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Big Ten in discussions regarding $2 billion private capital investment into conference

84lion

84lion

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PSUFTG

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Obviously, not a done deal at this point:

But, the potential involvement of the "Venture Capital" group:

Brings zero outside expertise or skillset to the table
Brings zero synergy (hate that word anyway) or any type of intrinsic value to the table
Brings zero capability to generate revenue, beyond what is available without them.
Breaks down no barriers to future growth and "profitability" (possibly quite the opposite)
Straps very significant hobbles to adaptiveness and flexibility for decades to come - in a VERY turbulent and dynamic market.

What it is, of course, is the equivalent of the VC firm buying a share of future revenues..... and unless the VC firm is run by idiots (spoiler: that is unlikely) they will take out far more value than they bring in (basic risk premium principals - with the effect of tax treatment causing further erosion)

This type of "venture capital" move is beyond idiotic - for the "seller", ie the Big Ten in this case (though there is ONE reason that the Big Ten, and maybe some other conferences down the road, may do it - wanna' know why? :) )

It sounds like the folks at OSU and Michigan may be the only ones with clear heads here, but I expect they will eventually be worn down and allow the principle of mob stupidity to take control.

Alas

1759369573110.png
 
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BobPSU92

BobPSU92

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$1.99 B to be split evenly by um and T™️osu, the rest for the rest.

 
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ChandlerPearce58

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PSUFTG said:
Obviously, not a done deal at this point:

But, the potential involvement of the "Venture Capital" group:

Brings zero outside expertise or skillset to the table
Brings zero synergy (hate that word anyway) or any type of intrinsic value to the table
Brings zero capability to generate revenue, beyond what is available without them.
Breaks down no barriers to future growth and "profitability" (possibly quite the opposite)
Straps very significant hobbles to adaptiveness and flexibility for decades to come - in a VERY turbulent and dynamic market.

What it is, of course, is the equivalent of the VC firm buying a share of future revenues..... and unless the VC firm is run by idiots (spoiler: that is unlikely) they will take out far more value than they bring in (basic risk premium principals - with the effect of tax treatment causing further erosion)

This type of "venture capital" move is beyond idiotic - for the "seller", ie the Big Ten in this case (though there is ONE reason that the Big Ten, and maybe some other conferences down the road, may do it - wanna' know why? :) )

It sounds like the folks at OSU and Michigan may be the only ones with clear heads here, but I expect they will eventually be worn down and allow the principle of mob stupidity to take control.

Alas

View attachment 937605
Click to expand...
This seems the equivalent of City of Chicago seller their future parking revenue receipts for what appeared to be an enormous amount of immediate revenue....only to learn that "snafu" was a catastrophic financial mistake!
 
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PSUFTG

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ChandlerPearce58 said:
This seems the equivalent of City of Chicago seller their future parking revenue receipts for what appeared to be an enormous amount of immediate revenue....only to learn that "snafu" was a catastrophic financial mistake!
Click to expand...
Very similar, in many ways.

One way in which it is not similar is that this incredibly stupid concept (I was trying to find the right words to describe it, couldn't, so those will have to do :) ) won't even generate additional revenues for anyone (including the VC firm) meaning the VC firm's "cut" of existing future revenues will have to be even more onerous (and bad for the long-term fiscal health of the Big Ten programs, as a whole).

It is an idea being contemplated - and, I will not be surprised, enacted - because several programs (including several "blue bloods") have engaged in multi-year wasteful spending orgies, and are severely cash-strapped.... and the powers-that-be can now "Rob Peter to pay Paul" and kick the can down the road (until after they have gotten out of Dodge) to where it will hang like a financial "Sword of Damocles" over the heads of the next folks.
Gotta' love it!


PS: This type of stuff has been coming down the pike for a while.
 
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NittPicker

NittPicker

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PSUFTG said:
Very similar, in many ways.

One way in which it is not similar is that this incredibly stupid concept (I was trying to find the right words to describe it, couldn't, so those will have to do :) ) won't even generate additional revenues for anyone (including the VC firm) meaning the VC firm's "cut" of existing future revenues will have to be even more onerous (and bad for the long-term fiscal health of the Big Ten programs, as a whole).

It is an idea being contemplated - and, I will not be surprised, enacted - because several programs (including several "blue bloods") have engaged in multi-year wasteful spending orgies, and are severely cash-strapped.... and the powers-that-be can now "Rob Peter to pay Paul" and kick the can down the road (until after they have gotten out of Dodge) to where it will hang like a financial "Sword of Damocles" over the heads of the next folks.
Gotta' love it!


