*“Colleges aren’t pro franchises,” Baumgartner added. “They’re stewards of a public trust."
OK, Thanks for that bulletin. We all feel better now.
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As of today, nine Big12 sschools have opted out of the PE deal.
Big 12 Schools Declining $30M Private Capital Credit Line
More than half of the Big 12’s 16 schools have opted out of the conference’s new $30 million line of credit offered through a five‑year partnership with RedBird Capital Partners and Weatherford Capital Yahoo Sports**+1**.
Schools That Have Declined
Confirmed opt‑outs include:
- Texas Tech – Will not use the credit line Yahoo Sports
- Colorado – Declined the credit option but supports the broader RedBird/Weatherford deal Yahoo Sports
- Iowa State – Will not use the line of credit Yahoo Sports
- Baylor – Holding off for now Yahoo Sports
- Cincinnati – Holding off Yahoo Sports
- Houston – Declined, citing preference for lower‑cost financing MSN
- TCU – Holding off Yahoo Sports
- UCF – Declined, joining WVU in rejecting the offer MSN
- West Virginia – Declined, with campus‑wide consensus against the credit line MSN
Kansas has not yet decided, while Arizona, Arizona State, BYU, Kansas State, Oklahoma State, and Utah have not responded publicly Yahoo Sports.
In light of the PIF pullouts we are seeing, most notably LIV Golf. It will not be a surprise if the whole conference says “Thanks, but no thanks” to the whole line of credit scheme.
It’s easy to understand why the allure to more money, but what is being considered to generate an ROI for private equity is most likely pie in the sky.
This reminds me, don’t try to eat “pie in the sky.” I tried that once and ended up wearing it when the plane hit turbulence. It was a mess.
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Some sobering information about Utah Athletics Department financial situation.
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While I agree there are risks with this venture I think there are also great opportunities. One example would be merchandise. I can walk into any SportChek store (largest sporting good retailer in Canada) and find lots of college sports gear from Michigan, Texas, Florida, Duke, Kentucky, etc and even smaller places like Wazzu or Ok State. But not Utah.
That to me is an opportunity! I have people in Alberta ask me all the time to bring back stuff and I even had a few people at the Edmonton Folk Music Festival ask where I got my Utah hat I was wearing. That is just one opportunity of many that I have outlined before.
Auditors can only look at the information they are given. It is not their job to speculate. Based on the current situation, yeah there is some risk to this on the surface and with not knowing the full details yet.
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That seems like more of a demand issue and not something that throwing venture capital money at would really have any impact on.
My two bits…
I understand the lens from which the auditor is looking at the deal, and have to somewhat agree with the findings.
Government agencies and operations generally tend towards being risk averse - for numerous very good reasons. When government has something like this go bad, it tends to be very expensive, and the university doesn’t carry an unrestricted fund balance in its budget to cover the hole that could be created.
I don’t know if trying to move our local brand to an international market brand will have much success on the bottom line, but if the deal actually works, it could certainly make things more financially competitive.
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Nothing of substance is new in the auditor’s letter. These points and concerns have been raised ad nauseum over the last 6 months. It’s risky for sure, but arguably also necessary for survival.
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The point is I think there is untapped demand because the merch managers at the campus store don’t currently have the bandwidth or knowledge to be able to tap into larger markets. I deal with alumni all the time who express a certain level of disappointment in being able to access merch. That is just one tiny example of the opportunities available to additional revenue. There are also opportunities for branding, sponsorships, collaborations, etc. as well. Otro has some expertise in business development that can be utilized as part of this deal.
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Yeah, but who has all those missing Huntsman Center keys?
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Comment of the week, right here. Just beautiful. <chef’s kiss>
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- What struck me from the article is that the rainy day fund went from $61 mil to $42 mil and is expected to drop to $5.8 mil this year.
Although Utah has a number of alums who have substantial sums of money, none appear overly interested in athletics at least to the $$ level required today. Athletic Departments of public universities have 4 sources of revenue: TV, ticket sales, donors and the State. The TV deal is set for the next few years and while the money is better than we were getting in the PAC, the Big XII is last among Big 10, SEC and ACC. I believe football tickets (the only significant ticket revenue) has probably maxed out and I expect that there will be a reduction of season tickets over 5-7%. The State will never give the U more money.
