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How Private Equity Could Change The Future Of College Athletics · Buckeyes TomOrrow Morning

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  Welcome to Buckeyes tomorrow morning for Saturday. It's January twenty seventh time your host
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  tom Or The Acron game is in two hundred and seventeen days. The game
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  against Michigan in three hundred and eight days. This is gonna be this is
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  a little off the beaten path for us as a show. This is one
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  of those Friday afternoon what are we gonna do this Saturday show on heath THEAMIL
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  drops a really interesting article about some of the big picture themes for the future
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  of the sport of college football for college athletics in general, the role stuff
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  like private equity could play in there. And this is just maybe the most
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  interesting part of this. Was not that long ago, twelve eighteen months ago,
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  the idea of private equity getting involved with college football was sort of like
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  you sort of heard about it. It was kind of like, come on,
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  come on. And then Friday there's an article with the chancellor of Syracuse
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  University talking pretty openly about you know, hey, there's like major changes comings.
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  You have university leaders talking on the record about this stuff. Now this
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  is sort of inevitable. So we're bringing in our buddy Tony Gerderman of buckey
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  huddle dot com that was somewhat inevitable as well, Tony. I think the
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  most interesting part of this is just how quickly the conversation around this has changed
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  from maybe you heard some whispers to like, this is getting talked about right
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  in the middle of the town square now. Well, and for me,
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  the first that I had started hearing about it was Florida State talking about getting
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  out of their granted rights and what it would cost them. It's like,
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  ah, that's just committing you know, private equity will help us out.
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  And I hadn't really heard about it with anything else. I don't think they
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  need to be involved in anything else. You know, this is Florida State
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  and a financial crunch, so you might understand they're going to try to find
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  a way out of it. But to think that, to see it now
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  with the chance they're talking about how the whole college sports system has been a
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  dead man walking for three years, like, yeah, but that's just because
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  all of these different rules need to get solidified. And as what Ted Carter
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  ross Byork said a couple a week or so ago about like legally defensible,
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  this is where they need to get the idea that you need private equity to
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  come in before the fact, after the fact whenever. I yeah, that's
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  that's interesting, and I think I love a scary Honestly, it is a
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  little scary. And you're right in that the conversation at an individual school level
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  started with Florida State. I mean a couple of years ago, the PAC
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  twelve was talking about taking on investors, you know, at a sort of
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  conference level. But Florida State's not the only school Florida State's got. It's
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  one, it's one sort of situation, and we'll get into Florida State in
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  a little bit. But you've also got schools like Arizona that's hundreds of millions
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  of dollars in the hole right now and facing some uncomfortable and unwelcome kinds of
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  conversations around their whole athletic department at the moment. So Florida State is definitely
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  not the only school at a you know, university level, that is,
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  you know, at least in a maybe we need to start thinking or talking
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  about this in some sort of some sort of way kind of situation. What
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  I thought, let's start Tony with the quote that made me laugh out loud,
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  which is what are you looking for if you are a private equity,
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  asked an industry source, You're looking for a poorly managed business that nevertheless has
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  a strong market. That's the definition of college athletics. And you sort of
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  touched on this a little bit earlier. But the fact that there hasn't been
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  a real structure to this and the fact that it's just sort of been shambling
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  from one court order to one temporary solution to another, and it's just sort
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  of been run in a real patchwork manner that has left the college athletics realm
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  in a spot where they are poorly managed. They are they do have a
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  strong market, So that does, you know, sort of set the table
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  for what this could be. That entire quote just reads to me like,
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  what are you looking for? If you are running a game of free card
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  Monty, You're looking for a mark. And that's what the private equity Later
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  in that somewhere in this piece talking about how they are four or five private
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  equity firms circling about, It's like, yeah, they're vultures, this is
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  what they're They're they obviously see something, and really the fact that they're coming
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  to college sports rather than college sports kind of reaching out to them should tell
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  you like, we don't need them, We don't need the investors. Now,
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  some schools are just they've created a mess, like you said, Arizona
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  losing fifty some million dollars or the athletic department borrowing like fifty some million dollars
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  from the university and not being able to pay it back. I think cal
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  was in some dire straits for a while, probably still are. But yeah,
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  you're you're looking for what are you looking for if you're private equity a
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  mark, You're looking for somebody that you can go in there. And the
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  fact that they say this out loud as well, like you said, a
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  poorly manage business and something you can take advantage of. And we know that
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  that is college sports. And if college sports were so broken, they wouldn't
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  want anything to do with it. And I think that's that's kind of my
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  concern, is that they see plenty of plenty of potential there. And the
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  quote that I thought you were going to read another hilarious quote to me is
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  from one of the the private equity guys saying that we're studying or not.
