Is Private Equity Coming for College Football? Is That Dangerous for NCAA Schools?!

Private equity has entered the discussion. It is coming for college athletics. It wants a piece of the NFL. What is private equity? How dangerous is this for the NCAA schools?
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[@johnl7468]

If private equity does get a toe in, it will be the taxpayer who pays for the guarantees from state legislatures.

[@battlescorn]

Same way we are on the hook with private prison contracts

[@Amber90125]

If a university or conference go to private equity for funding they may regret going that route.

[@gregh2367]

That is a very polite way of putting it.

[@brianyakata1978]

It’s the evolution of the sport. Athletes deserve every penny they get, lord knows colleges have been making money off their talent. And a serious injury could ruin their career. Just imagine training all your life to be a pro and something happens and they tell you “you can’t do that anymore “. That’s when you want to come home on your shield

[@gregh2367]

Imagine if private equity is what makes the ivy league conference the new big conference

[@darrendent8288]

@4:17 I feel like in some aspects most big colleges have private equity funding already.... They're known as "Boosters"

[@tomk537]

@@darrendent8288 Boosters make donations - maybe you have to kiss up to them - but “equity” means ownership - private equity is totally different - they expect / require their money back with a profit

[@rapalbumdepot7648]

People have completely forgotten that- prior to Seinfeld- Jason Alexander was a Tony Award winning actor who had appeared in films Pretty Women and Jacob's Ladder. Also- do yourself a favor and go watch Jacob's Ladder because it's completely fucked up and memorable. It has some haters tho I consider it a fun horror film.

[@alwaysJaytwist]

The NCAA would be sleeping with the enemy messing around with Private Equity firms.

[@NPAMike]

The reason they go to private equity is because your no longer asking for a million or even 5 if your asking for hundred million or more and private equity has enough cash to do so.

[@jonlee6774]

Venture capital private equity that typically invested in startups. Private equity in general does invest in companies but also break up and sell parts of companies as well.

[@DueceSpice]

VC HELPS CREATE..PE TAKES OVER COMPANIES

[@tomk537]

Private Equity is bad news and clearly wants to spin out the major sports - what else is the exit strategy? And PE has huge oversight / control - they are not hands off owners - I was an executive acquired by PE - I had to report to PE owners through the consultants (who we paid for!) on our turnaround progress - We took on huge debt, that when PE exited, our organization still had our books - PE owners left clean profit when they sold - PE so bad for college athletics - very dangerous

[@boischristian]

These guys clearly don’t know anything about the FSU case. FSU will use the PE money to buy out the contract, then immediately go to a conference. This would increase TV revenue from 30 MM to roughly 60 MM (and growing). Expected buyout amount is roughly $200 MM. So it’s a fairly standard PE debt

[@2480lewis]

Great explanation of PE!!

[@michaeld1414]

I love these 3 together

[@miamidolphinsfan]

have you forgotten what a lying sack of crap Samson was when he owned the Marlins???? People here in Miami now loathe the Marlins because of what he & Loria did with the stadium deal. That's why the attendance is always so low, and combined with a cheap ass owner who won't sign anyone worth a damn. Like the luxury tax money the Marlins are getting this year - over $72 million....their payroll this year is $79 million....but they are also getting $62 million in local TV rights, $125 million (that every team gets from the national TV & internet rights)...which means the Marlins owners are profiting $150 million after overhead expenses (minor league expenses, coach salaries, front office personnel) which is the 2nd highest profit any team makes....and yet they have 20,000 empty seat per game and don't give a damn if they ever sell them. Their objective is not to win, but to maximize profits just like venture capitalists....at the expense of the product....if it becomes a dead carcus they don't care they got their profits and are on to their next victim

[@chrisjoe535]

The Intro had me in tears

[@f25mart]

Awesome discussion topic! FSU was not the best example to use but I knew what he meant - fsu would use the PE money in case they need to buy out their ACC membership to go to a guaranteed better fiscal situation aka Big Ten or SEC, which would make the guarantees back to PE more realistic and low risk. They won’t be using it to get better players, coaches, increase sales etc. but who knows lol

[@troywest7045]

What does FSU do, if after getting the PE money they get low balled by the B1G and are offered the same as Wa/Or got last year. Then the SEC passes because ESPN is cash strapped at the moment. Do they try and go independent?

[@Adam-xo5iq]

I definitely agree athletic departments will be spun off into their own entities. I expect on paper it will look something like the university leasing their infrastructure and name/logo to a private company.

