I don't worry about college football going away I but I do worry about the non-revenue sports being cut to "reduce costs". Football is the money maker (and basketball to a lessor extent) but all other sports are money losers and private capital might be to loath to continue them.
Not that it can't be done, but the NCAA would have to change their requirements to be an FBS member. Universities must currently maintain and fund a minimum number of female and male sports. Of course, the NCAA could change or eliminate that requirement, or the P4 could leave the NCAA behind completely, but something would have to change.
Yes, for the big buck rev sports the NCAA has become irrelevant, which is why that organization can't control its conferences. All FBS programs that want to stay competitive need to leave the NCAA and set up the same as the NFL, with a players union that can negotiate for players and agree to rules that protect the game, like a draft, salary caps, a rev payout percentage (already underway with the rev-sharing program) and other requirements to maintain a competitive industry. The NFL has already gone through the learning curve. FBS is really just the feeder system to the NFL, like any other minor league affiliation that exists such as the NBA "G League" and minor leagues for the MLB
The key to the "Olympic" sports is a streaming subscription program through PAC12 Ent. They have to pay their own way. The football and basketball programs will need all the revenue they generate to stay competitive.
Why should "Olympic" sports have to "...pay their own way."? From time immemorial colleges have established competitive venues for such activities. What has changed? Why should track and field competitors, wrestlers, tennis players, etc., have to pay their own way?
PE hasn't led to the demise of healthcare, yet, but it's made the parts most impacted immeasurably worse. At first, only providers and administrators noticed. Now, patients are starting to feel the effects.
Universities didn't let PE into their academic health systems despite endless efforts, and it's sad that they aren't similarly vigilant about athletics.
The irony of Private Equity is that most of academia is lothe to get involved with the notion of “greed” from PE. But then you look under the hood of the $93b PERs pension fund and its stuffed with plenty of PE funds to drive risk adjusted returns. Academia needs to look in the mirror….
Universities need to band together and demand more social responsibility from the general partners they invest in. That's true in other asset classes besides PE/LBO funds.
It's curious how the most vigorous opposition to PE tends to come from schools with PE principals on their governing boards, and a long history of investing in the PE/LBO asset class. There's a story there for some intrepid young reporter.
I'm not sure what you just said here will be appreciated or realized just how seriously F-ed up this whole thing is becoming. The minute these people get in, its like dealing with the devil himself. College athletics should not be entirely about money, the bottom line. It is much more diverse than that and just looking at short term to long term profit and loss does not fit this eco-system. But at this point, the powers that be have created a panic bubble and to keep up with the Jones' everyone feels like they need to do it, but there have been many who have made the deal with the devil who have regretted ever meeting "The Man" in the first place. Sad day indeed, but hardly surprising given the present circumstances. I'am very glad to be out of coaching now, it's simply someone's else's problem.
Ben, you are absolutely correct. Be that as it may, formalized athletic competition requires funding. I coached in Little League for many years. I know. It took money to provide playing fields, uniforms and equipment, officials to make that work. Without the funds, we would have been playing pickup games in the park and that's fine if that's what you want. The very first time anyone ever put on a uniform to participate in an athletic event, money was involved but it was not the driver. Today, sadly, it is.
The other thing that people who haven't lived with PE miss is that, compared to the companies PE typically pursues, college athletic departments/football programs are actually quite small. They are big BRANDS, to be sure, but even the largest only have around $200MM annual revenue, which is well below the median PE deal size.
That means they have to squeeze even harder to create the conditions for liquidity or exit, and the fees they charge are a disproportionate drag. The PE model was never about growth, it was about extracting value, and messaging to the contrary is just that.
Healthcare is a basic necessity. College football is a totally discretionary expense. It can go away and civilized society keeps going without skipping a beat.
Actually, the free market's response, i.e., voting with our feet, may be the only thing that can protect it from the unbridled monetary arms race that is corrupting it. When the ROI is sufficiently reduced by a diminished market of un-satisfied consumers of the discretionary CFB commodity, the primary investors in that commodity will either alter their business model to regain and grow market share or drive it into the dirt while extracting as much money as possible from the dwindling diehard fans before its complete financial collapse.
