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The ROAR Podcast:Chris Bevilacqua, Smash Capital · The ROAR Podcast

• Brice Clinton: College sports is in an enormous state of flux. And the people trying to fix it are working at the intersection of government, private equity, and the future of American higher education. Chris Bevilacqua has spent four decades at that intersection. He's a senior advisor at Rothschild Company, a partner at Smash Sports, a private equity firm operating in the college sports space. Adam: ⁓ Welcome to the Roar Podcast. your host, Adam Grossman. With me is Chris Bevelaka. Chris, welcome to the show. Chris: All right, thanks for having me back on, Adam. Great to see you. Brice Clinton: and an independent board director at Playfly Sports. If you want to understand the business of college athletics, Chris is one of the few people talking directly to senators, athletic directors, and institutional investors all at the same time. In this conversation, Adam and Chris break down the $5 billion annual deficit threatening the sustainability of college sports. Where Chris believes media rights for college football are worth nearly four times what they're currently fetching. Adam: Yeah, third time's a charm on the intro. we'll start rolling from here. Chris is, this is the second time on what was the Revenue Above Replacement podcast, now the ROARD podcast. So for those who want to hear more about Chris's background, you can jump into the previous podcast, but we're really going to focus on what's happened since the last podcast. So we recorded the last podcast in 2023. A lot's happened to Chris and a lot's happened in the world of sports that Chris has can. have expert insight on. So let's start from there. So what's happened since the last podcast? Brice Clinton: how private capital could serve as a bridge financing over the next eight years, and what role real estate and artificial intelligence will play in reshaping the college sports model for the long term. If you're interested in or are currently working in the college sports landscape or like me, are an enormous fan, this is a can't miss episode. I'm Bryce Clinton and this is the Roar Podcast. Chris: Oh my gosh, it doesn't feel like it was 2023. That's like three years ago. Adam: It's unbelievable. Yeah, I couldn't believe it either when I saw it. Chris: Well, jeez, in the media world, that's like dog years. mean, it's like three years, like 30 years. Adam: ⁓ yeah. Well, I was gonna say even more than dog years. It seems like a lot longer, like 50 years. 30, I'll go with 30, but 50 feels like. Chris: ⁓ yeah. It's, you like you said, ⁓ it has been quite interesting. I mean, especially for someone that's spent my entire career in this industry, I've never seen the change and the ⁓ of change that I've seen over the last several years. It is remarkable. But you know, like I'm spending my time these days. I'm a advisor at Rothschild working as kind of their sports guy on the on the platform, so seeing a lot of interesting things in the ⁓ &A and financing world. And then more recently, I became ⁓ a partner at Smash Sports, which is a private equity company that's operating in college sports space right now, and then also took on a board role at PlayFly Sports as an independent board director. So. You know, a lot of my time has been spent around ⁓ college and amateur sports in my career, but more recently, you know, the last few years in the world of college sports has been nothing short of remarkable with all the chaos and dislocation coming out of all the litigation that's happened over that last number of years. You know, I think the whole a of what I'm spending time on these days is trying to ⁓ Adam: Yeah. Chris: help organize, if you will, some structure around college sports longer term. there's been a bit in the news about all that recently. Going back to, you know, most recently Trump's executive order ⁓ just came out a couple of weeks ago and then ⁓ various committees have been put together coming out of ⁓ the round table he hosted. Adam: Yeah. Yeah. Chris: I guess it was about a month and a half ago. And then probably most importantly of all of it is what's happening on the legislative side. that's, those are the bills that have been being negotiated and discussed in Congress, right? The score act, the safe act, ⁓ the most recent one, the competitive, I think it's called the college sports competitive act. The one that's been put forth by Senator Schmidt, Senator Cantwell. Adam: Yeah. Chris: first bipartisan piece of legislation in years that has come out, which has been, ⁓ think, a very positive development. So there's a lot of, ⁓ a lot of smart people looking at how to ⁓ help and organize college sports so that it has a lasting positive impact in the future, which ⁓ I certainly in of. ⁓ Adam: Yeah, part of the reason we caught up a little bit last week and part of the reason I wanted to have on the podcast is specifically to talk about what you just talked about, particularly because you're talking and have spoken to senators, to congressmen, their staff, about this issue. This issue, as you