On CNBC this morning they had a segment about PE starting to get involved with Big time football programs. As part of that they put valuations on teams. UGA was 9th with around a $800 million valuation. Bama was only SEC team above. Dont see UGA being involved with PE but never know
Private Equity
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As soon as a few get involved with PE, most all will get involved, b/c it will be the only way to compete.
College football as you know it is over, the transition simply hasn’t taken place yet.
It’s always fun to read about some beloved brand (like Red Lobster recently) going bankrupt and then the story hides in paragraph 8 that actually what happened is some PE firm bought the brand, sold the land to itself, charged the brand rent, and that’s why it no longer could stay afloat whilst the PE guys made off like bandits.
Looking forward to them doing that in college football
Looking forward to them doing that in college football
A state university can’t sale something it doesn’t own. Could they sale the law school? I don’t think it’s legal.
PE is horrible - it never works out for anyone but the PE group.
Most people don't understand how PE works - when a PE firm buys a company for $100 million - they don't plop down all that cash of their money, they borrow $90 million against the company they bought and put down the bare minimum say $10 milllion. Then over time they start siphoning money out (management fees, etc) all the time leaving the company to pay the debt service. Only to turn around and sell it to another PE group in 3-5 years to start the cycle all over again. Said company is left with no resources and a debt service that is through the roof.
^^^^^^^^^^*
It’s honestly a predatory business model. PE gets all the benefits and the company they bought gets all the debt. It’s a cool gig if you’re on the PE side though!
As yes, the next great thing that private equity can completely ruin.
What would they be buying? How would they profit? I don’t see it. Maybe a Blackstone takes down a spun off ESPN, giving it a ton of influence…..but that’s no different than now just a different ownership structure in Disney / public markets. Buying into programs themselves would require a complete detachment from the NCAA and an arms length relationship with the schools. A separate league “affiliated” with the schools and their brand for a fee or profit share.
I think that is a broad overstatement. I work for an industry where most of the funding comes from PE, and in most cases the PE investors just want a guaranteed ROI. As long as they get it, everything is kosher and most stay out of your business. There are definitely some “bad actors” and we try to stay away from those.
Gordon Gecko style Hostile takeovers / company break-ups could be considered predatory but that’s a tiny sliver of PE. And even then it is usually to the benefit of shareholders.
More often than not the relationship, new capital, ideas, and management are a win / win for both sides. And it is usually the sell side company that reaches out to the firms or investment banks. I wouldn’t designate the entire gigantic space predatory.
Fair. There *are* some ethical PE firms out there that actually want a mutually beneficial deal, but far too often it’s just them raiding whatever they buy and taking all the benefits and leaving the burdens behind in a bankruptcy
As it relates to private companies, founders don't have to sell. They chose the liquidity event....or they were desperate for cash at the beginning, took VC money, and were stupid to give away control. As it relates to distressed companies, well they're distressed. We're not seeing a bunch of corporate raiding these days, so really who is to blame for the start of the cycle?
That’s actually the minority really. We deal with PE funds quite a bit, and if they’re turning over and selling for parts, that’s typically a poor scenario for the firm and investors.
And the funds have limited fiduciary responsibilities to the firm or firm investors. Their responsibility is to their LPs. Guess who that is? Pretty much any pension or endowment....ie, University of Georgia Foundation.
Should be illegal frankly - its just stealing at its base level.
Lots of “evil bad businessman” Disney Movie takes on PE in this thread.
Would like to see several specific examples of how evil PE is. And contrast that with how pure the public markets and/or private founding ownership / management is.
Would like to see several specific examples of how evil PE is. And contrast that with how pure the public markets and/or private founding ownership / management is.
F**k PE.. soulless ghouls that ruin everything they touch in the name of profit.
Except the Ath Assoc is a separate entity which supports itself.
I know Market Equities whacked out John Dutton and tried to take the Yellowstone Ranch from the Duttons and the Injuns. Plus that Gordon Gecko was terrible.
It CAN be predatory. Just like any business model (even non-profits) CAN be predatory if the wrong incentives are in place or predatory people are running the show. There are some really broad strokes in this thread, and while it cannot be debated that traditional LBO-based PE has generated some bad headlines, those cases are not necessarily illustrative of how the industry (which is unfathomably massive and international) works as a whole. In fact, I am skeptical whenever anyone tries to describe the entire private funds industry as a whole because it is so large, so diversified and so ubiquitous at this point that no simple description would do it justice.
