More realignment talk from Greg Swaim

[tmcats]

I suppose it's possible for the Big 12 to borrow against increased revenue from having games including Clemson and FSU to sell, use that money to pay the two schools' ACC exit costs, then let Clemson and FSU have a cost-free exit option but agree that they will assume the full remaining cost of paying down the loan if they leave before it is repaid. I don't think Clemson and FSU will be joining the Big 12 at all, but they certainly won't be doing so if they can't get out immediately should the Big Ten or SEC come calling.

that's an interesting theory. another would be that their value is compensated accordingly so that their revenue in the b12 is similar to the b10 and sec. if they are that valuable there, they are here as well. their revenue generation from the b12 is thus recognized. they have no reason to leave.

 

[The TCU Football Jerk]

Personally, I still don’t see a path or mechanism that gets them out of the ACC GOR. Everybody is glued to the ACC, but that just seems like a drama sideshow that could be years from resolution.
I still believe the ball is in the BIG’s court.
When the BIG comes for NC, Duke, Kansas, & Utah and the SEC responds with Clemson, FSU, & ??? is when we begin to see the emergence of the Big 2 super league in a NFL model. A straight up NFL minor league with its own commissioner, own playoff system, & a championship game on the Saturday before the Super Bowl.

This interview with Kyle Whittingham beginning @ 10:30 is exactly where we’re headed. He is spot on.

One of the big things is anti-trust. College sports can't continue in their current form with no limits on anything. Schools can outbid and undercut others on a whim now. That way can't succeed forever. There will have to be some limits placed on salaries, etc. The only way is with anti-trust legislation. And at that point a league like that is in direct competition with the NFL. The nfl almost needs to find a way to buy college football and put it under its umbrella. Then you get into what schools do they want. It won't be all. Will there then be a league for the have nots left out? This is a bigger mess than people realize.

 

[froginmn]

Which B12 division will SMU be in?

 

[82 Frog Fever]

private equity is not buying either out of the acc only to let them leave for the b10. you must think p.e. dudes are not very smart or you yourself are simply naïve.

Private equity is the cash source, they would expect a 10% return, so $25m-$30m year. Across say 22 schools (add 6 from ACC), it’s less than $1.5m per school annually.
$1.5m per school is mice nuts. Just Duke’s Bball team makes $45m/yr.

 

[An-Cap Frog]

I'm still amazed that Vandy and Northwestern are looked at as viable programs.

 

[helcap]

I'm still amazed that Vandy and Northwestern are looked at as viable programs.

It's similar to Fraternities wanting to have one real smart student as a member

 

[McFroggin]

Private equity is the cash source, they would expect a 10% return, so $25m-$30m year. Across say 22 schools (add 6 from ACC), it’s less than $1.5m per school annually.
$1.5m per school is mice nuts. Just Duke’s Bball team makes $45m/yr.

10% is a joke. Basic SP500 and sitting will get 8-9% return. PE wants much more than that.

 

[fanatical frog]

private equity is not buying either out of the acc only to let them leave for the b10.

Agree.

 

[fanatical frog]

that's an interesting theory. another would be that their value is compensated accordingly so that their revenue in the b12 is similar to the b10 and sec. if they are that valuable there, they are here as well. their revenue generation from the b12 is thus recognized. they have no reason to leave.

Agree. Pessimism has become the new conventional wisdom for many on this board.

 

[82 Frog Fever]

10% is a joke. Basic SP500 and sitting will get 8-9% return. PE wants much more than that.

That’s simply not true.
Even Blackstone, the world’s largest private equity firm, only has a 10.2% return since inception.
CASI - “Our annual performance study now includes 2023, a year that produced a modest 0.8% return for private equity compared to a 17.5% return for the public stock market equivalent return. The large shortfall in private equity return for 2023 is due to a valuation spillover from the 2022 drawdown in public stock values. A two-year lookback shows private equity earning a 10.3% annual return compared to 0.2% for the public stock market equivalent.”

10% is the approx. average for the last several years, some get much more and some less.
The biggest determiner of return is the level of risk in the investment. With the cash flows of the B12, the risk level here is minimum.

 

[Sangria Wine]

PE at 10% pref rate would also be getting a nice stake in the conference ownership. Otherwise they’re looking for 25% plus or there will be no PE…

 

[y2kFrog]

I'm still amazed that Vandy and Northwestern are looked at as viable programs.

There was a story I read recently (I can't remember where at the moment) about how conferences can't rid themselves of these schools because they are scared (and rightly so) that they will lose big. They only way these schools disappear is if they get left in the dust like Oregon St. and Washington St. Vandy and NW are lucky they are where they are. Wake probably not so fortunate.

 

[Chongo94]

Just crazy. I’m in Florida, and have seen some big storms, but I swear Houston gets more big storms than we do. Houston = storm magnet

Saw a stat the other day that Texas has lost more money due to natural disasters the last 10-15 years than any other state, including Florida. Crazy.

 

[Big Frog II]

I just have to wonder if Houston residents are having second thoughts about living there. It is unreal how many natural disasters they have been through, and they seem to be coming around more often.