[@bengardella4412]

great great segment

[@alexe727]

Guy in the middle is clueless

[@kinetic6506]

First time I've listened to this trio. Will most definitely not be the last.

[@robertott9925]

As a Chem teacher, always the first cuts, 😢

[@thepathoforion]

What about the facilities? I don’t see how spinning off athletics departments can work for State universities when taxpayers build and operates the facilities.

[@jasonkraus2831]

What happens when David's plan has one "team" bought by someone and moved? Florida State Seminoles now playing in Omaha because the next owner of Berkshire Hathaway isn't a Husker fan?

[@battlescorn]

Sad the way places of education are devolving it appears

[@leftnutt9730]

Let freedom ring!

[@courtneyturner5083]

The whole idea of betting the farm on college football as semi pro is crazy. Only like 2-5 guys, if that, make it to the pros each year from a college. So, the college goes bankrupt to provide a venue for 2 guys to play in the NFL for 2 years. Dumb!!

[@chrisweidner4768]

Second time listening to this. Don’t care. Love these guys. Wish they did daily shows.

[@WickstarRunner]

This discussion strikes me as rearranging the deck chairs on the Titanic. At a time when the US birthrate is in decline combined with a growing percentage of the populace realizing that college is a scam, many colleges are fighting to just survive. Athletic programs at many institutions are going to shut down. To use the Rutgers example, is the University starts posting $500 Million in loses to the legislature, it's going to be very difficult to justify the costs of running a 4-8 football team at the cost of engineering and science departments.

[@jefferyb11]

Am I the only one who watches exclusively these DS segments? Only part of the show these days that’s enjoyable

[@Bman32x]

17:02 very interesting idea. Not only could private equity become owners of a school’s football or basketball team, if they entered some exclusive contract with pro teams, suddenly their players are exempt from the NFL & NBA draft. Their minor league college team becomes direct feeder into an NFL/NBA franchise. That’s gotta become an issue with the players’ associations no?

[@lancelance4582]

State legislators went to those public schools, and many played non revenue sports. They are not going to cut their own programs.

[@Choice86]

Ohio State will only get more dominant if they allow PE to step in. Their athletic department generates the most revenue in the country and is the 3rd most profitable too. They have an established profitable business model and they are suited to successfully upscale it with the extra investments coming in

[@JeremyKasperson]

Title IX is very much on the ballot this November. Non-revenue women's sports will be cut everywhere.

[@HTHAMMACK1]

David, the big universities are not going to touch private equity nor are they going spin off their athletic programs. Those programs only exist because the university created them and funded them. Let's say Georgia did that. At that point, they are no longer the Georgia Bulldogs.

[@letsgo8310]

why is this episode so short?

[@1290n]

These private equity investments seem like they'll be one-time cash infusions with hopes from the schools that these programs turn a next level profit for the schools (even thoug most schools likely won't). Why wouldn't these mostly state schools get financing from relatively low-interest state bonds or some other debt instrument? Giving equity? What's the benefit? Giving private equity the ability to own these state entities seems oligarch-like? It should be illegal. Again... bonds. The really big schools don't need the money (other than the ACC escapees). It only makes sense for some of the mid-majors that might realistically become major. For those mid-majors... issue bonds. State based individual "investors" might not even demand a high or market return as you might tap into many "investor/alumni/booster/collective types" (and booster mentality) who may even make "investments" into these bonds with 401k money. Regardless, cutting non-revenue generating sports at revenue generating schools makes less sense than cutting non-revenue generating sports at non or nominally revenue generating (Div 2, 3, NAIA, FCS) schools. Many of these programs don't even have football, and those that do, don't make much if anything. But, they've all sustained non-revenue generating sports for decades and decades. Threats of revenue generating schools (wealthy schools) ending non-revenue sports is a sore-loser move, not an economic one. The D1 schools have a moderate increase in scholarship numbers compared to some of the other divisions, but they also have revenue generating sports that are more than self-sustaining. Those football and basketball programs do not need funding from the types of university resources that FCS, D2, D3, and NAIA tap. Revenue generating schools should be just fine with keeping their non-revenue sports. They just need to rearrange their monies. Again, to do anything other is a sore loser move. And if trying to "take their ball and go home", states should probably decrease those sore loser university funding. If belt-tightening is needed, coach salaries, athletic director salaries, other athletic department bloat should be targeted. If athletes are capped at a percentage of revenue, cap the rest of the athletic departments. A system wide cap would likely be an anti-trust violation unless instituted by congress. Why isn't anyone clamoring to add coaches and athletic directors to the antitrust exemption bills submitted to congress? Wouldn't such caps be good for competitive equity? In any event, don't give away equity, don't create an oligarchy, don't mess with the core of the athletic department mission (fielding revenue and non-revenue athletics), do attack bloat, if needed.... issue bonds. Don't go crazy with bonds, they are not magic money, they are still debt instruments. Private equity is not magic money. It is worse than a high rate credit card that wants to equity share/take over. Would a rational person do that with their house?

