Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

[Jason Svoboda]

This is just a TERRIBLE idea.

Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

The proposed deal with a Luxembourg-based firm would bring a massive influx of cash to the league

www.cbssports.com

For those not privy to private equity or what it does, here is a solid primer.

https://archive.is/emO8p

 

[MovingScreenOfDeath]

So what's the collateral? Like if I take out a loan and use my car as collateral, I lose my cad. Surely they can't use ostensibly state-funded schools as collateral.

 

[Jason Svoboda]

So what's the collateral? Like if I take out a loan and use my car as collateral, I lose my cad. Surely they can't use ostensibly state-funded schools as collateral.

It's a great question. I've seen it asked and nobody seems to have an answer -- or wants to answer. My guess is it will be the brands themselves.

A lot of times these PE firms get controlling interest in companies, wring every last dollar out of them while they saddle them with debt turning them into zombies, and then end up owning the brand after the companies cannot make debt service. It could get to the point where they would then license the brand back to the school if they could somehow get majority stake.

 

[MovingScreenOfDeath]

A lot of times these PE firms get controlling interest in companies, wring every last dollar out of them while they saddle them with debt turning them into zombies, and then end up owning the brand after the companies cannot make debt service.

I'm sure there's hundreds of examples but this is exactly what happened to Toys r Us. The PEF bought them, transferred all their debt to them, and ran them out of business. Now they license the IP to Macy's to call their toy section "Toys r Us"

 

[Jason Svoboda]

I'm sure there's hundreds of examples but this is exactly what happened to Toys r Us. The PEF bought them, transferred all their debt to them, and ran them out of business. Now they license the IP to Macy's to call their toy section "Toys r Us"

Yep, one of hundreds if not thousands. Here is a list of the more major brands that are now owned by PE firms:

Category:Private equity portfolio companies - Wikipedia

en.wikipedia.org

 

[4Q_iu]

So what's the collateral? Like if I take out a loan and use my car as collateral, I lose my cad. Surely they can't use ostensibly state-funded schools as collateral.

Maybe not the schools but what about the endowments? A simple solution is for the conferences to NOT do it, however as we all know too well, there's not a hint of honor in any of the P2/FP3 and none in any of the schools in the G5 who have wet dreams of burrowing into the P2/FP3.

A pox upon all of them