mentioned, has bipartisan support, which is very rare, obviously for issues in D.C. or increasingly rare, at least I should say, for issues, particularly on the federal level. So what are you talking to them about? What's going on from your perspective? How has the legislation been coming along? Chris: Yeah, I mean, I think, you know, broadly speaking, they're, you know, and I'm one of many that are invested in and involved in, you know, in all these conversations, you know, and I think the, the, big. Adam: I was going to say you're the guy in Roscoe, you're also the guy for the Senate and Congress, I assume. You're the main guy, right, that they're talking to. You're to you, yeah, you're the main guy, right? You're the guy in Roscoe, you're the guy in Congress, you've got to the guy everywhere, right? ⁓ Chris: Who's that now? talking about that. Well, I don't know if I'm the main guy, but gotta be one of the guys anyway. No, think, you listen, the only way this is gonna get, you know, some stability is gonna come back into this whole, remember, this is a gigantic ecosystem, right? That it's a platform, you know, we think of college football and basketball, the two most visible sports, but there's 35 other. men's and women's sports and it's a platform that involves 550,000 student It has 1,100 colleges and universities. It's ⁓ a massive platform that also is feeder system to the Olympic movement worldwide. mean, if you just look at where all the athletes that come. in the Olympics where they come from and vast majority of them are coming through the American collegiate sports system. this involves a of communities, a lot of universities, obviously a lot of student athletes, a lot of fans and alumni, ⁓ and it is the only system in the entire world where you could get a world-class education and compete at athletics at the highest level. And that system that has served our country so well over the last hundred plus years is now under enormous stress. And there's been, I think, ⁓ a much more focused effort now over the past several years to try to put some long-term stability back into the platform. ⁓ happening through ⁓ these various conversations and various constituencies now bubbling up to legislation on a federal level. And the legislation really is designed to kind of hit three major areas. The first being the cost problem, right? Costs are out of control. We now have revenue sharing and we now have NIL and revenue sharing really, you know, it's supposed to be a cap, but it's really not a cap. It's just a floor. And then you add NIL, which is uncapped. Adam: the end. Yeah, just to stop there because I've heard the same thing and people maybe like a particular audience right from a cap to a floor. What do you mean from a cap to a floor? What do you see? Chris: ⁓ meaning, yeah, meaning like when house litigation was settled, right, and the $2.8 billion settlement that was going to be used to pay athletes from the past, and then put in place for the next 10 years a revenue sharing option that starts at $20.5 million in year one and then rises over the course of the next 10 years and that $20.5 million is now revenue that athletic departments can share directly with athletes. So that just added another $20.5 million per year onto athletic department budgets that were already 20 to $25 million a year in deficit. So now you have the average deficit across division one, let's just say, FBS, under 38 football schools. Adam: Great. Chris: at roughly 40 million. So you're talking about an industry that is operating in $5 billion a year in deficit. That is not sustainable. Okay. So even if you, legislation that's being discussed is ⁓ the things is how do we put caps ⁓ all these out of control costs? So even if you came up with the idea of a cap, all you'd be doing is you'd, ⁓ lock the system in at losing or operating in deficit of $5 billion per year. That's not sustainable. Adam: Well, yeah, on that front, think one of the things that people talk about is, yes, you're paying players more, but coaches, administrators, salaries have all gone up. And do you think part of this deficit reduction is not just looking at the athlete side, but obviously looking at, you know, the kind of the cost structure of these athletic departments and administrators, coaches, is that something we should be looking at as well? ⁓ Chris: Yeah, I mean, think you'll hear one example is agents. think you're going to have you're going to have clearly something that looks more like the professional leagues that have to certify agents. There'll be some requirement to have agent certification and caps on commission fee structures right now. 25, 30 percent is crazy. That's not the market for for these kinds of these kinds of things. So I think those kinds of things are going to get addressed on the coaches side. I'm not really sure, you know, like this is still the free market, right? Coaches are going to provide services and good ones are going to get paid well. And, you know, bad ones are going to get fired. ⁓ continue to work like that. But the, the cost really more is, is when I say cost structure, this is around things