[@solidghus4799]

Pablo wants to be cynical. He admits it.

[@NicholasOrlick]

Because more times than not private equity firms build up a whatever and then sell it for parts. So in the case of case of college sports colleges that are desperate for money are going to go to private equity firms and it could result and partial ownership of the athletic department and when that doesn’t work out- because very often it doesn’t it could bankrupt the university. David said associated with taking money from a those guys is expensive for reason. Colleges have the money, this is just another tool where greed can come in.

[@HTHAMMACK1]

He's right to be. Private equity literally destroys everything it touches.

[@angelsaulovelazquez3232]

bye bye lacrosse, gymnastics etc.

[@ejkboxing]

So, Samson disagrees with Skipper that the investors don't care where their return comes from as long as they get their money back with interest, but then he says private equity firms operate the same way loan sharks work. Loan sharks don't care if you make money or lose all of the money. However, they know they will collect something in the end if they don't get their money back. Samson just disagrees with Skipper just to disagree. Skipper's initial assessment is exactly how private equity works. They don't care if you make money or lose all of the money, but they will collect something, like the schools' teams, stadiums & arenas, if they don't get their money back. The private equity firms are already planning on how they will eventually collect those teams, stadiums & arenas & flip them (which would likely be the end of those teams because the buyers might just want the real estate, not the teams & other property), or run them themselves.

[@harrynamkoong3361]

First of all, loan sharks know they are not getting their all of their money back from all their risky loans. That's why they charge higher interest. If you make enough money back from 9/10 loans, then you can survive losing everything on the 1/10 loan that go belly up.

[@Lexyboogie]

In our bid for paying athletes what they’re worth, I feel like we’ve now opened a bigger can of worms that will never be shut. Moral of the story: be careful what you wish for.

[@wizarddragon]

If Private Equity gets their greasy paws on College football then we lose everything great about it.

[@thepathoforion]

Can KKR be far behind?

[@mrduckett4006]

Terrible idea

[@connorkillane7457]

That was a terrible description of Private equity

[@enriqueworthy4481]

I’m 38 I know pretty woman. That’s not exactly what you want.

[@Cougrun]

Let football spin off and cut all financial ties with University, PE can pay for right to use university name/logo/mascot. Keep the non-revenue sports funded by boosters and name licensing.

[@HBCUFantasySports]

Question: isn’t financial aid funded by private banks and insured by public institutions considered private equity?

[@harrynamkoong3361]

No, that's just a loan backed by the federal gov't. No university "insures" or "backstops" any student loans regardless of the funding source whether it's Sallie Mae or Bank of America etc.

[@rickclark3759]

Lil Joe Pesci there on your panel tries to act like he knows everything, rarely respects others opinions..thinks he’s a player..but he’s not …he’s a ball boy. You on the other hand have potential. C’ya

[@akjag17]

Cannot believe Torre is really so dumb that he did not get the Constanza reference re:Pretty Woman. Admittedly, the reference was a bank shot but Torre supposedly this sharp Harvard grad is suppose to be able and play on this field.

[@HTHAMMACK1]

You're talking about a movie that's nearly 35 years old. Pablo is not even 40. Perhaps he's never seen the movie or Friends. How is that dumb? Not every person watched or like Friends or Pretty Woman. How does that reflect on his intelligence or education? David Samson couldn't remember it was Disney Nelson Peltz was trying to take over. I don't think that reflects negatively on him either.

[@timmyeleven5001]

I like Sampson but why did they decide “nasally” Pablo should host this & did John do an 8 ball before this?

[@blessembreaks]

I really want to like Pablo, after all i am asian and we dont have enough personalities in sports media, but i just cant get over his cheesy ass announcer voice. Its so fake and cringe