Using your decision making power as a consumer is the opposite of surrender. It's no different than understanding you have the freedom and power to walk out of that car dealership when they're only offering an unreasonable deal.
Couldn't disagree with you more. As President Reagan memorably stated, "The most feared words in the English language are, 'I'm from the government and I'm here to help.'"
I've never seen an industry constantly asking for money and then saying they're broke and then turning around and eating more and more and more. When I go to a concert they don't stop me at the door and ask me to pay more. It's a constant money grab and when does it end? I'm guessing the 40 million a year coach is not far behind as is the 100 million dollar a year player. When will College presidents put a stop to this madness? It wasn't a bad deal before maybe the players need a little bit more money okay so what. If they don't like a free education tell them to go play pro football then.
I beg to differ. The summary conclusion of noted historians Will and Ariel Durant, authors of the comprehensive 10 volume, "Story of Civilization" anthology, and its epilog, "The Lessons of History", is that Wealth always concentrates until either the few wealthy haves let enough trickle down to the increasingly disgruntled masses to pacify them, or the majority of the wealth is destroyed via revolution. There have been multiple iterations of this inexorable dynamic throughout history. Maybe you could ask Marie Antionette's severed head if greed always wins
"Greed" is more like people (athletes) being paid fairly for what they contribute to a university sports program. Why shouldn't the kids get paid if they have outstanding skills, the top 0.1% in America in their respective sport. People enjoy watching the games and are willing to pay to watch those games, both in person and in the media. It is an act of slavery for a university to capture the funds from the 365/24/7 efforts of players on their teams and not share those funds with them, many who's families are quite poor. The problem is not paying the kids and management of the sports program, it is that it currently is a free-for-all with no guardrails. That is what needs to change.
I enjoy watching the bands perform at half time. Shouldn't the band members be paid for their contribution to the spectacle? How about the students who participate in stage plays or concerts to which the schools sell tickets, shouldn't they be paid as well?
I loved college too and share your concerns, but teams can still be successful without PE, NIL etc, I saw it work yesterday during Navy’s close win over Army. With the Beaver’s dismal season, following Navy football kept me going. FYI, I began what turned out to be a 30+ year navy career at 17, after South Salem H.S, appointed to the Naval Academy, but because of weak math skills, was diverted their Prep school (NAPS), where I still failed to make the cut, and won the consolation prize, a 4 year NROTC scholarship at Oregon State, and got there just in time to watch, the “giant killer” beavers, led by Bill Enyart and team beat OJ’s Simpson in Corvallis.
The conference commissioners and ADs sold their souls to television many years ago. Now they're repeating the money-grubbing process with private equity firms. It's a trap. Those people are only interest in profits and exit strategies. I fear for the future of college athletics.
As for the Bald Faced Truth, thank you so much, John, for turning down investors and advertisers. Your space is sacred, and we all value it tremendously.
Agreed. The college programs, especially former P5 schools like OSU and WSU are used to spending lavishly (compared to the rest of their university) without worrying so much about efficiency.
When they get the infusion of money but all of a sudden have a 3rd wheel at all their meetings wanting to cut back on headcount and not fully understanding exactly what those expensive General Managers do, there is going to be lots of frustration. Especially when said third wheel reminds them he owns a chunk of their athletic department.
It's hard to believe that what started out as an extracurricular activity is now requiring tens of millions just to field a team, and much more than that for schools who want to field competitive teams. Texas Tech put out a blueprint on how to quickly put together a championship caliber roster, and it ain't cheap. And they actually had most of a pretty decent team coming back. Imagine the cost for teams in WSU and OSU's shape -- yikes.
Kind of, yes. But those third wheels generally care what's best for the school or athletic department. Equity third wheels care about efficiency and their money -- period.
ADs look at the class of retired ADs who are pushing this from their cushy consulting gigs, and say "I want to be in THAT club." Of course, you don't get admitted unless you prove you're willing to do business and create opportunities for guys who are already there. I'm sure we could play the name game.
Yes, good for you John, hold onto your space so you have total sway and say over what you choose to write and omit. Sacred space is important, otherwise your business becomes a JOB.
This is all going to collapse like a house of cards. Remember how financial institutions gobbled up mortgage-backed securities in the early 2000s, only for the whole system to collapse because the underlying assets (home loans) were too risky? Yeah, the same thing is about to happen here.
