Big 12 exploring selling conference naming rights and private equity investment.

[Voltopia]

It's about long-term control, inching in with a voice at the table when it comes time for the next chapter in college athletics.

This isn't CVC's first rodeo with investing in sports. What they want is to control the direction, first, via a strong voice on the board to increase the monetary value, then they'll do what venture capital does and get out. It's just a longer game than they traditionally play.

Beyond the pitch: The rise of private equity in sports

At a time when economic uncertainty is curtailing private equity (PE) deal activity, sports-focused capital investment remains strong. PE interest in this sector has been around for some time, with CVC Capital Partners’ backing of the Formula 1 series in 2005 seen as one of the first forays into...

www.sportsbusinessjournal.com

Considering that the traditional roadmap for private equity firms is to acquire another property while simultaenously compelling that property to assume most or all of the risk involved with the transaction, often by saddling it with unsustainable levels of debt, conferences had best think twice - or even thrice - about surrending actual ownership in such a fashion. Their goal is to sell at a profit. Nothing more. Nothing less. Anything else can be gutted in the service of that goal.

 

[SayUWantAreVOLution]

Considering that the traditional roadmap for private equity firms is to acquire another property while simultaenously compelling that property to assume most or all of the risk involved with the transaction, often by saddling it with unsustainable levels of debt, conferences had best think twice - or even thrice - about surrending actual ownership in such a fashion. Their goal is to sell at a profit. Nothing more. Nothing less. Anything else can be gutted in the service of that goal.

Exactly and well put. CVC wants nothing good for college football fans nor the sport.

Their entire interest in investing is to maximize asset value and then sell that asset.

They probably see some value in "getting in early" on the Big 12 which is likely "undervalued" by some metric but also likely too important for the B1G and SEC to leave completely out in whatever the NCAA 2.0 looks like.

They're terrible for the sport but likely a fact of life as the money needed for success becomes just too big for donors, schools, etc to come up with.

 

[Voltopia]

They're terrible for the sport but likely a fact of life as the money needed for success becomes just too big for donors, schools, etc to come up with.

Entirely so. With the SEC and the Big 10 (and by extension, ESPN and FOX), telling the Big 12 (and the ACC) that they're second tier conferences, the pressure is on them, and every other conference in the G5, to find ways to keep pace. They'll end up selling out first, because they'll view it as their only option to stay competitive (whether or not they should try is a great question, but no one in college football even asks that question these days).

Then the SEC and the Big 10, not wanting to be outdone or "kept pace with," will also sell out, for even bigger amounts, just so they can continue to pride themselves on being the biggest, baddest groups in the room. It's all one big trashy race to the bottom. And before you know it, everyone will have sold out, and people can prance around and act like bigshots with their little pro leagues, all while the spirit of college athletics continues to fester and rot.

 

[SayUWantAreVOLution]

Entirely so. With the SEC and the Big 10 (and by extension, ESPN and FOX), telling the Big 12 (and the ACC) that they're second tier conferences, the pressure is on them, and every other conference in the G5, to find ways to keep pace. They'll end up selling out first, because they'll view it as their only option to stay competitive (whether or not they should try is a great question, but no one in college football even asks that question these days).

Then the SEC and the Big 10, not wanting to be outdone or "kept pace with," will also sell out, for even bigger amounts, just so they can continue to pride themselves on being the biggest, baddest groups in the room. It's all one big trashy race to the bottom. And before you know it, everyone will have sold out, and people can prance around and act like bigshots with their little pro leagues, all while the spirit of college athletics continues to fester and rot.

If I recall, there was talk at one point that FSU was looking at outside funding to get out of the ACC Grant of Rights. They've backed off that route and gone to court, thankfully.

"On the bubble" teams will have to decide to put up or shut up, but money NEVER comes from venture capital or private equity without a price.

The Big 12 Commissioner admitted they were lucky to get a media contract from ESPN and Fox and like the ACC they're getting torched financially by the B1G and SEC.