 

[Sangria Wine]

I just have to wonder if Houston residents are having second thoughts about living there. It is unreal how many natural disasters they have been through, and they seem to be coming around more often.

I suspect many Houstonians have second thoughts about living there having nothing to do with natural disasters.

 

[McFroggin]

That’s simply not true.
Even Blackstone, the world’s largest private equity firm, only has a 10.2% return since inception.
CASI - “Our annual performance study now includes 2023, a year that produced a modest 0.8% return for private equity compared to a 17.5% return for the public stock market equivalent return. The large shortfall in private equity return for 2023 is due to a valuation spillover from the 2022 drawdown in public stock values. A two-year lookback shows private equity earning a 10.3% annual return compared to 0.2% for the public stock market equivalent.”

10% is the approx. average for the last several years, some get much more and some less.
The biggest determiner of return is the level of risk in the investment. With the cash flows of the B12, the risk level here is minimum.

You are changing the subject. 10% is their average return because they accept higher risk options that have burned them the last few years. 10% includes the failures which means they anticipate 20%+ or they walk. Short term financing on secured debt earns 12%+ per year right now. I can get that without trying. No private equity is accepting higher risk for less than they can get guaranteed with no downside exposure. Big money isn’t stupid.

 

[Limey Frog]

You are changing the subject. 10% is their average return because they accept higher risk options that have burned them the last few years. 10% includes the failures which means they anticipate 20%+ or they walk. Short term financing on secured debt earns 12%+ per year right now. I can get that without trying. No private equity is accepting higher risk for less than they can get guaranteed with no downside exposure. Big money isn’t stupid.

I'm the unlikely event that any of this happens, Yormark will make sure it all works so that everyone makes what they need. I'm not going to waste time worrying that bankers won't get paid.

And, for what little this kind of thing is ever really worth...

Big Ten, SEC Unlikely To Add Florida State if ACC Survives

Read Brett McMurphy's report on the Big Ten and SEC being unlikely to add Florida State unless the ACC disintegrates.

www.actionnetwork.com

 

[McFroggin]

I'm the unlikely event that any of this happens, Yormark will make sure it all works so that everyone makes what they need. I'm not going to waste time worrying that bankers won't get paid.

And, for what little this kind of thing is ever really worth...

Big Ten, SEC Unlikely To Add Florida State if ACC Survives

Read Brett McMurphy's report on the Big Ten and SEC being unlikely to add Florida State unless the ACC disintegrates.

www.actionnetwork.com

Banks/bankers? What do you think private equity is? It is rarely a loan at super high interest. Private equity is usually along the lines of people like you and me that group together as limited partners to leverage an organization, optimize it for the short-term, and then spin it off to generate high profits, often at the expense of long-term stability. This isn’t a goal of the Big12 or any organization doing reasonably well. This is a crap option that will likely end in a bad outcome after PE has drained what they can.

Research Steward Health right now. PE came in and sold Steward hospitals after attaching high rents to them to make them look nice and shiny. They leveraged the business to the point of failure, sold what they could, and made off with tens to hundreds of millions. Now Steward can’t pay their rents and the pieces of Steward are being auctioned off in bankruptcy. PE made off like bandits. The new hospital owner is out $100 million+. Banks are out millions. Steward cared for 10% of the local patients. The patients are now with fewer options and care disrupted. Assuming no fraud, this was a successful PE takeover from the PE perspective.

Rarely is private equity going to be growth capital when banks won’t loan the money because the risk is too high.

Hard pass on private equity. If the Big12 can’t get a loan against their tv revenue for what they are doing, shut it down.

 

[Limey Frog]

Banks/bankers? What do you think private equity is? It is rarely a loan at super high interest. Private equity is usually along the lines of people like you and me that group together as limited partners to leverage an organization, optimize it for the short-term, and then spin it off to generate high profits, often at the expense of long-term stability. This isn’t a goal of the Big12 or any organization doing reasonably well. This is a crap option that will likely end in a bad outcome after PE has drained what they can.

Research Steward Health right now. PE came in and sold Steward hospitals after attaching high rents to them to make them look nice and shiny. They leveraged the business to the point of failure, sold what they could, and made off with tens to hundreds of millions. Now Steward can’t pay their rents and the pieces of Steward are being auctioned off in bankruptcy. PE made off like bandits. The new hospital owner is out $100 million+. Banks are out millions. Steward cared for 10% of the local patients. The patients are now with fewer options and care disrupted. Assuming no fraud, this was a successful PE takeover from the PE perspective.

Rarely is private equity going to be growth capital when banks won’t loan the money because the risk is too high.

Hard pass on private equity. If the Big12 can’t get a loan against their tv revenue for what they are doing, shut it down.

I understand how private equity funds work, thank you. Like you, I don't think this is a good idea for college athletics. But if the Big 12 puts something together this way I'm sure everyone involved will have made sure that the lenders will get paid and the project the money is funding will sustain the debt assumed.

 

[McFroggin]

I understand how private equity funds work, thank you. Like you, I don't think this is a good idea for college athletics. But if the Big 12 puts something together this way I'm sure everyone involved will have made sure that the lenders will get paid and the project the money is funding will sustain the debt assumed.

College football is already deteriorating. PE would be the nail in the coffin.