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University of Utah nearing landmark private equity deal expected to generate $500 million


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Posted
1 hour ago, Newy25 said:


Yes. Yes it will. Also the headline is misleading. It’s a loan, effectively. A very expensive one. 

I mean..  yes it is a loan in the way that borrowing money for a loan shark for your gambling debt is a loan. But is that really a loan? Are pay day loans really loans? Or are they indentured servants until the debt owner gets tired of fucking you and throws your lifeless corpse in the Hudson? 

Posted
10 minutes ago, UpperWestside said:

I think I understand people and the corrosive effect of money upon them. It’s odd that you earnestly believe a school would turn down money. PEOPLE ARE GREEDY. Jesus tap dancing Christ you live in a state filled with clowns in positions of power that will always want more money. To think any obscenely rich institution, it’s athletic programs or whatever else, would say “your money is no good here” just won’t happen. You can bookmark this thread for when it comes to pass a few years down the road.

See UTEP taking money from the cartels...

Posted
12 minutes ago, Alien Octopus said:

See UTEP taking money from the cartels...

Wasn’t that rumor started by a parody account on twitter?

Posted
9 minutes ago, B00M said:

Wasn’t that rumor started by a parody account on twitter?

They'd better than 2-10, that's for sure.

Posted
2 minutes ago, Deej said:

A lot of schools just need to shutter their football programs instead of continuing to chase debt. 

Or take the hit to the ego and drop down to the FCS. If you’re going into debt to fund your overall athletic program you are sending the message loud and clear that the school cares more about athletics than education. This is such an incredibly ridiculous American mindset. Get young people a quality education that they can then use to help out in society. But no, let’s get more state of the art practice facilities built for our football team that never wins anything that matters. Screw the students here to get an actual education.

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Posted
2 minutes ago, UpperWestside said:

Get young people a quality education that they can then use to help out in society.

Whoa...whoa!!! Let's not get all crazy.

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Posted

A. How is LSU not the first program to sign up for something like this?

B. I don't think any possible definition of the word "soaking" quite captures what is about to happen to Utah

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Posted
16 minutes ago, TejasPedro said:

Texas Longhorns Football brought to you by Carl’s Jr. 

Texas Longhorns Baseball brought to you by Carl’s Jr.

Dolla Dolla bills y’all! 

P. Terry's

You're not gonna find a fucking Carl's Jr. in ATX

Posted
2 hours ago, TOR said:

They're basically selling the Utah 'brand.'

In other news, Utah has a brand.

Bardi Gang GIF by Cardi B

i was trying to find Joe Pesci saying "Da two Utes," and say that THAT is their brand, but giphy gave me this instead. So this is what you get.

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Posted
7 minutes ago, Texasrocks said:

A. How is LSU not the first program to sign up for something like this?

B. I don't think any possible definition of the word "soaking" quite captures what is about to happen to Utah

They will once they bleed the Cane’s guy dry. No reason to give equity away when he’s doing it for free 

Posted
4 minutes ago, Rimbo said:

Bardi Gang GIF by Cardi B

i was trying to find Joe Pesci saying "Da two Utes," and say that THAT is their brand, but giphy gave me this instead. So this is what you get.

obligatory

 

mexico thread GIF

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Posted
1 hour ago, B00M said:

Dumb question…. If this can happen to a public university like Utah because of brain dead board decisions, what’s preventing it from happening to Texas? 

Texas has already run much of the PE playbook at least on the revenue side.  Texas is the most monetized (to the point of overexposure) brand in college athletics.  It is already a soulless corporate enterprise.  There is certainly plenty of fat that could be cut in terms of expenses but Texas is not Stanford or Ohio State which have 36 D1 programs. Texas only has 21.

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Posted
49 minutes ago, TejasPedro said:

Texas Longhorns Football brought to you by Carl’s Jr. 

Texas Longhorns Baseball brought to you by Carl’s Jr.

Dolla Dolla bills y’all! 

Welcome to DKR Costco,I love you.

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Posted
20 minutes ago, alincoln said:

Texas has already run much of the PE playbook at least on the revenue side.  Texas is the most monetized (to the point of overexposure) brand in college athletics.  It is already a soulless corporate enterprise.  There is certainly plenty of fat that could be cut in terms of expenses but Texas is not Stanford or Ohio State which have 36 D1 programs. Texas only has 21.

This is what I'm saying. They offer nothing. There isn't enough cash to buyout the cash machine that is Texas. 

Posted

have they sold the stadiums and facilities to one of their shell companies yet 

 

if the sec was smart, they'd pull the saudis in now before another conference does it 

Posted
2 hours ago, immamac said:

Texas is obscenely profitable and has no need for a deal like this? 

Texas really did not need Sec money’ but yet here we are. 

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Posted
1 minute ago, Satchel said:

Texas really did not need Sec money’ but yet here we are. 