like, like and transfers. And so There's a lot being discussed now around whether it's five years for five years or five years for four years. And you can't transfer every year. Like this annual free agency obviously drives up costs. putting some, you know, some governors around that'll be, I think a key part of what's being discussed ⁓ that will have real, you know, cost controls, so to speak, put on So you have, you have all the things around. know, legislation that are going to attempt to address, you know, let's just say the cost issues. Then you have the other big, big bucket is, okay, once you've addressed costs, we have a platform that is massively under monetized, right? And so you've heard the ⁓ of the data, right? As an example, the NBA, who did their recent media deals has ⁓ half audience of college football, but yet Adam: Exactly. Chris: they get twice the revenue. So there's a huge monetization ⁓ to especially college football and basketball name the two that are the revenue drivers of the entire platform. Those are massively under monetized given the structure ⁓ of how Adam: Right. Exactly. Chris: media rights agreements work and like just in football alone is a good example. $4 billion a right now for 12 deals, right? Those are the 10 conferences, Notre Dame, the CFP. So ⁓ if you had, if you got paid the same way for ⁓ audience that's twice the NBA, that's 4 billion should be more like 15 billion. Okay, so there's a massive. Adam: Yeah. Chris: undervalued, undervaluation of college football right now. And so the idea. Adam: I was just gonna hold on that point because I think this is like really your sweet spot. You're like uniquely qualified when it comes to media rights, college sports, and you mentioned $15 billion. I think there and I really want to hold on the point about revenue increases because I think it's not that to be clear I agree with you about coaches and administrators. There's a market rate and it's not like that should be held back. But I do think you know from as a cost issue and a structural issue in terms of profitability and net negative cash flows potentially there is an under-monetization clearly and we can talk about your role at Playfly and how you guys are helping from that perspective. We talked a lot about that with Craig in a previous Craig Sloan the CEO of Playfly in a previous episode. But do you think the gap could be 15 billion dollars if the college sports rights, you know, do you think there's demand, there's enough there's enough entities that be willing to pay for it, do you think given all the other things particularly if the NFL rights come to market, could colleges get up to you think 15 billion dollars or somewhere in between that four to 15 billion dollars? Chris: Well, I think it's whatever it ends up being if and when they're able to unify, come up with a unified structure. And you can't really do that. Most people know, right, there's a whole bunch of existing contractual arrangements in place, which will have to run their course. That'll get you all the way until 2034. So the way to think about it is what is the market going to look like in 2034? If you're able to take what is about four billion viewer hours, was a massive chunk of engagement and put that into the market in 2034 with lots of competition. And I can tell you what the math says. The math says, all right, well, if those four billion viewer hours are getting properly compensated in a Adam: Absolutely. Yeah. Chris: highly competitive market eight years from now, what's that worth? It's worth a hell of a lot more than 4 billion. So yeah, so whatever it is, it's gonna be a lot more than it is in today's current construct. My sense is that that's kind of the low mark. mean, then you start thinking about in a unified structure, what can you do to beyond the like, Adam: Yeah. Right. That's the point. Yeah. Chris: in a world of personalization and a world of technology, you know, where, where you're looking to high quality sports to mitigate churn as an example and lower customer acquisition costs. And in a world of streaming streaming, like right now this year was the first time ever that ⁓ more content was viewed streaming than it was on linear. Right. So Now the majority of the way that most people are consuming content is now, especially live sports is gonna be in, a streaming first strategy. And guess what? There's a handful of multi-trillion dollar streaming companies that like live sports. So ⁓ that all worth in 2034? It's with billion viewer hours just for football. Okay, so and everything else ⁓ on of that. Adam: Yeah. Right. Right. Right, exactly. Right. Chris: My is it's gonna be worth quite a bit. on competitive front, the NFL is testing that right now, right? Because they have this well-reported option to reopen their agreements before the, they were originally 11-year agreements and they can open them up after a year, six or seven. Adam: basic. Chris: And, you know, they're, now contemplating doing that. ⁓ what's ⁓ discussed right now. Like what, what's NFL and an open market worth. So, they too have multiple billion dollars of viewer hour or multiple, ⁓ billions of viewer hours to bring back into the market. Should they decide to do so? Adam: And how much, I completely agree with you and two, I think, you know, would be curious to get your take on how you would advise conference commissioners and senior leaders at universities about this specific issue, given how important it is, given everything that you said. But I also want to say how much when you're talking to on the government side, public official side, how much are you getting into this with them? How much do they understand this? And how much do you think these future conversations, let's say the 2034 conversation shapes legislative considerations now. Chris: Well, there has been quite a bit of discussion around this. And again, this is this all goes back to, you know, the goals of legislation. One, solve the cost problem. Two, need a revenue solution. This is the revenue solution. So I think there's for sure been broad agreement on that, on those issues. And then you have like the rest of it is like it's governance issue. Adam: Yeah, Right. Chris: what entity now is gonna have whatever limited liability protection Congress can offer, whatever antitrust protection Congress can offer under this new legislation, right? Somebody has ⁓ to and control all that. And then gotta figure out, all right, well. Adam: No, just hold on. Obviously, traditionally that's been the NCAA, right? Or at least in theory. So do you think it will be the NCAA or, you know, obviously still be determined? Chris: Yes. I think that'll be kind of an open, even after there's legislation, my sense is that whatever entity receives these benefits, they will figure that out as time goes on because that entity is gonna have specific obligations in order to receive all of those kinds of protections. And whether it's the NCA or some other version of the CFP as an example, or some new entity, so long as that new entity is fulfilling all their obligations under the way the legislation would theoretically work, it could be any of the above. But I think that's, don't know, I can't tell you ⁓ that's gonna work itself out. Adam: Yeah, totally makes sense. It's just, you know, I think historically, obviously, as you're saying, there's going to be an entity involved in helping to make this move this forward. It's historically been the NCAA, obviously, and a lot of back and forth to put in mildly controversy about where the NCAA is role in this. And another area that you've talked about previously is the College Sports Commission and about, you know, what role do you see in what you're thinking about or the long term vision? What role do you see for that as well? Chris: Well, I think I'm not sure about the college sports commission specifically, but again, going back to the, you know, whatever legislation might somebody is going to have to enforce whatever these new set of rules are. So whether that's the college sports commission or some other mechanism inside of this soon to be or eventual entity that would have these kinds of. Adam: Exactly. Right. Chris: protections, liability protections or antitrust protections, whatever it may be, they're still going to have to have a way to enforce all of it. so whatever that mechanism, it could be the CS or some new version of that. But the current ⁓ version of that hasn't really worked so well. So I don't I don't know ⁓ that plays over the next few years. I mean, they're obviously trying to get ⁓ the membership. to sign up to, you know, I guess the contractual commitments to let CSC ⁓ the ⁓ And ⁓ has not, you know, ⁓ like it's still kind of stuck in neutral. Adam: So whether it's the CSC, ETA, another new entity, I again, agree about enforcement action. So from your perspective, what are some, I think you've highlighted it, but what are some key points that you'd like to see in bipartisan legislation to really move the needle and make this something that can really have a substantial impact on the collegiate sports space? Chris: I think it's going to have to touch all three of those areas that we just discussed. mean, for sure, you got to have a revenue solution. And I think the unification the SBA ⁓ some new version of that is a major move in that direction. Then on the other side, you know, on, ⁓ on, hope whether it's in the statute ⁓ or ⁓ ⁓ required by the new entity we have to come up with or someone has to come up with eligibility and transfer rules that are sensible. And then, you know, it's hard to imagine that any of this works without having the athletes at the table when you're talking about rulemaking. So I don't know that it's, you know, it's traditional what you would, what we would typically refer to as collective bargaining. I don't know that it will go that far and how athletes get Adam: Yeah. Chris: ⁓ characterized, you know, I, I, I know there's been a big debate about whether it's employee or non-employee or independent contra whatever it is, ⁓ There's, there's gonna ha athletes are going to have to have a say, like it just would seem, impossible to come up with something that has bipartisan support that doesn't somehow have the athletes at the table when