College athletics has thrived on being competitive, connected to its institutions and alumni, and in it for the love of the game and the rivalries. Those factors are what drove fans into the stands and to the screens. But these days, college athletics are a shell of what they used to be. Fans are losing interest, in large part because everything that made college athletics so great has been replaced with a bastardized, corporate version of minor league sports. And once the fan revenue falls, those firms that invested will be regretting their decisions.
But it gets worse: those athletic departments that took private equity deals will be stuck with an unhappy partner who doesn't understand the business. Whether or not those ADs can buy-back their equity from the PE firms will depend on how deep their pockets are and whether the equity firms want to cut their losses. But it'll be ugly either way.
We're about to witness a market crash of epic proportions in the next few years.
Agree, and I'm finding out that a lot of these people at the universities aren't very bright. I recall the Economics professor at the University of Utah way overvaluing the Pac-12 Conference and how much money they could get from ESPN. Not only was he bad, but the president of his institution and others high-fived him like he knew it he was doing. That dude needed to stay in his lane, which was some thick, boring Economics textbook and his equally boring lecture to his students. Yes, this will come crashing down, Maybe not today or tomorrow but it will collapse. We've seen this drill before.
There is no leverage used in college football. It was the leverage that took down the mortgage business and banks. Nothing is going to "take down" college football, so long as fans are willing to pay and watch.
And my point is that fans are already tuning out. Do you think a CFP that favors only two conferences will have the same viewership year after year as a CFP where every conference has a shot at solid representation? Do you think that Notre Dame throwing a hissy fit won't hurt CFP and bowl game viewership? Do you think that meaningless conferences that make no historical or geographic sense won't turn away fans at the margins? The entire model assumes *growth* among viewers. But every move they're making stands to lose even more viewers.
This is my question. Who wins with this. Most of these institutions are public universities. Why are state governments allowing this. State legislatures need to step in and shut this down now. Salary caps for coaches and players. No PE period.
Because it's too unpopular for both political parties to regulate college sports. If you're a Republican, doing anything to "regulate" big business (e.g., the TV networks, major conferences, private equity) is antithetical to who you are. If you're a Democrat, spending time diving into the problems with college sports looks like you're not focused on the issues affecting real Americans, such as healthcare or the cost of living. So this very obvious problem is allowed to hide in plain sight because both parties have political disincentives to do anything about it. (And I'm saying this as a very hard-core Democrat, not as some "both parties are bad" cynic).
As a Cougar alumni, I will start off by saying I love my Cougs. With that in mind, "Private equity" is bad for Public schools. I can see private schools doing it, but as long as state legislatures have a voice in public schools, public schools should stay public investment and/or "Private capital" only. WSU and OSU, being public schools, should re-examine what their roles are. Instead of trying to stay at the same financial/competitive level as SEC, Big10 and Big-12 schools without the high-level media contracts and donors like Uncle Phil, WSU and OSU should accept that they are playing in a lower tier conference with only 2/3 star athletes, smaller stadiums, limited resources, geographical limitations, and target their programs accordingly. When they do, they can concentrate on what they do best - delivering quality education at a decent price point, at land grant universities. And their Athletic Departments can return to delivering fun entertainment without the constant harassment of alumni to donate, and the drive to keep up with the Jones.
How so? If the program does not compete effectively and does not draw viewers or media contracts it is the PEs that will lose, not the program. It is money that allows a program to be competitive. Without the money the program is what the Beavers or PSU were this year. Is non-competitive, losing football better because there is no money? You aren't even making sense
The Oregon Ducks have taken "Private Equity". It is in the form of Phil Knight's investments in Oregon sports, especially football. So this is not a new concept in the Pac NW. The difference is that PK does not care if he gets a financial return on his investment, though there is some implicit return in his company's (Nike's) very direct association with the Ducks. Most investors, even if they are alums, want some promised return before plugging several hundred million or a billion into a sports program, just as NFL owners do. Taking on a PE investor is just acknowledging the obvious.
This comment is ignorant. Private equity=ownership. Phil Knight DONATED his money. Zero ownership. Very, very big difference. Every school, yes even OSU with REESER money, receive donations. UO is just better at it.