 

unpopular opinion - should have stayed in the big12 and ran the show 

Posted
1 minute ago, tx 3 putt said:

if the sec was smart, they'd pull the saudis in now before another conference does it 

You consistently have the worst ideas on this entire board

Just now, tx 3 putt said:

 

unpopular opinion - should have stayed in the big12 and ran the show 

Thanks for proving my point! 

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Posted (edited)
Just now, Js1 said:

You consistently have the worst ideas on this entire board

record rights GIF

 

you think the sec poors are voting no ?

Edited by tx 3 putt
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Posted (edited)

UT BOR might be greedy and all about money, but they are financially savvy and competent.  We will never do private equity for anything because the cost of capital is way too high.  The reason Utah's athletics is doing PE is because they're not an investment grade credit and can't borrow at the same low rates as UT.  Can't determine the actual interest rate from the financial reporting, but at the UT system level, yields are currently around 3%, which is lower than a T-bill because, like munis, these bonds aren't subject to income taxes.  And I'm not sure how investors go about looking at UT-Austin's athletic department debt (since it's in theory siloed from the University and UT System), but there's probably some implied "lender of last resort" situation between the University and the Athletic Department, in which the University could loan the AD money at its cost of capital, or maybe a little bit above (in other words, at like 3-4%).

Private equity requires high single/low double digit returns at a minimum.  So UT would never go that route because it could just borrow money at way cheaper rates from institutional lenders.  In other words, UT can borrow money at slightly above the US government's interest rate, after adjusting for the income tax exemption.

 

Edited by ryskey
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Posted
1 hour ago, UpperWestside said:

Or take the hit to the ego and drop down to the FCS. If you’re going into debt to fund your overall athletic program you are sending the message loud and clear that the school cares more about athletics than education. This is such an incredibly ridiculous American mindset. Get young people a quality education that they can then use to help out in society. But no, let’s get more state of the art practice facilities built for our football team that never wins anything that matters. Screw the students here to get an actual education.

The debt makes sense, to a point. Big-time football is advertising for the university as a whole.

SMU saw a decline in student quality when they shut down the football program for the death penalty. Conversely, their move to the ACC saw the opposite effect. Better and more students means more money, now AND later. So, going into some level of debt to keep your name as part of the game makes sense.

There is a limit, however.

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Posted
3 minutes ago, ryskey said:

UT BOR might be greedy and all about money, but they are financially savvy and competent.  We will never do private equity for anything because the cost of capital is way too high.  The reason Utah's athletics is doing PE is because they're not an investment grade credit and can't borrow at the same low rates as UT.  Can't determine the actual interest rate from the financial reporting, but at the UT system level, yields are currently around 3%, which is lower than a T-bill because, like munis, these bonds aren't subject to income taxes.  And I'm not sure how investors go about looking at UT-Austin's athletic department debt (since it's in theory siloed from the University and UT System), but there's probably some implied "lender of last resort" situation between the University and the Athletic Department, in which the University could loan the AD money at its cost of capital, or maybe a little bit above (in other words, at like 3-4%).

Private equity requires high single/low double digit returns at a minimum.  So UT would never go that route because it could just borrow money at way cheaper rates from institutional lenders.  In other words, UT can borrow money at slightly above the US government's interest rate, after adjusting for the income tax exemption.

 

 

agree'd, but UT is only one vote in the SeC if the conference looks to chase a big check 

Posted

Surly has some pretty brilliant minds. Shouldn’t take much to come up with some really great money making schemes. 
I’ll start and shoot out an idea.

Longhorn Fertility Clinic. 
Run an Ad in the Daily Texan “Don’t be an Aggie and just Jizz in a Jar, Nut in a Cup!”
Help those in need and plant your seed.  

Juat watch the money roll in.

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Posted
2 minutes ago, TrashMaster G said:

The debt makes sense, to a point. Big-time football is advertising for the university as a whole.

SMU saw a decline in student quality when they shut down the football program for the death penalty. Conversely, their move to the ACC saw the opposite effect. Better and more students means more money, now AND later. So, going into some level of debt to keep your name as part of the game makes sense.

There is a limit, however.

That I can understand. That line where the limit is gets crossed by so many schools to the point of absurdity. Your mediocre football program cranking out a Jeff Fisher wet dream of 5-7 or 6-6 is just a pointless program to overfund. I realize this is mostly preaching to the choir, but more money into education means your graduates will be better prepared for the world they will step int. Buying that 4 star WR for your football team that never does anything is, well, it’s just ignorant and a slap in the face to the professors working their backside off to provide a great education.

Posted
1 hour ago, Deej said:

A lot of schools just need to shutter their football programs instead of continuing to chase debt. 

Pretty sure that's coming, maybe in a big way.

Honestly, it might make college basketball more interesting for quite a few schools if they funnel their resources into that instead.

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Posted
3 hours ago, Newy25 said:


Yes. Yes it will. Also the headline is misleading. It’s a loan, effectively. A very expensive one. 