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  Yeah, this is one of the private equity guys. We're studying ways to
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  unlock more value from and for college football for the betterment of all, Like,
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  yes, you are so worried about the betterment of everybody, you know,
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  the kids? Well, Tom, well somebody think of the children.
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  Yeah. Always. I don't know where that goes in the balance sheet,
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  but it's somewhere. I'm sure it's somewhere near the middle to the bottom.
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  The good they both the the goodness of the children and the benefit of the
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  children always always been concerned. And you know, we've sort of seen some
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  of this in the sports media realm over the last few weeks about you know,
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  companies that sort of get bounced around, and you know, if you
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  had said twenty years ago, wait till you see what happens with Sports Illustrated,
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  no one would have believed it. So there is I think I have
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  sort of gone on the record about this about Florida State in particular in the
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  last couple of months, about Yet you're mad now and you're mad about the
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  acc and I get it, but it feels like the potential downside here is
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  pretty significant that what is it going to look like? You know, guess
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  guess what you know? In addition to what's best for college football. Private
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  equity does tend to be driven by maximizing return and making a profit. So
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  what is that going to look like? Is that going to be sports getting
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  cut? Is that going to be you know, you can't pay your players
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  as much if you know, if and when there's a pay the players kind
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  of model. It just this just to me feels like there's been a lot
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  in college sports over the last few years that I think you could look at
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  and go, this could be good, this could be bad. This one
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  feels like one where the potential downside for the first school that sort of takes
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  a leap into this and maybe doesn't quite know what they're doing or who they're
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  you know, who they're making a deal with, that feels like the potential
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  downside there might be bigger than just about anywhere else. And to me,
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  it's like a payday loan type of thing where the money is great initially,
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  but then the cost of paying it back is immense. And like you said,
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  the drive for the profit is how often do we see of late especially
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  where company has record profits and then the next day twelve hundred employees have been
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  laid off or they've cut two thousand jobs or whatever from this business. And
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  so you would could see like Florida State gets this price equity and then like
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  six months later the baseball team has been laid off. You know something like
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  that where they're gonna be looking at everything and you know, if the money
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  is nice, until like you said, we only have four million dollars for
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  a head coach. That's that's work. That's the budget. That's what it's
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  gonna be. So you're gonna have to come under that and probably like two
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  and a half million for an entire assistant coaching staff. So work with that.
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  What's that now you're not making as much money because you're not as successful,
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  Well, you're gonna have to find it somewhere because you owe us this
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  much each year. And it just seems like something you don't want to get
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  into bed with. It's you know, the the the loan shark type of
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  stuff where you're gonna be scrambling to pay this back as opposed to just being
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  patient and being financially okay. But like right now, they're just looking at
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  the money that they should be making and aren't. Whereas you get this private
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  equity staff and it's it's nice for a moment, but then you're not making
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  as much as you should because you're paying so much of it back. And
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  I just think that the fact that they want in should tell you that you
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  shouldn't let them in. Well, And I think the other thing that's true
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  here is, you know, in this article they're talking about some really interesting
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  potential solutions or opportunities for college sports. These are all things you could do
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  without inviting private equity to the table. This is all you know, the
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  schools collectively negotiating television contracts. But as opposed to having leagues to it,
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  yeah, you would absolutely have the SEC and you know, the big SEC
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  schools, the big big ten schools going to the table and just saying,
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  okay, now we're all you know, you don't get to play one of
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  us against the other. Now we're all coming together. It's you know,
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  the National League in the American League or the NFC and the AFC, they
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  don't you know, the NFL. Yeah, it's a temparate TV deal,
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  but the NFL brings it all to the table, and you can you can
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  dice it up if you want to, but it's all the same conversation at
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  the college level right now, that's all happening at a conference level rather than
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  a national level. Other stuff that they mentioned in their centralizing FBS football scheduling,
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  promotion, and commercial rights would be better for you know, football student
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  athletes. It would enable them to collectively bargain and be rewarded for their value
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  without limiting their choices or needing to be employees. I mean, there are
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  opportunities here, certainly, but this is all stuff you could do. I
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  just I think you're looking at as long as Florida State doesn't go lee Roy
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  Jenkins here, or you know, Arizona doesn't just because like, well,
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  we're mad at the ACC right now, Like great, your contract's up in
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  twenty thirty six, ride it out. Because the downside of doing that is
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  you might not be great for the next ten years, and then you can
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  move on. You know, Florida State is not going to be forgotten forever.