As any big donor will, yes, PK has influence. John writes about this influence regularly. But PK is NOT an owner with a profit motive. Again, comparing the relationship of a donor, yes even one as powerful as PK, to the impact private equity will have is just dumb. An owner with a profit motive is a totally different thing and is only being brought up here because Beaver fans continue to be butt hurt and refuse to face reality.
Which matters most, cause or effect? In this case, I submit that cause doesn't matter because the effect is the same. When PK or any spokesperson for major donors to a program, lifts the phone, the effect is the same. Heads roll or whatever.
It’s not ignorant if it’s true that Oregon coach Lanning has Nike stock shares options as part of his contract, and only eligible to strike them if he remains a certain XX of years as coach, as it’s rumored. This would also explain why Dan is rarely part of any new coach vacancy speculations.
You are ignorant if you don't think Phil Knight "owns" the University of Oregon. Go visit the campus sometime and see his name all over many buildings. "Donation" is a relative term, used for the purpose of reducing taxes. If it were anonymous donations that might be different, but it wasn't and isn't. PEs aren't going to "own" FBS football programs. They are taking a 15% stake, which is far from a controlling interest. Phil Knight has absolute control over UofO sports to the point he names the AD and makes sure the coach hires meet his approval (Dan Lanning)
PE ownership seeking profit is a totally different thing. Every university in the country is filled with buildings funded by donors, including OSU. It is part of the funding model. You don't understand ownership and PE if you think it is even comparable.
@Brian M, seems to me this is just a continuation of a Beaver fans obsession with Oregon and PK. Oregon and PK are not responsible for OSU losing to Sam Houston this year (along with a bunch of other embarrassing losses). If OSU would focus on building a competitive program rather than a constant obsession with what UO is doing they might be better off. The mindset you are putting out with this line of thinking is the reason the Beavers are where they are. Grasp reality, move on and work the problem.
This whole scenario is nearly beyond comprehension and is morphing into something that has nothing to do with how a college/university's mission statement reads! Perhaps it's time to take football away from college's and give it a new home somewhere else.
True.... I would say that ship has sailed. We have blogged about this before. The idea of amateur football with no money influence with the players is toast with recent court decisions and a toothless NCAA
The problem is you have a line of investment bankers who talk about 32 NFL franchises that are collectively worth over $200BN, and chancellors/presidents get stars in their eyes and lose their situational awareness. They didn't hand over control of their academic medical systems, and they need to exercise similar diligence on athletics.
Both in what you do - and don’t do - it’s evident you zealously have hewed to your vision for this enterprise. It’s why I’m invested in it — and in you, John. Love you for it.
Private equity is like water. It moves everywhere, fills every crack it finds, and is damned hard to remediate once it’s there. Nothing inherently bad about it; access to outside resources and (theoretically) the expertise accompanying it can be hugely beneficial - in the right environments and circumstances.
But you gotta know up front: private equity investors are in the game for one reason: profit. If the investment also benefits society, all the better. An investment that makes a positive impact but doesn’t make money? Nooooo. And if you about me, go take a look at the private equity plays that were followed by mass layoffs, wholesale cuts to operations, and in many cases, sell-offs. Those stories aren’t hard to find.
Putting private equity inside college sports? Oof. I can just imagine the conversations when an AD sits down with the “experts” deployed by the equity investors.
Can we see your budget?
Can we see your travel itineraries?
Can we see your NIL agreements?
Can we see your org charts?
Can we see your compensation agreements?
We just want to help you find “efficiencies” wherever we can. No desire to meddle in your business. You’re the experts. Trust us. We won’t interfere.
Uh huh.
I guarantee you: athletic departments accepting private equity will be hollowed out. HR? PR? Finance? Capital planning? Why can’t the campus cover that?
Gosh. Your season ticket plans are underpriced. Your sponsor agreements are too lean. Your concessions are too affordable. Why aren’t you selling alcohol? Why are you sending your athletes to road games a day early? Can’t they fly same day for a night game? Can’t they fly home on a red eye after a night game?
Each of the five colleges and universities I served had some bloat in their back office operations. (I was laid off from one job during a cost-containment kick. I know how it works.) But there never was confusion about the business we were in: supporting people who were delivering a public good. And the students. Always the students.