you're talking about working conditions. I don't see how that happens. Adam: And from your perspective, what does sensible transfer rules look like? Are talking about maybe limitations on the number of transfers? Chris: Yeah, I don't think you can, I mean, let's start what it shouldn't be. It shouldn't be annual free agency for everyone. Like that seems silly, right? That just creates chaos and ⁓ of bad behaviors. So I think a sensible rule is kind of back to, you know, part of what it used to be, which is, ⁓ get one transfer during your four years or five years, however long they decide it should be. unless there's some extenuating circumstances. My coach left, he recruited me or she recruited me and then she left. I've already transferred, I ought to have another opportunity to go in that kind of circumstance. Otherwise, it's one year and if you do it again, then you got to sit out a year. That's kind of back in the day, ⁓ version of what it used to be. So I think that to me sounds sensible. Adam: One we should note here is that we previously, ⁓ student of mine in the Masters of Sports Administration at Northwestern, he did a systematic analysis of transfers in the pre and post kind of NIL era. ⁓ he found that... the current market is functioning like a labor market with incentive structure in a way that not everyone, but in general, players were maximizing their incentives, which was either more playing time or this was only focused on college sports on more playing time or a better path to the NFL. And it was basically functioning like you would expect a labor market and a functional labor market to operate. And I think one of the things that's interesting from my perspective is you can do an academic analysis. you know what people are seeing on a day-to-day basis particularly at top schools, you know I think you have to kind of hopefully merge both of those together but from your perspective you know I guess does that shift or change if you're seeing it like on a holistic kind of more academic study basis because I don't think it will necessarily but does that shift your perspective at all on transfer rules or what you think sensible transfer rules would look like if you are seeing like this function you know that's not the only thing to consider for sure in college sports but if that's one of the facts is that or alter your opinion of what you think about like for sensible transfer rules. Chris: Um, well, I, mean, I guess I suppose it could, but, um, you know, the, one, the one thing that I'd love to see, I'm more, a little more old school on this. I mean, go back to what I said at the top, like this, this is the only system in the world where you can get a world-class education and compete at athletics at the highest levels. So I'd love for there to be some requirement, some minimum standard. of being an athlete, like you're going to class, like you're trying to get a degree, right? Like let's have the incentives aligned such that it respects the fact that this athletic platform sits inside of a higher education platform. So if you want the benefits of being a college sports athlete, which clearly, you know, in a world of NIL on revenue share and Adam: Yeah. Hmm. Chris: hopefully some sensible transfer, you will get great benefits. so, but shouldn't there be some tethering to the educational mission in order to get those benefits? would be a view that I would wanna see. ⁓ Adam: Yeah. And one thing from a labor market perspective, right, you don't just work and go, you know, have to, there's organization, culture, organizational or institutional knowledge, culture, relationships. It's not like even if you're an employee, you just get to do whatever you want. Like that's not the case. I think it's just, I think it's exactly what you're saying. Shouldn't there be a marriage of these different factors to come up with a sensible solution, which I think totally makes sense. It's just, I think that that was what was so interesting about Mac, or at least from my perspective about Max's paper is I think there are, I think even now I would say like what you would before. I this paper, I had a similar point of view about transfers and like this seemed to be like happening a lot. ⁓ then looking at it systematically, I think there's probably a little more ⁓ nuance, ⁓ least from my perspective, I'm not gonna obviously speak on your. It to, go ahead, sorry. ⁓ Yeah, goes to another question. It's kind of. Chris: No, no, I agree with you. Yeah. Adam: From my perspective, like I said, you've been talking directly to legislators on this topic. Has there been anything that's come up from those conversations that you think would be surprising or not something you expected to think about or consider as they're trying to put together this legislation? Chris: No, I I I was surprised in the beginning, but now that I've been around this for a few years, it's interesting that everyone kind of goes back to their ideological corners, Republicans and Democrats, right? And it becomes like it's a political issue. And ⁓ realize we're both citizens and you realize why been really difficult, especially over