B1G Exploring Private Capital Investment

[herbsinator]

Apparently you can't put patches on your jerseys without an infusion of $2 billion in cash. The patchmakers probably connected us to the Saudis to make it possible.

I think there are two separate issues. The revenue generation is one thing, but at the end of the day the investor is just buying a share of the media rights money. Any additional value is going to be peanuts compared to that.

In my mind, this investment is about (a) giving a carrot to the big dogs to commit to the B1G for the long term and (b) shoring up the finances of some of these schools given rev share.

 

[herbsinator]

I’m on the same page as others here in not understanding what’s in it for the investors nor am I sure I know what the schools are doing with the money. We aren’t at risk of meeting revenue share salary caps, and theoretically NIL has to be real endorsements, so is this more money to put into weight rooms and stadiums?

The investor will get $80-100m/yr in pretty much guaranteed cash flow off the bat. If the media rights money grows, then they’ll get even more over the long term. Also if the SEC/B1G consolidate at some point they’ll get a piece of that—if that happens their share of the pie would be worth a lot more than what they’re paying id guess.

 

[Frogsker30]

Love the “per me” in his tweet

 

[BorWhiskey]

The investor will get $80-100m/yr in pretty much guaranteed cash flow off the bat. If the media rights money grows, then they’ll get even more over the long term. Also if the SEC/B1G consolidate at some point they’ll get a piece of that—if that happens their share of the pie would be worth a lot more than what they’re paying id guess.

Where are you reading that?

 

[cwessel76]

Why would you need a private equity firm to decide to put patches on everyone’s jersey? They would be consultants to show how to squeeze as much money as possible out of everything?

Patches alone aren’t going to bring in $2B.

 

[cwessel76]

I’m on the same page as others here in not understanding what’s in it for the investors nor am I sure I know what the schools are doing with the money. We aren’t at risk of meeting revenue share salary caps, and theoretically NIL has to be real endorsements, so is this more money to put into weight rooms and stadiums?

Revenue sharing is the only way I can see this making sense.

Looking forward to the Riyadh Bowl in 2027.

 

[herbsinator]

Where are you reading that?

It’s in the article. They would basically get an even cut of the revenue, same as the teams.

 

[Baron Winnebago]

We're almost there

 

[Flabio]

We're almost there

 

[BorWhiskey]

It’s in the article. They would basically get an even cut of the revenue, same as the teams.

My reading comprehension must be shit. I can't make heads or tails out of that article. So much jargon in it that doesn't say anything. Creating a new entity to focus on business development... better scale and leverage our 18 members... organize ourselves better... modernize operations... wtf does any of it mean.

And I still don't see where it says the partner is getting an even cut of revenue. Is it only tv revenue?

 

[Frogsker30]

Let’s put onlyfan patch on our jerseys. That’ll sure make blue hairs happy

 

[CornFed Gregger]

Feel like it’s short term thinking so presidents & ADs can get a pay raise or they’re trying to gauge long term commitment from Michigan/tOSU

 

[HCFord1]

My reading comprehension must be shit. I can't make heads or tails out of that article. So much jargon in it that doesn't say anything. Creating a new entity to focus on business development... better scale and leverage our 18 members... organize ourselves better... modernize operations... wtf does any of it mean.

And I still don't see where it says the partner is getting an even cut of revenue. Is it only tv revenue?

The link in the tweet has more details in plain English. Dannen’s statement is a bunch of fucking gibberish, and I say that as a management consultant with an MBA.

 

[herbsinator]

My reading comprehension must be shit. I can't make heads or tails out of that article. So much jargon in it that doesn't say anything. Creating a new entity to focus on business development... better scale and leverage our 18 members... organize ourselves better... modernize operations... wtf does any of it mean.

And I still don't see where it says the partner is getting an even cut of revenue. Is it only tv revenue?

Right here:

The setup being discussed, sources said, is that this will essentially be the formation of a new commercial entity within the Big Ten that would house all revenue generation such as media rights, sponsorships and league revenue streams.

The working title for the new entity is Big Ten Enterprises, sources told ESPN.

The private capital company would get money back through the new entity through annual distribution in proportion to its financial stake. The Big Ten will essentially have 20 equity shares, comprising the 18 schools, the league and this investor.

 

[BorWhiskey]

Right here:

The setup being discussed, sources said, is that this will essentially be the formation of a new commercial entity within the Big Ten that would house all revenue generation such as media rights, sponsorships and league revenue streams.

The working title for the new entity is Big Ten Enterprises, sources told ESPN.

The private capital company would get money back through the new entity through annual distribution in proportion to its financial stake. The Big Ten will essentially have 20 equity shares, comprising the 18 schools, the league and this investor.

So the assumption is that equity shares will be equal? Because that’s not the case with corporations. And the article sets the stage for unequal distributions.

On the revenue piece, I get media rights and sponsorships. But then everything else has been couched as revenue streams and I’m too basic to envision what that is.

 

[herbsinator]

So the assumption is that equity shares will be equal? Because that’s not the case with corporations. And the article sets the stage for unequal distributions.

On the revenue piece, I get media rights and sponsorships. But then everything else has been couched as revenue streams and I’m too basic to envision what that is.

This is the corporate lawyer in me talking but I doubt that the schools would have separate classes of shares/units amongst themselves. Maybe the PE group gets a class with certain veto rights, etc., but I doubt they’d be getting preferred equity or anything like that. It’s not like the B1G NEEDS the cash—they’re looking at like $1b+ in revenue this year. I guess we’ll see how it all shakes out after the full details come out.

Selling a 5% share on a $40bn post-money valuation is not a bad deal IMO if that’s what the deal is. The B1G doesn’t have a ton of other levers to pull to push growth at this point.