Well said. Large public universities already benefit from a lower cost of capital than virtually any private enterprise. Universities were some of the first limited partners in institutional PE/LBO funds going back to the late 70s and early 80s, and they've reaped huge returns along with substantial losses, at times. There's no reason why they should be looking to these outside profiteers who know less about the business of college athletics than anyone else in the room.
It won't end good with private equity. It's basically propping up this house of cards, pushing the can down the road to a later date of implosion. Utah just kicked off the beginning of the end. The system is now morally and ethically bankrupt. I'd run for the hills if private equity approached me and something tells me that is why Utah's coach had finally had enough.
This should end well. 😏Investment firms expect a positive ROI. Since most athletic departments lose money, what’s the attraction? Apparently there is one.🤔
A share of the TV revenue. A share of ticket sales. A share of merch sales. A share of commercials put on by NIL athletes. A share of licensing for anything branded w/ University logo. A share of travel packages (think Costco travel) for fans to attend CFP games. A share from Nike/Adidas/Under Armour for jerseys and other apparel worn by players and adorned w/ those companies logos. All revenue streams would be defined in a NewCo deal. But it’s only visible to the private parties.
My contention remains the same, these programs are losing money. Would be interesting to see the business plans as to how these investments will grow the athletic department’s pie enough to accomplish their ultimate goal. Win!!
Furthermore, this reminds me of the arms race axiom. Once one school does it, others will follow and the advantage is quickly neutralized.
If some PE firm just gave Utah $500MM I would almost guarantee it is based partially on current cash flows and not just projected cash flows. When these departments say that they "lose" money take it with a grain of salt. None publish segmented financial statements that break out athletic department revenues and expenses and all likely include significant payments from the department to the university for overhead etc. that is just random transfer pricing. Part of the problem I have giving the athletic department any more money is exactly because their financial reporting is completely opaque. One thing's for sure though, if PE gets involved, the fans and non revenue sports will get the shaft.
We'll know as soon as we see the amortization schedule on the debt. I'm gonna bet whatever it is ends up looking a lot more like a mezzanine deal than a bank loan.
Utah's is straight PE but you're right on the Big 12. Hopefully they just don't blow all the debt proceeds on ever increasing coaching, admin and player salaries or other items that produce no positive return. Good financial practices and athletic departments generally do not mix well...
Private equity or capital doesn't matter, this will be the final nail in educational systems with sports activities for students and alumni. Just another business looking to gouge customers, or in this case fans. John, glad you are keeping yours clean, a major reason I subscribe to you and not to $ driven rags.
John, I appreciate this clear explanation. So much happens that I don't understand everything. It's great to read your writing and walk away feeling a little bit smarter.
Excellent piece. Seattle has 15 Fortune 500 companies. I think the goal is to get them directly involved with the university and create relationships with the student athletes that will lead to NIL opportunities. If this can be done successfully on a large scale, it will help to keep private equity out of the university space which I think is the proper thing to do.
PE direct involvement will lead to opt out in bowl games (not worth the $ spend) and (potentially) pressure for injured talent to return to gridiron earlier than they should. The next stage in this is for players to be officially W-2 employees of the University (and no longer student-athletes). I wonder if there will be any rude awakenings for students already receiving NIL $ come April 15th.
Since when did a Fortune 500 company cease to be private equity? Are you saying that such companies exert no influence on the beneficiaries of their donations?
I love college football and worry that this will eventually lead to it’s demise.
I don't worry about college football going away I but I do worry about the non-revenue sports being cut to "reduce costs". Football is the money maker (and basketball to a lessor extent) but all other sports are money losers and private capital might be to loath to continue them.
Not that it can't be done, but the NCAA would have to change their requirements to be an FBS member. Universities must currently maintain and fund a minimum number of female and male sports. Of course, the NCAA could change or eliminate that requirement, or the P4 could leave the NCAA behind completely, but something would have to change.