the last number of you know, Congress is why it's so hard to pass legislation. this one, I actually believe this one is really one truly is bipartisan. Like who the heck doesn't want us to succeed, you know, in college sports and college athletics and higher education? Like, and you know, you realize also that the federal government is providing made Adam: Yeah. So Chris: in billions of dollars a year to all these states, including my alma mater, Penn State, like over a billion dollars a year is coming from the federal government to Penn State for research grants. Not to mention if you want a million dollars from the state and that plays itself out across the country. And so there really is an alignment here and a political alignment, but these are very tough issues, right? When you get down to the heart of it. So like employee status, right? Or non-employee status. You have, you know, one political party that, you know, is very supportive of unions. Another political party that's anti-union. So, you know, those are hard things to bridge the gap on, which is why this has been taken so long. And so I definitely have a appreciation to... how hard the legislators are working on this. And there really is our sticky issues to get through. But from everything I've seen, there's a lot of good faith bargaining going on on both sides. And there's a lot of well-meaning on both sides and trying to ⁓ bridge the gap on ⁓ political issues. Adam: Yeah, and something we talked about is, you know, obviously President Trump has both spotlighted public support of universities, we'll put it that way, in several times, but also just this specific issue about NIL. executive orders that front. I ⁓ we agreed, ⁓ at we're not trying to make this a political, whether you agree with what he's doing or not. It's clearly, obviously he's shown an additional spotlight on the issue and that has an in any kind of legislative process. ⁓ Chris: Yeah, I think that's right. mean, I don't, I don't really believe that executive orders, they don't really have any teeth or any legislative authority ⁓ all that was likely to happen is more litigation ⁓ around, even a lot of what's in these executive orders seem sensible, but at end of the day, you know, we live in a world where Congress makes the laws. Adam: Yep. Chris: If we want something that's lasting, it has to be done through the legislative process. But I do think that President Trump's interest and all the visibility around this has turned this into a net positive in that it's created a little bit of urgency around a very high profile issue. And it's one that a lot of people care about. So I think it's created some urgency and some momentum that I, you I'm hopeful going to lead to. legislation this summer and that would be an amazing outcome. Adam: Yeah, and one of other things I think you're uniquely qualified to talk about is, you know, institutional capital, private capital, particularly, you know, either from the legislative process and how legislator thinks about that, but just more broadly about, know, we talked about the cost gap and some increases in cost and, you know, a popular solution at least is to consider outside capital or institutional capital. one, ⁓ you talk about that. ⁓ could talk about that more broadly in terms of your experience and two, obviously, smash for it. is entering and has entered that space and kind of what you guys are doing to enter that space as well. Chris: Yeah, we'll start with the beginning, which is we have a system that's $5 billion a year and counting in deficit. ⁓ not sustainable. So short-term, let's to get legislation in place that will help us put some stability back in the platform. And then eventually as a part of that legislation, let's have this revenue. revenue fix where we have unification of media rights and that can't really occur until another eight years from now. So somewhere between now and eight years from now, when you're operating at $5 billion a year of deficit going up, you know, it's hard to imagine that we can keep doing things the way that we're doing without some help. So that's where we, and there are others that are trying to do you know, look at similar opportunity to deploy capital in. It's almost like bridge capital. Like how do I get from this side of the river to the other side of the river, which is eight years from now? Like I'm going to need help in between. And that's really where I think we, we fit in and others that are, are looking to deploy capital in a way. then, you know, if you're, if you're one of those that are in 40 to $50 million a year in deficit. You know, you want to, you want to have capital that comes the cheapest form or the least expensive form, not only in cost of capital, but then you have governance issues and like, okay, if I give you money, like any investor, I'm going to want to say in how you run your business. Right. So, so the capital that will have to come into the system in order to keep it solvent over the next eight to 10 years has to come in in a way that works. not only for the investor, but for university and do it on terms and do it under conditions that