NCAA president urges conferences and schools to be cautious of private equity deals
NEW YORK — The president of the NCAA is urging schools and conferences tempted by riches offered through potential deals with new equity sources to think about the long-term repercussions before jumping into the deals.
“My message to everybody on this would be really simple: Be really careful,’” Charlie Baker said Monday at a Big East roundtable on the future of college basketball.
With schools and conferences under increasing pressure to raise funds to pay their players, reports of them negotiating with new equity sources for college sports are becoming more frequent.
Recent headlines out of the Big Ten are about its negotiation to bring in an investor that would pay $2.4 billion to help market the conference’s media rights and other properties.
https://www.nbcsports.com/mens-college-basketball/news/ncaa-president-urges-conferences-and-schools-to-be-cautious-of-equity-deals
Inside the Big Ten’s Private Capital Gamble: What It Means for College Sports
In the past year, there was a notable set of new faces showing up to such gatherings (NCAA Convention, the Final Four or the National Association of Collegiate Directors of Athletics convention) en masse—private equity executives. They have spent months gauging interest in college athletics and trying to dispel misconceptions about an industry that does not garner the most favorable headlines when issues surface publicly.
Many of the finer details are still being finalized, and there remains a lack of full unanimity among all schools in the Big Ten over whether to ultimately proceed with the new venture. Reaction tended to center around a very obvious question: Why?
“Private Equity deals, at the conference level, make zero business sense. All these deals do is give more power, control, and job security to the conference commissioners [which probably explains these suspicious media leaks and obfuscation with respect to the actual terms of the deals],” Texas Tech regent Cody Campbell wrote on X. “Why would an entity [like Michigan], with a $19B endowment, take money from private equity, when [through their endowment] they invest in private equity funds and pay a fee and promote to do so?? Doesn’t pass the ‘smell test’ at a very basic and common sense level.”
“I think everybody’s still getting educated about what the possibilities are,” American commissioner Tim Pernetti told SI this summer. “Honestly, the universities with significant endowments can borrow the money against their endowments at a far lesser cost of capital. But the key to these deals, at least in our sense, is we’re out there looking for the right partner. The investment is great, but if I don’t have a partner that’s going to help me grow the commercial business, then what are they actually betting on for future growth? Bringing a partner in that can dig in, help me grow the pie, that’s only going to be better for their investment down the road.”
https://www.si.com/college-football/inside-the-big-ten-private-capital-gamble-what-it-means-for-college-sports
This quote, from the link: “These guys do not lose,” says one Power 4 athletic director who has had discussions with private equity executives. “I think in specific cases, they can bring benefits and relationships to the table that you don’t get when you’re just asking donors again or hitting campus up [for more money].”
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Yeah, they don't lose. Be cautious is right. Better yet, just say no.
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