Yes, for the big buck rev sports the NCAA has become irrelevant, which is why that organization can't control its conferences. All FBS programs that want to stay competitive need to leave the NCAA and set up the same as the NFL, with a players union that can negotiate for players and agree to rules that protect the game, like a draft, salary caps, a rev payout percentage (already underway with the rev-sharing program) and other requirements to maintain a competitive industry. The NFL has already gone through the learning curve. FBS is really just the feeder system to the NFL, like any other minor league affiliation that exists such as the NBA "G League" and minor leagues for the MLB
Roughly 1.6% of college football players make it to the NFL. How does that make FBS "...a feeder system to the NFL."?
Otherwise, I agree with you, especially with regards to a salary cap.
The key to the "Olympic" sports is a streaming subscription program through PAC12 Ent. They have to pay their own way. The football and basketball programs will need all the revenue they generate to stay competitive.
Why should "Olympic" sports have to "...pay their own way."? From time immemorial colleges have established competitive venues for such activities. What has changed? Why should track and field competitors, wrestlers, tennis players, etc., have to pay their own way?
Your probably right
PE hasn't led to the demise of healthcare, yet, but it's made the parts most impacted immeasurably worse. At first, only providers and administrators noticed. Now, patients are starting to feel the effects.
Universities didn't let PE into their academic health systems despite endless efforts, and it's sad that they aren't similarly vigilant about athletics.
Great post.
The irony of Private Equity is that most of academia is lothe to get involved with the notion of “greed” from PE. But then you look under the hood of the $93b PERs pension fund and its stuffed with plenty of PE funds to drive risk adjusted returns. Academia needs to look in the mirror….
Universities need to band together and demand more social responsibility from the general partners they invest in. That's true in other asset classes besides PE/LBO funds.
It's curious how the most vigorous opposition to PE tends to come from schools with PE principals on their governing boards, and a long history of investing in the PE/LBO asset class. There's a story there for some intrepid young reporter.
PE teachers are usually Vice Principals
Actually the school's coaches. And often not good at either.
Yeah , that's obvious but that doesn't really work as well as a play on the wording of the comment I replied to.
🤣
I'm not sure what you just said here will be appreciated or realized just how seriously F-ed up this whole thing is becoming. The minute these people get in, its like dealing with the devil himself. College athletics should not be entirely about money, the bottom line. It is much more diverse than that and just looking at short term to long term profit and loss does not fit this eco-system. But at this point, the powers that be have created a panic bubble and to keep up with the Jones' everyone feels like they need to do it, but there have been many who have made the deal with the devil who have regretted ever meeting "The Man" in the first place. Sad day indeed, but hardly surprising given the present circumstances. I'am very glad to be out of coaching now, it's simply someone's else's problem.
Ben, you are absolutely correct. Be that as it may, formalized athletic competition requires funding. I coached in Little League for many years. I know. It took money to provide playing fields, uniforms and equipment, officials to make that work. Without the funds, we would have been playing pickup games in the park and that's fine if that's what you want. The very first time anyone ever put on a uniform to participate in an athletic event, money was involved but it was not the driver. Today, sadly, it is.
The other thing that people who haven't lived with PE miss is that, compared to the companies PE typically pursues, college athletic departments/football programs are actually quite small. They are big BRANDS, to be sure, but even the largest only have around $200MM annual revenue, which is well below the median PE deal size.
That means they have to squeeze even harder to create the conditions for liquidity or exit, and the fees they charge are a disproportionate drag. The PE model was never about growth, it was about extracting value, and messaging to the contrary is just that.
Healthcare is a basic necessity. College football is a totally discretionary expense. It can go away and civilized society keeps going without skipping a beat.
Maybe it's time it does, and then reboots itself, because this craziness will wreck the whole entire collegiate athletic ecosystem.
Or, those responsible can choose to protect it. We do not have to surrender everything to the whims of the free market.
Actually, the free market's response, i.e., voting with our feet, may be the only thing that can protect it from the unbridled monetary arms race that is corrupting it. When the ROI is sufficiently reduced by a diminished market of un-satisfied consumers of the discretionary CFB commodity, the primary investors in that commodity will either alter their business model to regain and grow market share or drive it into the dirt while extracting as much money as possible from the dwindling diehard fans before its complete financial collapse.
Using your decision making power as a consumer is the opposite of surrender. It's no different than understanding you have the freedom and power to walk out of that car dealership when they're only offering an unreasonable deal.
What we have here is someone, Chuck, hitting the nail on the head.