are fair. I think ⁓ that's where trying to thread the needle. Adam: Well, yeah, I think that totally makes sense. But what does that mean like more tactically? Right? I think people are trying to solve this, you college administrators, particularly those who don't necessarily have a strong finance background, but even institutional capital that's been looking to get into college base. So what does all that mean? How does that actually become, at least from your perspective, what is one pathway for it to become operational? Chris: Yeah, well, so the current way they've been doing it, again, isn't sustainable, which is like at my alma mater, well, we raise donations and we money from the federal government. We get money from ⁓ the government and okay, we're at a, ⁓ we still operate a deficit. So we increase costs to students. We charge student fees. charge, we raise tuition and you know, the taxpayers are then paying for it. So that's just not sustainable, right? coming up with a way of legislation that's gonna address a lot of these issues in the longer term, it's now like, what's actionable? So schools are now starting to consider, you saw this with the Utah outro deal, right? They essentially sold 49 % of their athletics department. but that comes with governance. you like I haven't seen the agreement. I don't think they put that, the agreement out there, but you know, that's, you're selling a lot of your upside now in order to get money now, right? So that's what I would describe as very expensive capital. Now it may work for Utah because, you know, that's the, they've decided that they need help now and this is the way they're gonna do it. I think there are other flavors of that where, you know, there's different ways to do it and the cost of capital isn't as great and governance issues can be addressed. So I do think that you're going to see a handful of these things. I wouldn't call them experimental because they'll be real deals, but they'll they're not all going to be cut from the same cloth. ⁓ And so think that, you know, in the near term, if you're a president or an athletic director and you're looking at, all right, I'm operating at 40 plus million dollars a year of deficit, how am I gonna keep my 25 or 30 men's and women's sports operating in a way that's consistent with what I've done in the past if I don't have some help here? You can only ask your alumni to donate so much, you can only keep raising tuition, you can keep raising the fees to attend athletic events. There's not a lot left there. Adam: Yeah, I mean, think from Ochoa Deal functions more like an equity arrangement, ⁓ if not entirely an equity arrangement where it sounds like maybe not Smash specifically, but maybe Yes Smash specifically looking at more loan instruments or debt instruments to help Is that when you're saying lower, less expensive capital, you're... ⁓ Chris: Yeah, no, think that's right. There's different flavors to all these things and finding ⁓ the sweet spot, I think will be what kind of comes out over the next year or two what's the best way to do this. Adam: Yeah, and you're talking and that's kind of what I want to get at is like you're talking to college administrators and both sides, right? Talking to LBs, you know, capital partners in addition. So how much is that like for like better term understood? the, you know, cost of capital, where your capital sources could come from, what this kind of structural gap looks like and how it can be financed. Let's just call it the eight year gap, which I think is right. Like there's a media, you know, in 2034, like we've, as we talked about, but how much of that is kind of understood by both sides? Like what's the differences are and what the issues are and how this could be solved. Chris: Yeah, I mean, it's still very early days. mean, like I said earlier, there's only been one or actually two of the Michigan State one, which happened a few months ago. But to say, I think what it has done is it's ignited a lot of these discussions. And, ⁓ know, think that universities aren't really set up to do these kinds of things. So it's, there's a little bit of a learning curve. So, you know, that's one of the things having spent. 40 year career in the sports business with a vast majority of being in college sports. Like we have a lot of relationships on campus these days. And, you know, these are, these are early discussions and you know, there's a lot of education that has to go on. know, universities aren't really set up to do these kinds of things yet. I mean, where, you know, that's all part of like the learning curve. So I think it will take a little bit of time. And like, like most things in the sports business, you always have. Adam: Ha! Chris: you know, bunch of early movers. And then you got a, you ⁓ a whole slew of fast followers. And then you have, you know, the laggards, right? That'll, that'll, I'm sure be the way this thing goes in college over the next couple of years. Adam: Yeah, so one question I get a lot, and I'm curious to hear your feedback on it, is what's the best way to educate university, particularly university folks on the