they're against it.
sbillini
- st petersburg, fl
Are we really still with this line of thinking?
We don't know the inner details, that's why I so surprised so many take a strong position against it when so many B1G's are for it. But people still don't even understand the basics and they're against it.
technically this is private equity. It's an equity stake in a non-publicly traded entity.
But, yes, it's not what's typically thought of as private equity in a traditional sense. Specifically, a 10% stake isn't going to give any material operational control of the business. CU Investments isn't going to be able to decide how the business functions like a stereotypical PE deal does, though i'm guessing it'll have board seats and provide guidance.
But this still doesn't answer the basic question as to "why?" Why does the big ten feel the need or desire to sell a piece of itself? You don't need to know the inner details for that to be a valid question.
socalini
- So Cali
AKA, just under an hour.
I don't think anyone here is anti-Whitman, quite the opposite, he has 'saved' Illinois sports IMO.
That said, PE/PC ( I know they are pretty different from one another), or whatever you want to call it, will not yield long-term positive results for athletic departments and fans. The MGM/Blackstone example is one of thousands of similar examples.
That said, PE/PC ( I know they are pretty different from one another), or whatever you want to call it, will not yield long-term positive results for athletic departments and fans. The MGM/Blackstone example is one of thousands of similar examples.
I know, you've mentioned it before. You don't even know the specifics of this deal so......
I know Illinois and the other Universities have had outside representatives review the actual specifics. They know the specific language and actual numbers.
So what if OSU gets more, they aren't the real competition. It's those outside the B1G.
sbillini
- st petersburg, fl
you know the valuation they're getting, the % stake they're selling, the GoR extension, and the financials of the conference. what exactly is there left that's material that you'd need to know? The SEC doesn't require more disclosures than that for major merger deals 10x the size of this deal.
to be clear, my issue isn't with the uneven revenue distribution. that's a whole different debate that isn't my primary concern.
UC Investments will have a seat at Big Ten Enterprises. Which is part of what USC doesn't like. Despite the fact, the B1G could give UC the bird and there's nothing UC could do about it.
Part of the sell is all parties are locked in for 20-years. It provides 20-years of stability. That's a good thing, IMO.
Some have theorized MI is against it because they want to leave the option open for a super-conference or potentially kick members out. I wouldn't write that off.
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It's locking in for 20 years with a partner you just met 6 months ago and has no common interests with you and your other shareholders.
My question is this...if the B1G is so confident in future revenue growth, why bring in a 19th partner? Why not just keep the conference as is, and split the future revenue 18 ways?
My question is this...if the B1G is so confident in future revenue growth, why bring in a 19th partner? Why not just keep the conference as is, and split the future revenue 18 ways?
My understanding is that after 20 years, UC investments can sell off their share to whomever they choose. I'm not sure if there are guardrails in place, but that alone seems like a huge red flag down the road, in addition to the already flawed premise of offering unequal revenue shares to conference partners.
Perhaps in 2-3 years, this kind of deal could be worth evaluating. Still, with so many things changing, like the need for better NIL regulation (better than what they are trying to do now), or some form of cap on 'salaries', it's way too early even to have something like this on the table, let alone trying to jam it through without 100% of the schools on board.
I don't believe this is accurate. After 20-years, what's left to sell? UC Investments would have received their return.
To me it seems like a 20-year period certain annuity for UC Investments. The only difference is the payback would vary based on what the B1G makes.
Battle89
- Cary-Grove, the better Trojan team
I swear I read somewhere that there were going to be 20 (uneven) shares, the 18 schools, UC Investments, and the B1G itself. Or am I making that up?
And as to stability, while there was not the huge cash infusion up front like in the current proposal, I can't help but make parallels to the ACC. Those schools thought they were buying into stability and a long-term revenue stream and that deal has been roundly criticized since before the ink was dry on the signatures.
Still don't see much change from my Chicago parking meter argument of several weeks ago (including the likely undervaluing by the seller). Really difficult for anyone, even those with good hearts and intentions, to turn down the money today and thereby let the endgame in 5, 10, 20 years be another guy's problem.
TentakilRex
- Land O Insects between Quincy-Macomb-Jacksonville
I may be wrong, as I have no inside information. I thought it was said that the share of the new entity that UC gets (1/20th or whatever) could then be sold when the deal is up. What that would mean, I do not know. However, if that share has rights to revenue or other benefits, someone could then acquire that share, unless there is a clause that grants the B1G the right to repurchase that share upon the deal's expiration.
The question then becomes, how much would that share be worth in 20 years? It could be a reasonable or an insane amount of $ to get back what you gave away in the first place, not even including the loss of $ to the B1G from what that share earned over 20 years (that was given away for the $2.4B).
That share could theoretically earn $5B in 20 years, so you've lost $2.6B plus whatever it would cost to buy the share back, which could be a very high cost for getting $2.4B in 2026, and one has to assume the current or assumed value of that share is worth more that $2.4B over 20 years, unless there are other aspects of the deal that we are not aware of. The devil is in the details and math at that point.
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Another potential positive, if the B1G adds any additional members over the 20-years, none of this 2.4B would go to the new member. The 2.4B would have already been paid out. But the B1G would theoretically benefit from additional revenue the new member brings to the table. The new member would be giving up that 10% (to UC Investments) with nothing in return.
sbillini
- st petersburg, fl
Or, if i'm a potential new member, i'm deciding between the Big Ten and another conference and seeing my payout with the big ten will be (on a apples to apples basis) lower than another conference.
Yes, 20 shares.
Chicago sold it all. 100% for 75 years.
B1G is selling 10% for 20-years - And they capture 90% future growth.
Big difference
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Good point on that one. . . the B1G network was quite controversial IIRC back in the day, and it's worked out very well for us.
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It's possible they could sell it before the end of that 20-year period? UC Investments sells their 10% stake (or 5%, whatever) in B1G for X dollars to another party.
If so, it wouldn't change that the B1G still controls the B1G.
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Question for anyone, do you think USC and Michigan would really leave the B1G over this?
If so, it could be the path to creating a new super league and eliminating conferences as we know it.
If so, it could be the path to creating a new super league and eliminating conferences as we know it.
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