Couldn't disagree with you more. As President Reagan memorably stated, "The most feared words in the English language are, 'I'm from the government and I'm here to help.'"
Well, Reagan was promoting his preferred ideology with that little bon mot. I don't subscribe to it, but you go ahead and enjoy it.
Who gave you permission to grant me the right to enjoy my "preferred ideology"?
Greed seems to have a gravitational pull on every thing.
I've never seen an industry constantly asking for money and then saying they're broke and then turning around and eating more and more and more. When I go to a concert they don't stop me at the door and ask me to pay more. It's a constant money grab and when does it end? I'm guessing the 40 million a year coach is not far behind as is the 100 million dollar a year player. When will College presidents put a stop to this madness? It wasn't a bad deal before maybe the players need a little bit more money okay so what. If they don't like a free education tell them to go play pro football then.
They have all lost their collective mind and are throwing out the baby with the bath water now
Classic quote!
FBS already IS a professional sports affiliation. To say otherwise is to ignore the facts on the ground
Greed is undefeated.
Indeed. Also, winless at times.
I beg to differ. The summary conclusion of noted historians Will and Ariel Durant, authors of the comprehensive 10 volume, "Story of Civilization" anthology, and its epilog, "The Lessons of History", is that Wealth always concentrates until either the few wealthy haves let enough trickle down to the increasingly disgruntled masses to pacify them, or the majority of the wealth is destroyed via revolution. There have been multiple iterations of this inexorable dynamic throughout history. Maybe you could ask Marie Antionette's severed head if greed always wins
I would love to ask her (it) but I'm too busy eating cake.
Finish up your cake. The King is ready for a bit of sport:
https://tinyurl.com/txfpyrav
Fantastically funny, many thanks!!!
"Greed" is more like people (athletes) being paid fairly for what they contribute to a university sports program. Why shouldn't the kids get paid if they have outstanding skills, the top 0.1% in America in their respective sport. People enjoy watching the games and are willing to pay to watch those games, both in person and in the media. It is an act of slavery for a university to capture the funds from the 365/24/7 efforts of players on their teams and not share those funds with them, many who's families are quite poor. The problem is not paying the kids and management of the sports program, it is that it currently is a free-for-all with no guardrails. That is what needs to change.
I enjoy watching the bands perform at half time. Shouldn't the band members be paid for their contribution to the spectacle? How about the students who participate in stage plays or concerts to which the schools sell tickets, shouldn't they be paid as well?
Thank you for this David.
That ship has sailed.
It already is in slo motion
Ditto, sir, ditto.
I loved college too and share your concerns, but teams can still be successful without PE, NIL etc, I saw it work yesterday during Navy’s close win over Army. With the Beaver’s dismal season, following Navy football kept me going. FYI, I began what turned out to be a 30+ year navy career at 17, after South Salem H.S, appointed to the Naval Academy, but because of weak math skills, was diverted their Prep school (NAPS), where I still failed to make the cut, and won the consolation prize, a 4 year NROTC scholarship at Oregon State, and got there just in time to watch, the “giant killer” beavers, led by Bill Enyart and team beat OJ’s Simpson in Corvallis.
The conference commissioners and ADs sold their souls to television many years ago. Now they're repeating the money-grubbing process with private equity firms. It's a trap. Those people are only interest in profits and exit strategies. I fear for the future of college athletics.
As for the Bald Faced Truth, thank you so much, John, for turning down investors and advertisers. Your space is sacred, and we all value it tremendously.
Agreed. The college programs, especially former P5 schools like OSU and WSU are used to spending lavishly (compared to the rest of their university) without worrying so much about efficiency.
When they get the infusion of money but all of a sudden have a 3rd wheel at all their meetings wanting to cut back on headcount and not fully understanding exactly what those expensive General Managers do, there is going to be lots of frustration. Especially when said third wheel reminds them he owns a chunk of their athletic department.
It's hard to believe that what started out as an extracurricular activity is now requiring tens of millions just to field a team, and much more than that for schools who want to field competitive teams. Texas Tech put out a blueprint on how to quickly put together a championship caliber roster, and it ain't cheap. And they actually had most of a pretty decent team coming back. Imagine the cost for teams in WSU and OSU's shape -- yikes.
