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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, Don Johnson said:

The best owners are usually the ones who have fuck you money and are more worried about winning than turning a profit.

It's ironic that Jerry Jones was a better owner before he had "fuck you" money. He's gotten worse the richer he's gotten.

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Posted
4 hours 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”

Super cool to see something that belongs to taxpayers (the Ute brand) get sold to PE and it’s somehow mitigating that if it all goes sideways a taxpayer owned institution has the right to buy it back. 

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Posted
10 hours ago, dieucla98 said:

How does that end up making money exactly?

They’ll make a killing burning through resources and when nothing is left then move on

 

 

 

 

Oh you meant for Utah? 

 

Posted
5 hours 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”

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Posted

It is New Year’s Day 1991. Your eyes are blurry as you come to in your buddy’s S-10 in the parking lot of the Cotton Bowl.

”Hey man, you kind of overdid with the beers in there, I know the game sucked. What the hell were you talking about? ‘Private equity’ buying the Big 10? ‘Venmoing’ a ‘collective’ to get a seventh year senior DT from Middle Tennessee in a ‘portal’? Just recline the seat and chill out.” 
 

The future must not come to pass. The SWC must be saved. 

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Posted
35 minutes ago, 956 Worldwide said:

Super cool to see something that belongs to taxpayers (the Ute brand) get sold to PE and it’s somehow mitigating that if it all goes sideways a taxpayer owned institution has the right to buy it back. 

Oh yeah.  If Otro Capital is taking most of the athletic department revenues, where is the $$$ going to come from in 5 years when the Utes desperately want out of this deal?  

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Posted

A lot of people have no idea what working under ‘private equity’ means; you’re lucky if you’re in the layoff group, the “has to stay” group is a lot worse. I’ve been through 3 KKRs, a Blackstone, and a PPG…

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Posted
10 hours ago, Deej said:

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

 

9 hours ago, TexArcher said:

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.

Only 25 athletic departments were breaking even before the pandemic.  I'm sure it's lower now, plus we are adding expenses.  Something has to give.

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Posted (edited)
5 hours ago, The Ace of Aces said:

PE exists for the exit: what’s the exit here?

Getting alcohol sold at all of their sporting events. Should be fun watching Mormons drink during the game and not before it anymore. No way that alcohol ban stays in place with this deal. BYU will probably follow with that as well. Should make for some good Mormon on Mormon violence, especially during football and basketball games.

I know it’s not that simple, but seeing this transpire will be something.

Edited by UpperWestside
Posted
3 hours ago, JBJ said:

 

Only 25 athletic departments were breaking even before the pandemic.  I'm sure it's lower now, plus we are adding expenses.  Something has to give.

The academic side. 

Posted
16 hours 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? 

unpopular answer......Texas already has a "PE deal" with The Moody Center 

no matter how anyone terms that deal it is a PE deal.....Texas got a facility built (it was stated it was for free, but the Moody Foundation gave a lot of money) and it was a private entity that built it, it is a private entity that manages it, it is a private entity that takes a share of the profits and then shares some with UT (though they do not take that share from the UT sporting events) and in the end they paid up front money to build the facility, take a portion of the profits for a number of years, and then the deal ends 

worse yet as I have stated in the past Texas used to manage 100% of The Drum (and get the profits), but now they do not have to do that......but somehow I doubt a single person that was on staff (or at least a single position) that was responsible for managing that venue was let go, assigned to the new managing company for Moody, or placed into a different position that was actually a needed job......they are probably just the same people pushing around paperwork that looks a bit different because it is on corporate letterhead and not UT letterhead and they just "read and approve it for UT) 

 

with the Utah deal there are out clauses and there is an end point to the deal where Utah gets all of their "stuff' back........I was surprised that it was a shorter period of time than I thought......there is also the odd "see shares to large donors" aspect to it that I find stupid......either large donors are looking for a tax break on a most likely failed investment that gives no return and might go to zero or there are some dumb people out there with a lot of money 

Posted
15 hours 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.