Utah needs to do something outside the box and the PE is certainly that. My question is the delay in finalizing the agreement on the U or the PE group?
I guess no schools, including Utah, have signed onto the Big 12 conference PE deal. I found this interesting item:
Colorado, Kansas State, Arizona and Iowa State are the latest Big 12 schools who have “declined to accept” a $30M line of credit that is being offered as part of the league’s private capital deal, bringing the total number of schools to reject the credit line to “at least 12,″ according to Brent Schrotenboer of USA TODAY. This resource comes at an interest rate of “nearly 10%.” TCU, Baylor, Cincinnati, Houston, BYU, Central Florida, West Virginia and Utah also have said that they have “no plans to take the money,” even though all schools are “challenged financially by the rising costs of paying players and coaches.” But while no Big 12 school so far has confirmed it is taking the money, that does not mean the arrangement is not “a good deal for the Big 12 overall.” The league office is taking in $12.5M as part of the partnership “to help the league invest in its growth.” Beyond the money, the deal helps the league “buddy up to big resource partners with influence in media rights and sports.” RedBird Capital has an ownership stake in Paramount Global — parent of CBS, which broadcasts some Big 12 games. Weatherford Capital is an investor in the IMG Academy in Florida, where Big 12 schools “have recruited top players” (USA TODAY, 5/7).
SET UP THE FUTURE: In San Jose, Jon Wilner wrote the private capital agreement is a “screaming deal for the conference unless the schools accept” the $30M, in which case it “morphs into a fireable offense for the approving university presidents.” If no schools end up taking the line of credit, then the agreement is “reduced to two” components: the $12.5M for the conference office and the “strategic partnership with RedBird.” Wilner wrote, “And that, folks, is where the Big 12 stands to benefit.” The move makes “perfect sense” when cast against Big 12 Commissioner Brett Yormark’s “broader strategy to position the conference for the 2030s.” Any moves Yormark can make today that strengthen relationships with as many linear networks as possible “could benefit the Big 12 in a crisis situation five years from now” — when the NFL’s new media deals are expected to take the lion’s share of sports media-rights dollars. Connections equate to “optionality, and optionality leads to survival in a sports media ecosystem that could be stripped of cash” by the NFL (San Jose MERCURY NEWS, 5/7).
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Utah sold its soul for private equity. The layoffs were always coming | Opinion
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Where can any souls be found in Division 1A?
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Looks like Jason Chaffetz adopted a pseudonym and sent in an opinion piece. I thought he was too busy grifting the folks up in Box Elder County.
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Depending on the PE involved, “weeding the garden” of lesser productive employees is part of the equation. The wording of the email is definitely washing hands. Bad look, at the minimum.
I wonder / hope the blowback from this kind of associated publicity results in Otro taking on all the employees & nobody is kicked to the curb.
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Or we look at this from a different lens.
Government is often terrible at over hiring.
Go take a gander at the staff directory.
It’s pretty crazy the sheer number of “deputy/associate/assistant athletic director” positions exist.
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Or we could look at this from the lens of my former employer, who wants to do more with less, and that is coming back to bite them in the rump. I’d give more detail, but I can’t.
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The headline on the article about the state auditor’s analysis is wrong. The auditor is identifying a real problem, but it preexists the private equity deal, which is actually intended as a solution to the problem the auditor identifies.
Utah Athletics for years has been burning through reserves and facing rising costs from debt service, revenue sharing, and facilities. The PE deal didn’t create that situation. The auditor’s concern is that an infusion of cash could mask them for a few years without actually fixing the underlying business model. In other words, the risk isn’t that private equity causes the deficit; it’s that Utah spends the money and still has the deficit.
The flip side, of course, is that if the deal helps grow sponsorships, media revenue, ticketing, and the overall value of the brand, then it may be exactly the kind of capital injection needed to get ahead of the problem rather than just survive it.
The auditor’s letter mostly proves Utah has a financial problem without private equity.
Utah athletics is losing money. The question is whether the Otro deal is a bridge to a more valuable and self-sustaining business or just a way to delay the reckoning. Blaming the PE deal for deficits that already exist is backward and not really what the auditor is saying.
Media is so biased and stupid. Seriously, I don’t know what good newspapers are a lot of the time.
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