Where are you seeing that it’s a loan? At least from the linked article, it looks like an equity deal with a call option after a set period. 

Posted (edited)
47 minutes ago, Satchel said:

Texas really did not need Sec money’ but yet here we are. 

Which points to the greed of the whole operation. This will all eventually collapse upon itself. I’m not saying UT will go broke in athletics, but overall this is just not a sustainable way to do things. Utah is just small potatoes and they aren’t winning anything with or without this money. When the more prominent schools opt into this either on their own or through their conference affiliation it will not be a good time. I expect that ASU will also one day face this same decision. I’d like to hope they’ll decline, but that just isn’t how human beings are wired. There is never a number on money that makes it enough for people that have the wiring to eternally chase more of it.

Edited by UpperWestside
Posted (edited)
27 minutes ago, immamac said:

You think the move was about money? 

Most every business decision is about money.

Edited by Satchel
Posted
3 hours ago, immamac said:

It in no world makes any sense for either side. PE does well when there's something wrong and/or someone needs the money. 

Texas athletics or the University do not need money and are running arguably better than any other university already. There is no advantage to it under any circumstance and if some PE firm wants to light money on fire and pay 100B for the Texas brand which is over 10x the value of the current highest sports franchise on planet earth, Texas would simply refuse because they have nothing to spend 100B on

I mean, they could enhance the fan experience with that kind of money.  Strippers and cocaine for everyone!

Posted
3 hours ago, UpperWestside said:

None of that matters. More money is more money. People who base their entire worth on having more of it, even at a school like Texas, will take it. This is just some simple human psychology and how greed will inevitably lead to Texas doing this. It won’t be right now or even in the near future, but as sure as the sun rises everyday it’ll happen. Aggy is the one I am eagerly waiting on with this. They’ll take the money and try to make the Tackle Box seat 200,000 fans.

Individual seats? You sound poor. It is high time that some forward-thinking visionary builds the first ever luxury suite-only stadium. Think of the monetization!

Posted
5 minutes ago, tokamak said:

Individual seats? You sound poor. It is high time that some forward-thinking visionary builds the first ever luxury suite-only stadium. Think of the monetization!

Who is gonna be the first school to play home games on the moon? 

Posted
11 minutes ago, UpperWestside said:

Who is gonna be the first school to play home games on the moon? 

Probably f*cking Meatchicken.

 

Posted
1 hour ago, Rudiger said:

Where are you seeing that it’s a loan? At least from the linked article, it looks like an equity deal with a call option after a set period. 

Yes, it's a loan. The equity referenced is limited to ownership of future cash flows, so it is absolutely a loan. A public university is not going to put up ownership of assets, because they can't.  That would take a legislative act.

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Posted

Wait until Otro figures out that some along the lines of  7-5 is the perfect football season to have for generating revenue.  Enough to keep butts in seats, but doesn't require too much investment in coach and player payroll.

I wouldn't want a PE group to buy my favorite pro franchises.  The best owners are usually the ones who have fuck you money and are more worried about winning than turning a profit.

Also, once a PE group is involved, why would anyone every donate to an athletic department again?  You want me to donate to the new (indoor practice facility, weight room, locker room, etc) so you don't have to build it yourself and all the profits go to your investors?  No thanks.

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Posted (edited)

So does this end with the PE folks selling the Utah athletic offices and stadium for parts and scrap like they do with hospitals they buy up and destroy?

Edited by kevwun
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Posted
16 minutes ago, TrashMaster G said:

Yes, it's a loan. The equity referenced is limited to ownership of future cash flows, so it is absolutely a loan. A public university is not going to put up ownership of assets, because they can't.  That would take a legislative act.

I don’t have first handle knowledge of this deal, but I’d tend to agree that it is loan-like, although as a technical matter it reads more like a pref equity instrument than a debt instrument to me (which would be preferred from Utah’s perspective). Share in distributions of free cash flow during life of investment, with a put/call feature in 5-7 years that has price protections for both sides. 
 

“As for Utah’s partnership, in exchange for the upfront cash, Otro will earn a large percentage of annual revenues generated from Utah Brands & Entertainment as it splits funds with the university. An exit strategy — in five to seven years — exists, and the university holds the right to purchase Otro’s ownership stake”

Posted
42 minutes ago, Reynolds Woodcock said:

I don’t have first handle knowledge of this deal, but I’d tend to agree that it is loan-like, although as a technical matter it reads more like a pref equity instrument than a debt instrument to me (which would be preferred from Utah’s perspective). Share in distributions of free cash flow during life of investment, with a put/call feature in 5-7 years that has price protections for both sides. 
 

“As for Utah’s partnership, in exchange for the upfront cash, Otro will earn a large percentage of annual revenues generated from Utah Brands & Entertainment as it splits funds with the university. An exit strategy — in five to seven years — exists, and the university holds the right to purchase Otro’s ownership stake”

I think Joseph Smith Jr. would probably sit down and have coke and a soak over all this hullaballoo. 

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