It's ugly but that's how pro sports works. If you can't make enough money to compete, you either find money with strings attached or you fold.

 

[SpookyAction]

Exactly and well put. CVC wants nothing good for college football fans nor the sport.

Their entire interest in investing is to maximize asset value and then sell that asset.

They probably see some value in "getting in early" on the Big 12 which is likely "undervalued" by some metric but also likely too important for the B1G and SEC to leave completely out in whatever the NCAA 2.0 looks like.

They're terrible for the sport but likely a fact of life as the money needed for success becomes just too big for donors, schools, etc to come up with.

pump and dump

I have thought about how it will push the SEC and B1G in a similar direction, then the BigXII and ACC will be outgunned in the arms race once again.
The ACC should have a much more attractive position than the BigXII, but it will not matter when the SEC shops its value around.
The SEC and B1G will get gutted by whomever over time, but will win the short term battle.
Reminds me of Guitar Center (confession: I play guitar). Bain Capital, the venture capital company where Mitt Romney made his fortune, acquired control of Guitar Center, transferred the debt from their leveraged buyout onto Guitar Center, and used GC to buy and reduce the debts of other companies they control. That led GC to bankruptcy in 2020, and will end with GC closing for good soon.

Red Lobster is another victim of private equity, not endless shrimp promotions. Red Lobster owned the properties their restaurants were on when Golden Gate Capital bought the company in 2007, then sold the properties to another branch of their business. Red Lobster restaurants paid crazy rent for each site and profits disappeared. Thai seafood conglomerate, Thai Union Group, bought controlling interest in 2016 in order to sell more of their own seafood to their own businesses and now Red Lobster will be gone too. It is a shame. Red Lobster was a legit place to get decent seafood far away from the coast. Their food is good and we eat there 1-2 times each year. We love their salads and cheddar bay biscuits. I much prefer ocean seafood to catfish, which is what seafood is in my town. There is no fresh seafood restaurant anywhere near us so Red Lobster made sense if you wanted that.

 

[SayUWantAreVOLution]

pump and dump

I have thought about how it will push the SEC and B1G in a similar direction, then the BigXII and ACC will be outgunned in the arms race once again.
The ACC should have a much more attractive position than the BigXII, but it will not matter when the SEC shops its value around.
The SEC and B1G will get gutted by whomever over time, but will win the short term battle.
Reminds me of Guitar Center (confession: I play guitar). Bain Capital, the venture capital company where Mitt Romney made his fortune, acquired control of Guitar Center, transferred the debt from their leveraged buyout onto Guitar Center, and used GC to buy and reduce the debts of other companies they control. That led GC to bankruptcy in 2020, and will end with GC closing for good soon.

Red Lobster is another victim of private equity, not endless shrimp promotions. Red Lobster owned the properties their restaurants were on when Golden Gate Capital bought the company in 2007, then sold the properties to another branch of their business. Red Lobster restaurants paid crazy rent for each site and profits disappeared. Thai seafood conglomerate, Thai Union Group, bought controlling interest in 2016 in order to sell more of their own seafood to their own businesses and now Red Lobster will be gone too. It is a shame. Red Lobster was a legit place to get decent seafood far away from the coast. Their food is good and we eat there 1-2 times each year. We love their salads and cheddar bay biscuits. I much prefer ocean seafood to catfish, which is what seafood is in my town. There is no fresh seafood restaurant anywhere near us so Red Lobster made sense if you wanted that.

Desperate companies, those needing cash, draw vultures.

A rundown of what CVC did with Formula 1 racing is likely what they'd try to do with Big 12 football: Put a ruthless guy at the helm and squeeze as much money as possible out without putting much money in.

Just a word of advice to everyone: if venture capital or equity investor is sniffing around your company, get your 401(k) in good order and sharpen up your resumé.