I’ve also seen PEs invest into a company and then install their own people to run it without any background in that field. Ex worked for a media software startup up in which a PE became heavily involved and put their own people in to run said company. 5 years later that software isn’t off the ground, PE sells its stake to a competitor for nothing and competitor has software booming in a year.
It’s still a state organization not a private organization controlled by the university. Don’t think you can sale a public entity unless the legislature decides to do it. I could be wrong
Well said. The equivalent of saying lawyers are predatory. 40% of a settlement sure does seem high, no?
Sounds like you might be one of the ghouls.
Anecdotally, Zaxby’s has turned to shit since PE got involved. And, in more serious business:
Senate Report Faults Children's Dental Chain for "Fundamentally Deceptive" Care | FRONTLINE
The bipartisan report recommends removing Small Smiles, one of the nation’s largest dental chains for children, from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.
www.pbs.org
Could go on.
Exactly what they said how it will be structured
I will guess from your questions that you are in PE or work with PE groups
That's a decent analogy (coming from a lawyer whose clients are predominantly either fund managers, institutional investors in private markets or companies involved in PE/VC activity).
The legal field has evolved to a point where simply describing all lawyers as good or bad or predatory or whatever is a drastic oversimplification. There are innumerous fee and compensation arrangements, hyper-specific levels of specialization in terms of legal subject matter, giant mega-firms where 24 year olds are billing at over $1000/hr, tiny single-shingle shops, contractor models, and on and on. It's just such a broad and huge field that two lawyers barred in the same state working in the same city could essentially be speaking completely different languages to each other when attempting to talk shop. Hell I feel like @donalsonville_dawg is speaking Russian half the time when he's schooling us on many of the procedural and evidentiary goings-on related to legal matters involving the team or the school.
The same can be said of the PE industry at this point. There are so many people doing it in so many different ways. It's impossible to describe in a simple fashion. No doubt some a--holes in the industry, including at some influential firms that make it their model to strip down once-thriving brands to the last cent. But there are also some good firms providing capital to large chunks of the economy in ways that would be difficult to describe as predatory.
- Aug 22, 2015
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Those Shinnecock memberships don’t pay for themselves, pal. Welcome to the buy side!
Yep, most people don't realize how involved PE is in various industries from real estate, technology, restaurants, manufacturing, etc. Banning or overregulating PE would have a crippling effect on the economy.
I’ve made vast fortunes in PE… but, I wouldn’t buy UGA. I’d buy a program in the ascendancy, like GT, that I could stick a little capital in, 10X the income, and break apart and sell in <10 years. Imagine Grant Field with condos and a water slide.
Same for me. I’ve lived under PE ownership for 13 years. It’s changed hands three times over that time period and each group has done nothing other than invest the capital to grow the business and increase their ROI all while treating the people in my company with respect and allowing us to do our thing with their support. I’ve had the pleasure of getting to know several of the board members who are from firms like Goldman and KKR and they’re typically legit people who are trying to make money while doing it the right way. Some of these preceding posts read like an AOC op-ed
Come on… don’t make an accusation like “it’s stealing and should be illegal” and then refuse to substantiate any of that on the basis that SOMEONE ELSE is biased.
Nope. I am a founder of my own company. And tapping PE firms has been a big part of our growth. In my experience very talented and straight shooting folks. But hey zaxby’s chicken tenders aren’t as good so the entire industry is ghouls. I bet the folks who sold out their stakes in Zaxby’s aren’t complaining.Sounds like you might be one of the ghouls.
Anecdotally, Zaxby’s has turned to shit since PE got involved. And, in more serious business:
Senate Report Faults Children's Dental Chain for "Fundamentally Deceptive" Care | FRONTLINE
The bipartisan report recommends removing Small Smiles, one of the nation’s largest dental chains for children, from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.www.pbs.org
Could go on.
Funny hearing lawyers talk about a predatory business model when they are single-handedly destroying our country’s insurance infrastructure through predatory practices, driving up claims costs that get passed along to all of us that have to pay into the system. 😊. But that’s different.
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