https://www.cbssports.com/college-football/news/utah-college-athetics-fo...
The University of Utah is finalizing a landmark private equity partnership that would be the first of its kind in college athletics. According to Yahoo Sports, Utah is set to enter an agreement with New York-based firm Otro Capital that will help generate an estimated $500 million for its athletic department.
The demise of college football is accelerating quickly. This will succeed in the short term and crash and burn in like 3-5 years when the money is all squeezed out and Utah's football product is horrible.
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the enshittification will continue until the looting begins
Ticket prices for all Utah sporting events about to double next year
I mean, what were they? Like $25 for a good football seat?
I would be absolutely livid if I were an Utah alum.
It is absolutely insane to see some of the positive reactions on Twitter. Unless Otro already deployed a bunch of PR bots
As would I. What are they thinking?
Not enough of them understand the implications of a deal like this.. so they read this
$500M Utah Football FIRST
which translated to....
💥 💥 💥 💥 💥 💥 💥
OMFG WE ARE SO FIRE
So 2 years of budget that will cost revenue in 7 years like the big 10 deal?
Also why would I donate money to a private equity group?
Looks like the donors have the option to purchase stake in the new for-profit entity they're creating as part of this deal
How does PE get upside out of college sports, specifically and especially when they're dealing with one program? Are they getting a future share of revenue that they can help improve somehow? This isn't a conventional business (and even there PE often time completely fucking sucks). Are they going to aggregate media deals, leverage volume to sell more concessions at a better margin? Where is the upside?
The upside sounds like they give X dollars now, and get more than X back, by collecting a percentage over a time.
Utah's getting a huge chunk of $$$ upfront, but they're going to have to pay the PE firm out of their normal earnings over time.
I don't think it's any more complicated than that.
They can get that from a bank though. PE is usually after an ownership stake, not just lending, and they get or at least seek, a higher percentage as a result.
USF did something recently where they went to PE to finance some of their improvements (for their stadium) and the terms were worse than what they would have gotten from a bank.
The whole thing stinks of corruption.
https://www.billfarleyphd.com/p/private-capital-stings-the-university
The SEC got a massive loan for 2020 to keep things afloat. So getting a loan isnt new or unheard of.
*psst*
I'm fairly certain VT is bridge financing a decent amount of the new athletics budget.
My understand (which I'm not positive is correct) is that Utah is selling this group the rights to manage a variety of things, including:
Basically, the PE firm believes that if pay $X for these rights, they make $Y, and $Y >> $X. After 5 years, the PE firm has an option to sell back to Utah, or hold.
Not sure I want some investor group to manage my rights, and keep the profits.
I mean you now have an org that can work on what can be claimed to be there own interest to get more tv money. Like making a conference change. You wouldn't get an ACC grant of rights with this setup because no way they sign without reading everything this isn't college presidents now its a bunch of lawyers making sure the company has their interests met.
More like someone who wants to take your future profits. I'm casting doubt on the idea that a group of investors can hire better lawyers than you can hire. I've never had any problems at all finding lawyers.
After hearing about coaching contracts and other things in academia, lawyers seem to be rarely involved. It isnt the nature like a PE.
Don't take these comments as I condone this, its stupid and short sighted, there just might be a silver lining that no compenent organization would sign the ACC GoR.
Also how did all but two big 10 teams agree to a PE deal if they had competent lawyers
You're right, but I don't see this as the same topic as the ACC GoR. And you absolutely don't sign something like that, or this, without lawyers being involved.
If I own Utahs media rights then I care about the GoR.
I've dealt with enough PE's that I say no thank you. PE firms don't give a fuck about the "industry, product, people" they are investing in. Their motive, to buy, build a portfolio and sell to another PE. . I don't see how this will end well for Utah.
Yeah, if this is the new direction of college football, this might finally be what breaks it for me.
P.E. firms exist to do nothing other than maximize Revenue... which they do by nickel and diming the living shit out of the consumer.
See Southwest Airlines... no more free bags, completely fucked ticket levels, and now they're advertising that it's some kind of convenience to be able to pick your seat. Yet, they casually don't mention that now they're going to start charging you $15 for a fucking window seat. And want an Exit Row?that's $29.
That will be the new college football fan experience. After they make the stadium experience so excruciatingly expensive that average fans stop going, they'll move on to making games and media rights Pay-per-View oh great contracts with streaming services so you have to have four of them to watch an entire season... all the while kicking back money back and forth.
And when it inevitably fails, they'll start selling off parts for cash and then bail leaving someone else holding the bag, destroying the original which will be unable to recover from all the damage.
See: Sears, Joann, Borders, Waldenbooks, Kmart, Craftsman, ToysRUs, and dozen and dozens and dozens of others
They will lie straight to your face. They will do what appears to be "stupid" things in relation to the actual business. All in the name of the all mighty EBITDA.
Utah football ~2-3 years from now:
After (at least) 4 of 5 rounds of layoffs, has top executives at the all hands meeting get up there and say:
"Our people are at the forefront of everything we do."
"People are at the heart of what we do. When we create a culture where people feel they are valued and they belong, we enable them to deliver their best work."
Oh wait, is this not the hatin' on thread?
I've never seen a private equity firm that didn't value profits more than they valued people.
But in corporate speak they like to say they do. Mission statement and core values incoming