Otro Capital – Private Equity – Sports Sector
Strategy: Targets under-monetized or undervalued assets with strong intellectual property and aims to scale them through operational expertise.
These guys are an offshoot of Redbird Capital Partners from way back in 2023, who manage about $12B in assets.
If Congress comes up with a way to get the genie stuffed back in the bottle (SCORE Act), I’m all for it.
In the meantime, the U is for damn sure not going to let Crumbl cookies make us uncompetitive in NIL.
Again… get the SCORE Act passed. It got shelved for the time being. WHY!?!?!?
The end result winds up being the same. Fee for service vs a private company having a minority stake but ultimately a chunk of the revenue goes to an outside org or in this case a new partner org where Utah Athletics still calls the shots.
One of the complaints I have heard for a long time from people around Athletics is the funding folks and partnerships folks keep going to the same well/pool of money year after year. I know some guys in the Silicon Slopes realm who couldn’t get a phone call back when they wanted to put some money into ads or partnerships for their companies. Having a large organization like this to tap into otherwise untapped sources of revenue is going to be the difference maker.
Utah football had a lot of national exposure this season. I think there are a lot of potential sources of revenue from outside the traditional pool. I see this as an opportunity.
Après moi, le déluge.
That right there. Except I’m just not that French and I rage against the dying of the light….or something.
Smarter people than me have probably already asked the following questions. If someone has the answers, I’d like to know them.
I’m okay with jaundiced responses, given my BYU fandom. This strikes my admittedly untrained (in private equity) brain as different from an advertiser, donor or NIL partnership. Those are voluntary or contractual contributions. If the other party doesn’t like what the athletic department is doing with his/her/their money, it ends with the last donation or advertising contract expiration. Those people remain outside the domain of the athletic department.
This, OTOH, gives an outside party not just an open door but a figurative office and phone within the department. Can it become the camel’s nose in the tent?
Good luck with whatever comes. Hopefully it’s not like the saying about joining the Mafia: It takes $1 to get in and $2 to get out.
i really hope BYU’s donor pool isn’t actually affecting the judgement of Brother Randall and the U of U decision makers.
I am skeptical at best about PE. A couple of things that give me some sense of comfort This idea has been in the works at the U for several years from before the collapse of the PAC. A core group of traditional Utah donors are also putting money into this LLC and I assume that the group is comprised of some pretty smart business people. I think Randall is knowledgeable guy when it comes to this type of thing.
I believe the time is quickly approaching when there will only be the Big10 and SEC each consisting of 24 schools. If there is an ACC or BigXII, they will be much like the new Pac12. To have a chance to to be one of the schools in the Big10, Utah needs to do everything in its control to enhance the performance levels it has achieved over the past decade. This takes money.
utah can fire those subcontractors if they believe they are underperforming. Once utah takes that money they are literally owned up until they point they can buy themselves out. To do a deal PE is going to be expecting a ~15% return on capital. This isn’t a benevolent (albeit potentially misguided) business person - this is kill or be killed.
why do they need to do this? i’d rather they just ended up where Cal and Stanford end up eventually playing - in a lower, regional conference that is still tied to the schools.
I see we’ve got the cougs riled up here - lol - but it goes back to the other thread about NIL lasting. I mentioned there when I started the thread that donors will donate at high levels only for so long, and when the ROI isn’t there they’ll eventually sour on it. ie, I don’t care how deep your pockets are, but $7M to be the #1 high school player in the world for one year doesn’t get you what it used to in college sports donations.
But here we are, and the U has found a way around this problem with the PE deal - now these big donors can invest and get a return potentially on what they’ve done. And as far as the legitimacy, protection, and feasibility of this all, with Taylor Randall at the helm, I’m not remotely worried about that.
And I’m not saying I like it, but it does solve that problem.
I am amused at some of the comments by BYU fans here and elsewhere. They liked it when Ryan Smith and Crumbl Cookie dude were cutting checks, couldn’t see a problem with that… but THIS is now highly questionable.
My son started his career in sports marketing working in the athletic department at the U. He has since advanced his career working in marketing and partnerships for several professional teams across the country. We have had many discussions about how under performing the University has been in their sports marketing efforts. He has mentioned the opportunity to scale their efforts relative to what other college brands have done. While Utah doesn’t have the population base, in the last few years they have had exposure that has value to national sponsors and partners that has not been tapped. It is clear they don’t have the talent in house and current marketing partners don’t appear inclined to pursue these opportunities.
From what I’ve read, the PE firm is not investing in anything tangible, but buying into the marketing of the brand and some ancillary operations. They must see considerable unlocked potential or they would not even be discussing it.
Too new for me to make any judgement at this point, interested in seeing more details.
This new company really opens up the revenue possibilities. The stadium sits empty for much of the year. There could be possibilities of booking even more events outside of the Football season and the couple of concerts a year. I expect there will be opportunities to have even more types of University of Utah branded merchandise and University branded partnerships of various kinds. Non traditional University branded products is another opportunity.
KU is also able to tap into these kinds of dollars without having strings attached:
(Booth does know a thing or two about finance as well)
But what’s questionable to me is not some moral thing, but whether or not it is a good financial decision. There is no first mover advantage here - if this works for Utah, everyone else can do it. If it doesn’t work, Utah will be a cautionary tale.
Not necessarily true. If they obtain new sponsors and partners, many times there is some level of exclusivity involved that locks them in for a period of time. Making them unavailable for poaching by other schools.
Hey don’t interrupt his panic mode like that!
I just popped over to coogerbored to see their reactions. Pretty funny they are crapping all over the deal while simultaneously contemplating contacting their state representatives to quash it.
Every time someone reads coogerbored, a puppy dies.
I’ll stop for the puppies.
while you’re right utah might lock up some local deal - it’s pretty clear that if utah’s private equity adventure isn’t a disaster, 30 other schools in Utah’s tier will do their own.