https://sportsdata.usatoday.com/ncaa/finances

https://sportsdata.usatoday.com/ncaa/finances/104151

it is hard to talk shit about Utah being broke with that going on 

bad news champ....ASU subsidizes their athletics with $19 million+ in academic side funds 

over the last 20 years the academic side subsidy for ASU has been at least $10 million per year with the exception of two years when it was $8 and $9 million and for the last 10 years it has not been less than $10 million and in 2022 it was $75 million (da covids)

 

Posted (edited)
8 minutes ago, ButtFumble said:

https://sportsdata.usatoday.com/ncaa/finances

https://sportsdata.usatoday.com/ncaa/finances/104151

it is hard to talk shit about Utah being broke with that going on 

bad news champ....ASU subsidizes their athletics with $19 million+ in academic side funds 

over the last 20 years the academic side subsidy for ASU has been at least $10 million per year with the exception of two years when it was $8 and $9 million and for the last 10 years it has not been less than $10 million and in 2022 it was $75 million (da covids)

 

I don’t know what you want me to say about ASU being in the negative as well. There’s only a select few schools turning a profit. I don’t think that’s news to anyone here. I think I already said more schools are going to do this. If ASU folded up the entire athletic program it wouldn’t have any tangible effect on me. It’s just entertainment. I don’t base my life around the football team or athletic program.

 

And it’s pretty easy there “champ” to talk about Utah doing this when they should just drop football if they are taking PE money to field a team.

Edited by UpperWestside
Posted
1 hour ago, Deej said:

The academic side. 

Yep. It sucks. A fairly decent portion of American society would rather field a great football or basketball team rather than invest money into students who are struggling to make it through school. It’s embarrassing how little we care about academics in the US as a whole. 

Posted (edited)
15 hours 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.

this makes sense for a private university like SMU

but for public universities especially in a state like Iowa or Arizona that only have 3 public universities or Nebraska that has 2 large ones plus a very small one or Wyoming with a single public university it is impossible for those schools to keep out most state students especially in favor of out of state students

and in face one can look at the UC System and even the Cal State system and see that it is not football that is driving enrollment at a lot of those universities it is the academics that make them desirable.....in a state that has something like 30 public universities they have the ability to have high admissions standards for in state students all the more so when they have some really good schools available for students with lower freshman metrics 

they still do a shitty overall job serving their population at the top schools, but it is not because football is making them popular it is because they would rather keep the academics up and let students end up out of state 

this is an argument that uH, north Texas state and Texas Tech fans cannot grasp.....they think football being good will make them popular and thus attract better students and better students will make improve the reputation of the university.....but the reality is with guaranteed admissions that are extremely low, campus enrollments that are straining the total that gets you to "economies of scale" and is moving towards lack of economies of scale (something that Texas still deals with and has for decades) the only way to make a university more DESIRABLE (popular) AND to raise the academics is to raise enrollment standards and then raise your academic reputation off of that

thinking that a very large (or a massive one) can become better academically by enrolling more warm bodies (or good ags WHOOP!) and using sports to help drive that (and in the case of aggy all types of alternate admissions that are very easy to meet and that game the freshman metrics) is the john not-so-sharp plan to fuck over a university, drive their enrollment through the roof, enroll a lot of "going through the motions" types, and to actually take a cut in state funding on a per student basis because a lot of those warm bodies are enrolling in majors that are not funded at a high level by the stare formulas......and it fucks your endowment dollars to student ratio also.....all of which is bad for the overall academic reputation and desirability especially for top students with a lot of options 

Edited by ButtFumble
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Posted
7 hours ago, The Ace of Aces said:

PE exists for the exit: what’s the exit here?

Honestly, it's rape the brand for any and all value. Drive football and any other sports brand equity as high as possible, lots and lots of "remote" learning, get rid of any and all expensive employees that don't deliver additional revenue directly or aren't marketable, then when it's dry, sell it back to the state or let it fold. Expect to see University of Utah remote learning adds during games, lots of roster turn over, and coaching changes as deemed necessary.

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