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  They're not wake Forest. If you have a little bit of patience and
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  you take a little bit of a long view, it feels like you're going
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  to come out better than if you rush in and cut a deal and then
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  you find out, oh, I should have read the small print that's on
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  me. The one of the people that Pete the Almos talking to in this
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  is search firm executive named Len Perna, and he mentions here that you know,
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  talking about college sports isn't properly structured. Whatever said. Private equity alone
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  can't fix the core structural problems, but can play a role once they're solved.
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  Basically, once you get all this stuff fixed now, then then you
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  can come to us and boy, we would love to be part of this.
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  It's like, of course you would. Yeah, once you get this
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  stuff all fixed up, then boy, you share one our money then.
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  But it's like if you can't, if it's not about helping fix the situation.
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  And there are some portion of this article talking about one firm that is
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  trying. But yeah, a few times, you don't need private equity to
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  deal with getting things legalized or figuring out the law unless you want the private
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  equity to lobby and you know what, glad hand and five hundred dollars handshakes
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  or five hundred thousand dollars handshakes to get the laws that you want. I
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  just once once you have and I do believe that we're talking about vultures here
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  in terms of the circling and they're looking and it's not charity, it's not
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  altruism. It's not for the betterment betterment of the student athletes. It is
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  for the betterment of the people who would be investing, because they see all
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  of this money being made and being shared and being given to so many and
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  they think I should have some of that. That's an opportunity for me.
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  This is not an opportunity for student athletes. It's not an opportunity for geography.
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  It's an opportunity for the investors. That's all it is. I don't
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  care about anything else other than themselves, and for that very reason, you
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  need to keep them out of college, athletic or else. It will become
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  something eventually that is unrecognizable from what we've grown up with. Yeah, and
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  you know it's going to change. It's just a questioned at this point of
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  how much it's going to change. I will you sort of mentioned this quote
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  earlier in the show. I'm just gonna read this. This is an on
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  the record quote from Syracuse Chancellor Kent Serreviewed. He says, quote, it's
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  been obvious the whole college sports system has been a dead man walking for three
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  years, driven by legal developments. Quote continues. What's going to come out
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  of it is the thing that hasn't been What's going to come out of it
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  is the thing that hasn't been clear. The current system can't continue. It's
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  a dead man walking. And then Pete Thammill at one point, rights,
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  there are only two certain dyed in college sports. Sweeping change is coming and
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  no one, no one knows what it will look like. So on that
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  encouraging question, mark note, we're going to wrap this show up for today.
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  This is just one of these shows where I don't know, this doesn't
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  really fit in with this kind of show we typically do, but it's all
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  so one of those things that it feels like you should have a grasp on
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  that you know, hey, this is These are conversations that are happening right
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  now. Yeah. And one last point, when we talked to ross Byorke
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  a week or so ago and he talked about the tipping point of college athletics
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  coming into the and within the next five to seven years, and I asked
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  him, are you looking forward to the tipping point? He just said,
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  I'm looking forward to clarity. And I think that's what some of these other
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  people are talking about as well. Don't know what it's going to look like,
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  but you're looking forward to finding out what it is, just so you
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  can figure out how to deal with the real, the new reality, the
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  lasting reality, as opposed to the last three, four or five years now
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  that have just been constant change, one year after the next. At some
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  point this all needs to settle down, and that's what everybody's looking forward to.
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  However it may look, but I don't think it needs to look It
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  doesn't need to have private equity involved. Well, whatever happens in the future
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  of college football, will be there to cover it at buckey Huddle dot Com.
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  One thing's for sure, I'll have State fans are very excited about this
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  upcoming season. A lot of returning players, a lot of new players,
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  pretty talented roster, pretty exciting, some changes in the coaching staff, and
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  much much more potentially some changes coming this weekend with some new recruits coming in
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  Carter Lowe, the offensive tackle, announcing his decision on Saturday. We'll have
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  coverage of that over the weekend, and then there's going to be another at
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  least one more addition to the Ohio State coaching staff full time. We'll be
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  there cover that it's gonna happen with Michigan. Oh boy, that's a whole
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  separate question. We'll be following that as well, all at bucke huddle dot
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  com and YouTube dot com slash Buckeye Huddle. That we'll do it for today.
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  Thank you guys all for joining us. Have a great day. We
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  will talk to tomorrow.