There’s a rumor that private equity is about to get involved with LSU
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Publicly traded wouldn’t work the beauty of private equity is private financial records as opposed to publicly traded.
Private equity is the one that is destroying our country.
Private Equity & LSU Athletics - what could possibly go wrong? This will be an absolute disaster. The only question is the timetable.
Lane Kiffin, Will Waid, & Kim Mulkey will only add to the entertainment value
Lane Kiffin, Will Waid, & Kim Mulkey will only add to the entertainment value
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PE makes everything they touch worse
Another nail in the coffin as far as I am concerned. It’s not college sports anymore.
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Why is private equity any different than any other money/investment?
One of you financial guys, please explain like I'm a 9 year old.
Better than being funded by the kids' hospital.
They have the reputation for having a purely short term focus. They load up businesses with debt, liquidate assets, lean things up too far and sacrifice customer service and product development in the process with the goal of finding another PE firm to sell to or to take it public at a ridiculous valuations. Not all do this but not an unearned reputation.
LSU football is interwoven with the politics of the State like no other college program that I know of in the country......and has been for decades . College football is now like gigantic ship with no rudder.....who knows what's next ?
LSU will be an interesting case study for PE in college sports. They don’t have an endless supply of money like Texas, A&M, Michigan, Ohio State, etc, but they do have expectations to compete in many non-revenue sports, such as WBB, gymnastics, baseball, softball etc and have spent big on those sports even when they don’t return the value on the accounting sheet.
PE has long been come in and cut the fat, which is essentially non-revenue components of the business they acquire,in college athletics case it’s the Olympic/non-revenue sports. A reminder, college athletics isn’t a business, and certainly not an ideal model.
Remember when the B1G was about to cut a PE deal with the California State Pension System, the big schools (Michigan being the driver) were the ones that stopped it because they knew they couldn’t have their cake and eat it too, while the smaller schools (Maryland, Purdue, Minnesota) were clamoring for it
PE has long been come in and cut the fat, which is essentially non-revenue components of the business they acquire,in college athletics case it’s the Olympic/non-revenue sports. A reminder, college athletics isn’t a business, and certainly not an ideal model.
Remember when the B1G was about to cut a PE deal with the California State Pension System, the big schools (Michigan being the driver) were the ones that stopped it because they knew they couldn’t have their cake and eat it too, while the smaller schools (Maryland, Purdue, Minnesota) were clamoring for it
Yep. My employer has been PE-owned three times in my career, including currently. So far, two good, one bad, but the bad one was ethically depressing.
We should be going up for sale next year, so I'm more than a little apprehensive.
PE isn’t in this to make LSU athletics richer. It’s in this to drain as much of LSUs revenues off as it can & then leave them close to bankruptcy.
So looking at this and what @ckDOG said, this tells me PE won't stay long in this market. I know everybody crows about ItS mUh BiZnEsS, but like you said, it's not. It's a money loser. These boosters funding it are doing it to WIN.......not make money. Their money instantly disappears, with the only return being sideline visit or something.
The only way for PE to do well is to only play football. Maybe they should try the NFL.
They certainly would love to just take college football and make it their own, but other sports would die. Therein lies the problem…
That would be a failure too. Every league that has tried to compete with the NFL has failed.
Honestly, I think everything appears to be stabilizing. Law suits are settling down, everybody seems to have accepted the 2 portal windows and 5 year eligibility and max rev share numbers. If schools want to get PE involved, do so at their own peril. Because I don't see the amateur model, Title 9 and all that, going away. Some sports may get cut, sure. Really all about what alumni want to fund.
It is not stabilizing. The lawsuits on eligibility are raging and even questioning roster limits, and there is no cap on roster payroll. It is not sustainable as is
It’s gonna be harder to cut sports than people think. Arkansas tried to cut men’s & women’s tennis. That didn’t even last a week. You try to do much cutting & Congress and/or the courts are gonna put an end to that real quick.
They're doing an admirable job collecting coaches I hate. Maybe they can hire Vitello after he flames out with the Giants.
That stock is killing (it with) children, I hear.
Why not? Boosters are willing to pay. And the day they aren't? Well, you drop back to rev share only. And you aren't forced to do rev share........you are simply allowed to do so.
It's only unsustainable if you're trying to buy titles at any cost (like maybe LSU is attempting with PE). But college sports absolutely will survive, and honestly there's a ton of ways to moneyball this. We just don't have the people to do it. And if LSU buys a title and collapses and goes 1-11 for 10 years, well someone else will win. But they'll still field and team and play the games.
They aren’t really any different. Some are good and some are bad. Some like to take short term holds in companies and some have long range views. Some like capital intensive businesses and some like more service type companies that don’t require a lot of fixed assets and capex spending. There is certainly not a one size fits all PEG.
however, what I have not seen is a peg that is willing to, on an annual basis, constantly inject capital into a business. That’s why I’m not sure I really understand how private equity in college sports makes sense. These programs are only working because a large capital source (donations) is not expecting a return. Nearly 100% of the time what I see from a PEG is purchasing an equity stake (large upfront capital outlay) and then heavy distributions until a sell is done. I’ve never seen one continue to make capital contributions each year.
I know what you mean. My previous employer was PE owned. They flew us all to Vegas when they bought us (from a bank), told us how great it was going to be, how easier it would be to do our jobs, how much money we were going to make as the "stock" value grew over 5 years. I was all in. Then they sold us 6 months later to our largest competitor. Lying Snakes.
They aren't all that way. My current employer is 67% PE owned (33% employee owned). Things have been really good so far, they just want growth. IPO coming within 5 years though so we'll see how it goes.
One thing about PE is always true - The off-ramp is coming. How that off-ramp looks varies, but no matter how it looks, it's going to be disruptive.
Private Equity firms usually care more about profitability than quality.
The letter says the financial plan would be "the first of its kind". Utah already announced its PE investment program, and other schools have explored it. I guess it wouldn't take much of a twist to claim the program was the "first of its kind," but Im still curious to hear the details.
I am highly skeptical of PE in college sports. There is a big difference between making a donation to an Athletic Department vs. making an investment. Eventually the bill comes due, and these programs are barely breaking even as it is.
There are probably creative ways for athletic departments to reduce expenses and increase revenue. Seems like an AD should hire people to achieve that rather than sell out to a middle man.
I am highly skeptical of PE in college sports. There is a big difference between making a donation to an Athletic Department vs. making an investment. Eventually the bill comes due, and these programs are barely breaking even as it is.
There are probably creative ways for athletic departments to reduce expenses and increase revenue. Seems like an AD should hire people to achieve that rather than sell out to a middle man.
I can guarantee the donations and ticket pricing structure for non-top tier donors isn’t optimized at almost every university, but you can get some short-term vs long-term incentive conflicts. TV rights is another big area but also has the short-term vs long-term issue.
I don’t know enough about athletic department costs, but I suspect you’re right that most have a lot of waste.
I agree and I don't see how this would work. I just hope some PE group rips LSU a new one.
I wonder if it’s some type of direct state infusion that will require private match. I put nothing past their Governor and state leaders.
Their jersey patch deal is with an Australian company that is building a huge LNG terminal in south Louisiana, and got massive tax incentives from the state to build there. The mind does not have to wander far to imagine a scenario where the Governor made a deal that would involve tax incentives for investment into LSU athletics
Their jersey patch deal is with an Australian company that is building a huge LNG terminal in south Louisiana, and got massive tax incentives from the state to build there. The mind does not have to wander far to imagine a scenario where the Governor made a deal that would involve tax incentives for investment into LSU athletics
What about the current structure of college athletics screams quality to you other than perhaps the TV deals?