2025 College Football Thread

[Flystripper]

I hear that, but don't fully understand how PE ruins everything it touches. Is it just that while it brings an infusion of cash, it also brings significant debt burden that could hamper future operations? And also brings in stakeholders as another chair at the decision-making table that are focused more on financial return vs. on the field performance (I understand those two can be intertwined, but not always)? Those seem risky. Are there other ways PE affects this things it touches?

And give that this potential burden could fall back on taxpayers, doesn't the legislature need to approve this?

I work with private equity groups and funds every day of my career. They are great tools for creating wealth. The companies they buy often provide incredible returns to the investors in their funds, but I am yet to see a company that maintains the culture of the founders or family that started the business. These funds typically use use massive amounts of leverage which brings with it significant financial risk. They also have a limited time horizon to maximize return for a 5 year exit. Within the 5 year window it becomes a meat grinder for the people working in the company to maximize the exit in 5 years. In an athletic department I can see how this environment becomes problematic to culture building.

[beefytee]

Yeah. As a Utah taxpayer, I'm not a fan of this. Seems like it could go horribly wrong and I will be on the hook for it.

Has any other school done this yet?

[myboynoah]

I work with private equity groups and funds every day of my career. They are great tools for creating wealth. The companies they buy often provide incredible returns to the investors in their funds, but I am yet to see a company that maintains the culture of the founders or family that started the business. These funds typically use use massive amounts of leverage which brings with it significant financial risk. They also have a limited time horizon to maximize return for a 5 year exit. Within the 5 year window it becomes a meat grinder for the people working in the company to maximize the exit in 5 years. In an athletic department I can see how this environment becomes problematic to culture building.

Thank you!

Do the PE groups usually take a position, and if so, how much? This is being pushed as a way for uofutah boosters to invest in the program via the PE. Maybe those investors will have a longer or even an unlimited time horizon. But I have a hard time thinking they would be the majority investors.

[Flystripper]

Thank you!

Do the PE groups usually take a position, and if so, how much? This is being pushed as a way for uofutah boosters to invest in the program via the PE. Maybe those investors will have a longer or even an unlimited time horizon. But I have a hard time thinking they would be the majority investors.

Sometimes private equity funds take a minority position but they always want to be able to control their exit. It looks like this is the case with Utah. According to the Yahoo article, the university is maintaining a controlling interest in the new entity that they are creating. The private equity firm will get a couple of board seats and will provide operational assistance. I would love to see the operating agreement of the new entity as well as the cap table.

[MartyFunkhouser]

This is going to end very very badly for the Utes.

[myboynoah]

Sometimes private equity funds take a minority position but they always want to be able to control their exit. It looks like this is the case with Utah. According to the Yahoo article, the university is maintaining a controlling interest in the new entity that they are creating. The private equity firm will get a couple of board seats and will provide operational assistance. I would love to see the operating agreement of the new entity as well as the cap table.

Thanks, again.

Sounds like the targets are uofutah boosters. I question whether there really is $500 million of that out there. Funk? Wally? AJ?

[Donuthole]

Aren't all non-publicly traded companies, whether they're startups with VC funding or founder-funded or long-term privately held companies like Mars, Inc. basically private equity? If so, do you really believe "private equity eventually ruins everything it touches"?

I'm talking about PE Groups and Funds primarily. PEFs are the corporate equivalent of strip mining. Super profitable for a period, but once the low-hanging fruit has been seized and profits have been maximized (at the expense of the consumer and the end product), the PE Fund exits and almost always (maybe always) leaves a soulless company and a worse product behind.

[Flystripper]

Thanks, again.

Sounds like the targets are uofutah boosters. I question whether there really is $500 million of that out there. Funk? Wally? AJ?

I am guessing Otro has lined up enough LPs in their fund (LPs are typically institutional investors or massively wealthy individuals) for this interest in the new company, but the athletic department and Otro are allowing some doners to buy equity in the new entity separate from Otro's fund structure. I don't know this for sure, but its a good guess since Otro's fund is likely already closed to new investment since they have been shopping this idea to others for a while now. How the cap table is structured is very important. It would not surprise me Otro's investment includes convertible preferred in addition to common equity so they get paid back first at certain return thresholds in an exit or a liquidity event. This is very common in private equity deals. The devil is in the details.

[Flystripper]

I'm talking about PE Groups and Funds primarily. PEFs are the corporate equivalent of strip mining. Super profitable for a period, but once the low-hanging fruit has been seized and profits have been maximized (at the expense of the consumer and the end product), the PE Fund exits and almost always (maybe always) leaves a soulless company and a worse product behind.

DH is not wrong. The company is always changed and by most non-financial measures not for the better.

[Moliere]

Sometimes private equity funds take a minority position but they always want to be able to control their exit. It looks like this is the case with Utah. According to the Yahoo article, the university is maintaining a controlling interest in the new entity that they are creating. The private equity firm will get a couple of board seats and will provide operational assistance. I would love to see the operating agreement of the new entity as well as the cap table.

You likely should get to see it if it’s part of a public university program, unless they found a way to keep the investment from the reach of a FOIA request.

[wally]

I am guessing Otro has lined up enough LPs in their fund (LPs are typically institutional investors or massively wealthy individuals) for this interest in the new company, but the athletic department and Otro are allowing some doners to buy equity in the new entity separate from Otro's fund structure. I don't know this for sure, but its a good guess since Otro's fund is likely already closed to new investment since they have been shopping this idea to others for a while now. How the cap table is structured is very important. It would not surprise me Otro's investment includes convertible preferred in addition to common equity so they get paid back first at certain return thresholds in an exit or a liquidity event. This is very common in private equity deals. The devil is in the details.

I have only ever been a part of one PPP with a single investor, and all of the devil is in the details of the Operating Agreement just like you describe. I wonder if that will be made a public document, but I am thinking it will not as it might qualify for exclusion over trade secrets or some such provision.

In the arms race of college athletics, I think we will see more of these leading up to the point when the SEC and B10 start plucking their final garnishments from the B12 and ACC, to form the super conferences that will be the power brokers for the next iteration of media rights contract negotiations.

My first thought when i saw this was that Utah is pushing to be able to make the cut for that super-league in the next 5 or so years.

[wally]

Thanks, again.

Sounds like the targets are uofutah boosters. I question whether there really is $500 million of that out there. Funk? Wally? AJ?

No idea.

[wally]

I am guessing Otro has lined up enough LPs in their fund (LPs are typically institutional investors or massively wealthy individuals) for this interest in the new company, but the athletic department and Otro are allowing some doners to buy equity in the new entity separate from Otro's fund structure. I don't know this for sure, but its a good guess since Otro's fund is likely already closed to new investment since they have been shopping this idea to others for a while now. How the cap table is structured is very important. It would not surprise me Otro's investment includes convertible preferred in addition to common equity so they get paid back first at certain return thresholds in an exit or a liquidity event. This is very common in private equity deals. The devil is in the details.

Prediction: Largest LP: Deseret Management Corporation

[Northwestcoug]

If what PE has done to independently owned physician practices extrapolates to athletic departments, good luck Utah.

[USUC]

My first thought when i saw this was that Utah is pushing to be able to make the cut for that super-league in the next 5 or so years.

Isn't the PE group they are working with also working with the B1G? Will the PE group take over negotiations on getting into that conference? May be a shrewd move on behalf of Utah.