PS: This type of stuff has been coming down the pike for a while.
Click to expand...
The additional "revenue" will be the money kicked in by the investors. Of course, these investors wouldn't create a partnership if there wasn't something in it for them. Maybe they ran the numbers and a 1/20 share will be profitable for them. I have no idea. Maybe they're expecting significant real revenue coming from the next media deal. I can't see networks paying significantly more for the next deal since some of the match-ups aren't exactly must see, especially for CBS and NBC. If the B1G expands with some name brand schools then maybe there would be something there. Could be the investors know something we don't know.
 
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PSUFTG

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NittPicker said:
Could be the investors know something we don't know.
Click to expand...
Of course they do. Or at least one would assume so.
Which would just make it even a worse deal for the Big Ten members. Obviously :)

It would be nice, from the Big Ten side of things, to assume those folks were just "dumb" inadvertent and unintentional philanthropists. But I doubt that's the case.
 
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Moogy

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PSUFTG said:
Very similar, in many ways.

One way in which it is not similar is that this incredibly stupid concept (I was trying to find the right words to describe it, couldn't, so those will have to do :) ) won't even generate additional revenues for anyone (including the VC firm) meaning the VC firm's "cut" of existing future revenues will have to be even more onerous (and bad for the long-term fiscal health of the Big Ten programs, as a whole).

It is an idea being contemplated - and, I will not be surprised, enacted - because several programs (including several "blue bloods") have engaged in multi-year wasteful spending orgies, and are severely cash-strapped.... and the powers-that-be can now "Rob Peter to pay Paul" and kick the can down the road (until after they have gotten out of Dodge) to where it will hang like a financial "Sword of Damocles" over the heads of the next folks.
Gotta' love it!


PS: This type of stuff has been coming down the pike for a while.
Click to expand...

Maybe they should have a friend set up a go fund me for them so they can afford the basics of life, for which they didn't properly plan, while they pursue wasteful personal vanity projects?

Could they maybe sell their goodwill from off their balance sheet?

Maybe they can name the new entity Joe Paterno Enterprises, and then everyone would be happy?
 
M

Moogy

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PSUFTG said:
Obviously, not a done deal at this point:

But, the potential involvement of the "Venture Capital" group:

Brings zero outside expertise or skillset to the table
Brings zero synergy (hate that word anyway) or any type of intrinsic value to the table
Brings zero capability to generate revenue, beyond what is available without them.
Breaks down no barriers to future growth and "profitability" (possibly quite the opposite)
Straps very significant hobbles to adaptiveness and flexibility for decades to come - in a VERY turbulent and dynamic market.

What it is, of course, is the equivalent of the VC firm buying a share of future revenues..... and unless the VC firm is run by idiots (spoiler: that is unlikely) they will take out far more value than they bring in (basic risk premium principals - with the effect of tax treatment causing further erosion)

This type of "venture capital" move is beyond idiotic - for the "seller", ie the Big Ten in this case (though there is ONE reason that the Big Ten, and maybe some other conferences down the road, may do it - wanna' know why? :) )

It sounds like the folks at OSU and Michigan may be the only ones with clear heads here, but I expect they will eventually be worn down and allow the principle of mob stupidity to take control.

Alas

View attachment 937605
Click to expand...
Other than you throwing out incredibly, embarrassingly simplistic characterizations with completely unnecessary negative consequences and ignoring positive results (in patented Barry ways), thereby bringing nothing to the table except your naturally repellent ways, you nailed it.
 
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Bwifan

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Oct 12, 2021
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PSUFTG said:
Obviously, not a done deal at this point:

But, the potential involvement of the "Venture Capital" group:

Brings zero outside expertise or skillset to the table
Brings zero synergy (hate that word anyway) or any type of intrinsic value to the table
Brings zero capability to generate revenue, beyond what is available without them.
Breaks down no barriers to future growth and "profitability" (possibly quite the opposite)
Straps very significant hobbles to adaptiveness and flexibility for decades to come - in a VERY turbulent and dynamic market.

What it is, of course, is the equivalent of the VC firm buying a share of future revenues..... and unless the VC firm is run by idiots (spoiler: that is unlikely) they will take out far more value than they bring in (basic risk premium principals - with the effect of tax treatment causing further erosion)

This type of "venture capital" move is beyond idiotic - for the "seller", ie the Big Ten in this case (though there is ONE reason that the Big Ten, and maybe some other conferences down the road, may do it - wanna' know why? :) )

It sounds like the folks at OSU and Michigan may be the only ones with clear heads here, but I expect they will eventually be worn down and allow the principle of mob stupidity to take control.