CVC ownership of F1 should serve as a warning to Premiership Rugby | Giles Richards

On the eve of Premiership Rugby’s decision over the purchase offer from CVC, they may want to consider how the private equity firm’s tenure in charge of Formula One turned out

www.theguardian.com

 

[Redleg68]

See, a week ago we were joking about stuff like the Food City Tennessee Volunteers running through the First Tennessee T here at Weigel's Field, and now we're already being lapped by the Big 12. Or the Whataburger 12, or whatever they end up calling it.



But why stop at a name? They're also looking at selling off some of the conference itself.

Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

The proposed deal with a Luxembourg-based firm would bring a massive influx of cash to the league

www.cbssports.com

You can practically hear the Saudi Public Investment Fund slithering its way toward college athletics ...

Just wait till a China firm buys some naming rights

 

[VolNExile]

Just wait till a China firm buys some naming rights

The Winsome 12

 

[vol94]

These naming rights deals are so easy. They are incredibly shameless and tacky, but nobody is stopping watching because of it.

I hate seeing "Food City Center" on the side of TBA. Am I (or anybody else) going to stop watching Tennessee basketball because of it? Of course not.

Yeah, sports have become a billboard of advertisers. I don’t care for it but I still watch. Next will be names of businesses on the playing fields or court.

 

[05_never_again]

Yeah, sports have become a billboard of advertisers. I don’t care for it but I still watch. Next will be names of businesses on the playing fields or court.

Already are.

 

[vol94]

Already are.

True. But not quite there in football. I could see advertisers paying millions to have their logo on the field.

 

[Firebirdparts]

Desperate companies, those needing cash, draw vultures.

A rundown of what CVC did with Formula 1 racing is likely what they'd try to do with Big 12 football: Put a ruthless guy at the helm and squeeze as much money as possible out without putting much money in.

Just a word of advice to everyone: if venture capital or equity investor is sniffing around your company, get your 401(k) in good order and sharpen up your resumé.

CVC ownership of F1 should serve as a warning to Premiership Rugby | Giles Richards

On the eve of Premiership Rugby’s decision over the purchase offer from CVC, they may want to consider how the private equity firm’s tenure in charge of Formula One turned out

www.theguardian.com

Possibly. That would certainly make a lot more sense than what was written in the article.

The article made them (the "investors") sound like total idiots, and of course they're not. If they're going to get into something that's on the way down, and the Big 12 must clearly be, then they're going to want a piece of the cash flow. That said, it's hard to see how you take advantage if you're the big 12. they can't just open up more universities.

 

[SayUWantAreVOLution]

Possibly. That would certainly make a lot more sense than what was written in the article.

The article made them (the "investors") sound like total idiots, and of course they're not. If they're going to get into something that's on the way down, and the Big 12 must clearly be, then they're going to want a piece of the cash flow. That said, it's hard to see how you take advantage if you're the big 12. they can't just open up more universities.

Vulture Capital is like "flipping houses" only with businesses. They buy distressed and desperate companies, "give them a much needed shot in the arm of capital," then pressure the business to make decisions which result in "short money" so they can get their investment back.

Look no further than Red Lobster. It ain't the all you can eat shrimp that caused their business fail, it was the real estate deals the vulture capital company made when they bought the business.

In the case of the Big 12, these guys realize lots of the schools aren't top tier athletic franchises. Those that ARE possibly valuable as higher tier athletic businesses, they'll maximize their development (read: worth and attractiveness to whatever league comes after the NCAA.) Those schools that AREN'T going to be valuable in the next athletic reorganizations, they'll encourage the conference to push out.

It's all about trading money for control. CVC doesn't care about college athletics. CVC cares about controlling a piece of the decisions made so they can maximize the Big 12's marketability.

It's their only business. Unlike ESPN and Fox, who suck but at least they are in the sports media business for the long haul, CVC's only purpose is to make the businesses they buy turn a profit FOR THEM and they don't give a damn about long-term damage.

Again, read about "Red Lobster and Golden Gate Capital." That's how these guys work.