financial terms. So I get that you're almost like there's some irony, I guess, in saying getting an MBA or giving university administrators an MBA in finance. But what are the best ways to kind of bridge this gap? Chris: ⁓ yeah, I mean, it's, definitely, you know, labor intensive in that, you know, you do have to spend the time, but ⁓ of these end up being like bespoke, right? They get kind of customized depending on, you know, ⁓ like to say they're like snowflakes. They're all beautiful and they're all different, right? So you have to, you know, develop some rapport, a lot of which ⁓ group has a lot of connectivity on campuses these days. And then you gotta spend time specific under the tent and understanding exactly what the finances look like and then really kind of designing something based on the objectives that meets their needs. And that all takes time. It doesn't just send me over your P &L and we'll send you an offer. It's much more thoughtful than that. Adam: And one last piece, a couple of final questions as we enter towards the end of the episode is, ⁓ you know, ⁓ ⁓ Surge is ⁓ sponsor of Power and helping to power this podcast. We focus on mixed use developments and real estate. ⁓ much is real estate entered the conversation or discussion on your side of the smash side or as you're talking to university administrators? ⁓ Chris: Yeah, so again, like snowflakes, all different, all beautiful. There are some that, you know, it's really, really, it's like a sources and uses, okay? I need X money. I want to take ⁓ of the X and I want to put it into real estate development. That's all something that's done on that side. And that's all part of like the mosaic. When you sit down with someone, you'll kind of learn what their objectives are. And, know, they care about... Adam: Yeah. Yeah. Chris: getting the quantum of capital they need to do all the things they want to do. And they want to get it the least expensive way that they can get it. But they also have, you know, one of the things that we also bring is we have lots of experience and operating experience in college. And there are things that we can do as a part of not only deploying some capital, but there are things we can do on an advisory basis to help them think about this, you know, in a longer term way. Adam: Great. Chris: And that's, think is definitely an important value add here that maybe others that are just deploying capital and don't have ⁓ ⁓ as we might, ⁓ group that is. So I think that's also another factor in this and real estate, one of those things on the docket. Adam: Yeah, and I don't know if you're seeing anything specifically as they see real estate as it unlocked from a revenue or capital, know, institutional capital perspective or to your point, is it just another from their primarily one more thing to look at from an institutional capital perspective. Chris: Yeah, I think wouldn't say I've seen it as like the primary reason. It's it's part of the it's part of the whole overall solution. ⁓ Adam: Yeah, and one of the last questions, and this is a question we're trying to ask all of our guests now, is the influence of artificial intelligence. You've obviously, whether it's through SimpleVet or previous ventures that we discussed, you've operated the forefront from a technology perspective on a variety of different technologies and a variety of different fields. you're thinking about college sports, do think AI could have a disproportionate impact on college sports? ⁓ Or role do you see AI in the conversations you're having, either in terms of legislation, ⁓ things doing? at Smash or even things that you're looking at from a PlayFly perspective. Chris: would say that AI has been like top of mind in any of current stuff. I will say though, that I do think that AI is a long-term net positive. And, know, I say, just about my, ⁓ my, in the sports industry. mean, when you look at assets at the end of the day, these are, and you've this in pro sports, ⁓ it's a lot more professionalized. But when you look at these, these are really IP assets, intellectual property assets. And at the heart of an intellectual property is you've got a live event business, you've got a media business, you've got a sponsorship business, a ticketing business, a real estate business. And then most importantly, I think a data business. ⁓ as we move into a world of hyper personalization and all the data that's around all the IP. ⁓ Adam: Yeah. Chris: And this is where AI comes in. Like, how do I, how do I take all that data and organize it in a way to make it useful to my ultimate objectives here? And I think AI is going to be like rocket fuel on, that part of this whole business. Adam: Short answer is ask Roar and Serge about that if you want to know how to organize your data using. Yeah, there we go. We didn't plan that one. That was just a natural plug. So Chris, thank you very much for being a guest again on the Now the Roar podcast. Appreciate your insights. This was very valuable and I'm sure our audience is going to get a lot. Chris: Extra commercial. That's it. Excellent. Thanks again for having me on and it'd good to stay in touch.