Big Ten in discussions regarding $2 billion private capital investment into conference
- Thread starter 84lion
- Start date
It's Michigan screw the Big Ten because they are Michigan just another Evil Empire. OK so just what are those better deals?????? I call BS on Michigan.
The numbers being discussed as the up-front "investment" amount to roughly $130 Million per university.
During the Beaver Stadium bit, PSU provided estimates for the annual payouts of Big Ten revenue share (per team, ie Penn State - which is the same for every program) over the next 20 years.
PSU claimed those numbers were conservative - I don't know if I would call them conservative, but I do think the revenue projections were reasonable.
PSU, and every other program - will be losing 10% of that payout -as the payment to the Investor.
Using that information - and it is not higher order calculus - it is easy to calculate the rate of return is (think of that as interest rate charged by the PE):
At those figures, the rate is around 7.5%
Just as a FIRST brush, current 20 year municipal bond rates are around 4%..... ie, rather than this "deal" universities could borrow the $130 million - and pay a rate of nearly 1/2 of this "deal"
Now, obviously, that is HUGE over 20 years. In and of itself it would make any reasonable fiduciary say "No F-in way" to that deal.
But there are numerous other downsides:
1) If there is any unanticipated growth in those Big Ten revenues over 20 years - and that is probably a pretty high probability, this deal gets even worse
2) If there are any new revenue streams that come to be, that get added to that Big Ten bucket, this deal gets even worse
3) Any flexibility is eliminated (the extended GOR), or at least greatly reduced - the ability to act appropriately to changing market conditions over the next 20 years - makes this deal even worse.
4) Not every school has been a fiscally unsound as PSU, and several other schools (including OSU) - and they don't all need this "pay day loan" (as some have called it) and doesn't need this $130 million infusion to pay their bills - but they will all be hit with the "tax" of this deal.
It is a complete non-starter from a fiduciary standpoint - from a common sense standpoint - from any reasonable standpoint.
EXCEPT:
Leaders of some institutions who are facing ICA fiscal cliffs - and don't want the bad PR of either having to take out personal debt to pay their bills, or be forced to impart some degree of fiscal restraint on their out of control ICAs,
and/or
Some of the "Big Boys" are planning to be FOS wrt the "revenue splits" - and rather than just taking a "few percent" more than average (taking that away from the "little boys") they plan to take a HUGE excess share - and tell the "little boys" "Too damn bad - go join the ACC"
It is what it is.
Thus far, at least, the Chancellors at Michigan and USC have been willing to stand up for common sense.
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During the Beaver Stadium bit, PSU provided estimates for the annual payouts of Big Ten revenue share (per team, ie Penn State - which is the same for every program) over the next 20 years.
PSU claimed those numbers were conservative - I don't know if I would call them conservative, but I do think the revenue projections were reasonable.
PSU, and every other program - will be losing 10% of that payout -as the payment to the Investor.
Using that information - and it is not higher order calculus - it is easy to calculate the rate of return is (think of that as interest rate charged by the PE):
At those figures, the rate is around 7.5%
Just as a FIRST brush, current 20 year municipal bond rates are around 4%..... ie, rather than this "deal" universities could borrow the $130 million - and pay a rate of nearly 1/2 of this "deal"
Now, obviously, that is HUGE over 20 years. In and of itself it would make any reasonable fiduciary say "No F-in way" to that deal.
But there are numerous other downsides:
1) If there is any unanticipated growth in those Big Ten revenues over 20 years - and that is probably a pretty high probability, this deal gets even worse
2) If there are any new revenue streams that come to be, that get added to that Big Ten bucket, this deal gets even worse
3) Any flexibility is eliminated (the extended GOR), or at least greatly reduced - the ability to act appropriately to changing market conditions over the next 20 years - makes this deal even worse.
4) Not every school has been a fiscally unsound as PSU, and several other schools (including OSU) - and they don't all need this "pay day loan" (as some have called it) and doesn't need this $130 million infusion to pay their bills - but they will all be hit with the "tax" of this deal.
It is a complete non-starter from a fiduciary standpoint - from a common sense standpoint - from any reasonable standpoint.
EXCEPT:
Leaders of some institutions who are facing ICA fiscal cliffs - and don't want the bad PR of either having to take out personal debt to pay their bills, or be forced to impart some degree of fiscal restraint on their out of control ICAs,
and/or
Some of the "Big Boys" are planning to be FOS wrt the "revenue splits" - and rather than just taking a "few percent" more than average (taking that away from the "little boys") they plan to take a HUGE excess share - and tell the "little boys" "Too damn bad - go join the ACC"
It is what it is.
Thus far, at least, the Chancellors at Michigan and USC have been willing to stand up for common sense.
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Honestly, the folks - not just random yukmaluks, but folks including trustees at U Mich and USC - who are calling this a "payday loan" are not wrong. At least with regard to the structure and purpose (granted, it is not some outfit charging 5 points a weekThrow money at a money problem.
) I have seen others reference it as "taking out a new credit card, to make a payment on your existing one". Again, not really wrong in that analogy.And these folks - the folks making these kinds of decisions - and with gigantic gobs of resources at their disposal - are selling this nonsense to the public?
All is silent on the Midwestern Front. Did a vote even take place or did Evil Michigan screw everyone.
ROTFALMAO a guy who has never done anything advising everyone else on ancient history.
Why can't these folks learn to be fiscally responsible?
I mean, there's a huge private equity company out there called "GoFundMe" where, when confronted with your own poor financial planning (revenue generation, cost containment, etc.), you can just put out your hand and virtually beg for people to give you money.
Ain't that right, Barry?
Imagine if some folks could have actually produced the hypothetical $100 million to name the playing surface. Maybe then PSU wouldn't need any of the PE money.Honestly, the folks - not just random yukmaluks, but folks including trustees at U Mich and USC - who are calling this a "payday loan" are not wrong. At least with regard to the structure and purpose (granted, it is not some outfit charging 5 points a week
And these folks - the folks making these kinds of decisions - and with gigantic gobs of resources at their disposal - are selling this nonsense to the public?