Alas

View attachment 937605
Click to expand...
Exactly bring nothing to the table other than to cover their investment we are going to jack up the rates to carry the games which of course will be passed onto the end users. Soon it will be just as expensive to sit at home and watch the game versus being there in person... ;)
 
BobPSU92

BobPSU92

Heisman
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Bwifan said:
Exactly bring nothing to the table other than to cover their investment we are going to jack up the rates to carry the games which of course will be passed onto the end users. Soon it will be just as expensive to sit at home and watch the game versus being there in person... ;)
Click to expand...

At least with all that cash money coming in (and going out), PSU will be more competitive.

😞
 
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SleepyLion

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Moogy said:
Other than you throwing out incredibly, embarrassingly simplistic characterizations with completely unnecessary negative consequences and ignoring positive results (in patented Barry ways), thereby bringing nothing to the table except your naturally repellent ways, you nailed it.
Click to expand...
What are the positive results that are being ignored?
Especially if the VC does not bring any additional expertise to the Big 10, or do they?
If I buy 10% of a company and add no value other than cash now, what was the advantage to the seller?

I am sincerely curious.
 
BobPSU92

BobPSU92

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SleepyLion said:
What are the positive results that are being ignored?
Especially if the VC does not bring any additional expertise to the Big 10, or do they?
If I buy 10% of a company and add no value other than cash now, what was the advantage to the seller?

I am sincerely curious.
Click to expand...

Could there be a hostile takeover of the b1g?
 
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PSUFTG

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SleepyLion said:
What are the positive results that are being ignored?
Especially if the VC does not bring any additional expertise to the Big 10, or do they?
If I buy 10% of a company and add no value other than cash now, what was the advantage to the seller?

I am sincerely curious.
Click to expand...
There are situations - business enterprises of certain types at certain stages - where VC can be advantageous to both sides.

To say that this situation is one of them would be one of the "dumbest" claims of all time.
Honestly, if one were looking for a business situation where a deal like this would be the worst possible consideration - this (mature "college" sports league) would be a candidate to win the gold medal.
C'est la vie


There are two reasons it is being considered. It doesn't take a savant.

(A "VC" firm buying a revenue share? LOL. It really isn't even a "VC" type transaction that is being negotiated.... but enough about that)
 
84lion

84lion

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As I see it, it's not "VC" but rather a loan (putting up future earnings as collateral/payment for getting funds today).

Most people take out loans for something they need now - a car, house, etc., that they can't save up for but need shelter, transportation, etc. today.

So what is it the B1G needs today that it needs money for that it needs to put up future earnings as collateral/payment?
 
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SleepyLion

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84lion said:
As I see it, it's not "VC" but rather a loan (putting up future earnings as collateral/payment for getting funds today).

Most people take out loans for something they need now - a car, house, etc., that they can't save up for but need shelter, transportation, etc. today.

So what is it the B1G needs today that it needs money for that it needs to put up future earnings as collateral/payment?
Click to expand...
But it is a loan that appears to give up equity as well. Maybe not, but that is how it is being explained.

If you take out a loan, just pay it off. Don't give up something in perpetuity.
 
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BobPSU92

BobPSU92

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www.espn.com

Sources: Big Ten closes in on private equity deal

The Big Ten is approaching a vote on a private capital agreement and the formation of Big Ten Enterprises, which would infuse league schools with more than $2 billion, according to sources.
www.espn.com www.espn.com

😞

“The exact equity amounts per school in Big Ten Enterprises is still being negotiated. There is expected to be a small gap in equity percentage between the biggest brands and others, however it is likely to be less than a percentage point.”

😞😞
 
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cjrugger

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If there’s a huge amount of money en route to Penn State, it’s guaranteed that Barry is going to be upset about it. And then he’ll continue bitching that the school doesn’t have enough money. Rinse and repeat
 
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cjrugger

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84lion said:
As I see it, it's not "VC" but rather a loan (putting up future earnings as collateral/payment for getting funds today).

Most people take out loans for something they need now - a car, house, etc., that they can't save up for but need shelter, transportation, etc. today.

So what is it the B1G needs today that it needs money for that it needs to put up future earnings as collateral/payment?
Click to expand...
It’s not a loan. They’re buying an equity stake in a new company
 
84lion

84lion

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This article explains it a bit better:

https://sports.yahoo.com/college-fo...-move-within-college-athletics-170051033.html

cjrugger said:
It’s not a loan. They’re buying an equity stake in a new company
Click to expand...
From the article linked to above:

What's in it for UC Investments?​

How the pension fund receives a return on its seed capital is clear. UC Investments earns the annual cut of distribution plus an ability to sell its portion of the league after a 15-year “hold,” when it is prohibited to sell. Any sale must be approved by league members.

The distributions for UC Investments could be significant and benefit hundreds of thousands of former state public university employees as part of the pension fund. This year, Big Ten’s 12 legacy schools are expected to earn about $75 million each in conference payouts, a number that could rise as high as $90 million under the current TV contract. The league is likely to renegotiate its media rights deal as many as three times during the 20-year length of the deal.

It is true that they are buying an "equity stake," as you put it, however, the distribution cut is the big driver. Again from the article:

In what is described as a minority investment, UC Investments will provide an infusion of roughly $2.4 billion in a one-time equity distribution to the conference to own a 10% stake in Big Ten Enterprises and receive a cut of the league’s annual distribution.
 
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Nittering Nabob

Nittering Nabob

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Moogy said:
Maybe they should have a friend set up a go fund me for them so they can afford the basics of life, for which they didn't properly plan, while they pursue wasteful personal vanity projects?

Could they maybe sell their goodwill from off their balance sheet?

Maybe they can name the new entity Joe Paterno Enterprises, and then everyone would be happy?
Click to expand...
As the owner of Payday Loans of Boston, I was hoping you might be able to provide some savvy financial insight as to why VC professionals might want to invest $2 Billion in the B2 conference.
 
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cjrugger

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84lion said:
This article explains it a bit better:

https://sports.yahoo.com/college-fo...-move-within-college-athletics-170051033.html


From the article linked to above:

What's in it for UC Investments?​

How the pension fund receives a return on its seed capital is clear. UC Investments earns the annual cut of distribution plus an ability to sell its portion of the league after a 15-year “hold,” when it is prohibited to sell. Any sale must be approved by league members.

The distributions for UC Investments could be significant and benefit hundreds of thousands of former state public university employees as part of the pension fund. This year, Big Ten’s 12 legacy schools are expected to earn about $75 million each in conference payouts, a number that could rise as high as $90 million under the current TV contract. The league is likely to renegotiate its media rights deal as many as three times during the 20-year length of the deal.

It is true that they are buying an "equity stake," as you put it, however, the distribution cut is the big driver. Again from the article:

In what is described as a minority investment, UC Investments will provide an infusion of roughly $2.4 billion in a one-time equity distribution to the conference to own a 10% stake in Big Ten Enterprises and receive a cut of the league’s annual distribution.
Click to expand...
Yeah, that’s what I said
 
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PSU4U

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PSUFTG said:
Obviously, not a done deal at this point:

But, the potential involvement of the "Venture Capital" group:

Brings zero outside expertise or skillset to the table
Brings zero synergy (hate that word anyway) or any type of intrinsic value to the table
Brings zero capability to generate revenue, beyond what is available without them.
Breaks down no barriers to future growth and "profitability" (possibly quite the opposite)
Straps very significant hobbles to adaptiveness and flexibility for decades to come - in a VERY turbulent and dynamic market.

What it is, of course, is the equivalent of the VC firm buying a share of future revenues..... and unless the VC firm is run by idiots (spoiler: that is unlikely) they will take out far more value than they bring in (basic risk premium principals - with the effect of tax treatment causing further erosion)

This type of "venture capital" move is beyond idiotic - for the "seller", ie the Big Ten in this case (though there is ONE reason that the Big Ten, and maybe some other conferences down the road, may do it - wanna' know why? :) )

It sounds like the folks at OSU and Michigan may be the only ones with clear heads here, but I expect they will eventually be worn down and allow the principle of mob stupidity to take control.

Alas

View attachment 937605
Click to expand...
It's only a 10% interest/stake.
 
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PSUFTG

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There really isn't even any interesting conversation to be had as to whether or not such a transaction is in the best long-term financial (or other) interests of the Conference [It is not]

The interesting conversations start with, that being the case: why is such a deal being considered - and potentially adopted? That is where the "fun stuff" starts.
A LOT of interesting topic areas in that question.
 
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PSU4U

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84lion said:
https://sports.yahoo.com/college-fo...tal-investment-into-conference-205711352.html

Per Yahoo Sports’ Ross Dellenger, the conference has been in talks “for months” about private capital investments worth at least $2 billion.

According to ESPN, the investment would also come with a 10-year extension of the conference’s media rights deal through the 2046 season. The Big Ten has one of the most lucrative media rights deals in college sports with CBS, Fox and NBC.
Click to expand...
Up or Down Vote scheduled today. It may have taken place already?
 
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