That "third wheel" has always been there in the form of alums and others who exert serious pressure whether seated on the BOD or not. See Phil Knight.
Kind of, yes. But those third wheels generally care what's best for the school or athletic department. Equity third wheels care about efficiency and their money -- period.
ADs look at the class of retired ADs who are pushing this from their cushy consulting gigs, and say "I want to be in THAT club." Of course, you don't get admitted unless you prove you're willing to do business and create opportunities for guys who are already there. I'm sure we could play the name game.
Well said Gary, It's a huge bubble trap and I wonder where the payoffs begin and end...
It's called, "integrity."
Keep your sacred space John …it is precious..especially in the world we live in right now!
Thank you Jeanie. I got you.
Yes, good for you John, hold onto your space so you have total sway and say over what you choose to write and omit. Sacred space is important, otherwise your business becomes a JOB.
He is the finger on the pulse and he touches the ether once in a while too.
thanks Michael.
John… where is the update on Oregon state and Shephard’s assistants? Looking good. Lots of P2 assistants coming to OSU!! https://www.oregonlive.com/beavers/2025/12/oregon-state-set-to-fill-out-offensive-staff-with-successful-position-coaches.html
This is all going to collapse like a house of cards. Remember how financial institutions gobbled up mortgage-backed securities in the early 2000s, only for the whole system to collapse because the underlying assets (home loans) were too risky? Yeah, the same thing is about to happen here.
College athletics has thrived on being competitive, connected to its institutions and alumni, and in it for the love of the game and the rivalries. Those factors are what drove fans into the stands and to the screens. But these days, college athletics are a shell of what they used to be. Fans are losing interest, in large part because everything that made college athletics so great has been replaced with a bastardized, corporate version of minor league sports. And once the fan revenue falls, those firms that invested will be regretting their decisions.
But it gets worse: those athletic departments that took private equity deals will be stuck with an unhappy partner who doesn't understand the business. Whether or not those ADs can buy-back their equity from the PE firms will depend on how deep their pockets are and whether the equity firms want to cut their losses. But it'll be ugly either way.
We're about to witness a market crash of epic proportions in the next few years.
Agree, and I'm finding out that a lot of these people at the universities aren't very bright. I recall the Economics professor at the University of Utah way overvaluing the Pac-12 Conference and how much money they could get from ESPN. Not only was he bad, but the president of his institution and others high-fived him like he knew it he was doing. That dude needed to stay in his lane, which was some thick, boring Economics textbook and his equally boring lecture to his students. Yes, this will come crashing down, Maybe not today or tomorrow but it will collapse. We've seen this drill before.
There is no leverage used in college football. It was the leverage that took down the mortgage business and banks. Nothing is going to "take down" college football, so long as fans are willing to pay and watch.
And my point is that fans are already tuning out. Do you think a CFP that favors only two conferences will have the same viewership year after year as a CFP where every conference has a shot at solid representation? Do you think that Notre Dame throwing a hissy fit won't hurt CFP and bowl game viewership? Do you think that meaningless conferences that make no historical or geographic sense won't turn away fans at the margins? The entire model assumes *growth* among viewers. But every move they're making stands to lose even more viewers.
While your arguments are logical, so far the college football ratings are sky high. Time will tell if it stays that way.
You been reading my mail. bro.
Very well layed out Joe!!
1000% - This is simply bad business, but the real question is bad for WHOM?
This is my question. Who wins with this. Most of these institutions are public universities. Why are state governments allowing this. State legislatures need to step in and shut this down now. Salary caps for coaches and players. No PE period.
Because it's too unpopular for both political parties to regulate college sports. If you're a Republican, doing anything to "regulate" big business (e.g., the TV networks, major conferences, private equity) is antithetical to who you are. If you're a Democrat, spending time diving into the problems with college sports looks like you're not focused on the issues affecting real Americans, such as healthcare or the cost of living. So this very obvious problem is allowed to hide in plain sight because both parties have political disincentives to do anything about it. (And I'm saying this as a very hard-core Democrat, not as some "both parties are bad" cynic).
As a Cougar alumni, I will start off by saying I love my Cougs. With that in mind, "Private equity" is bad for Public schools. I can see private schools doing it, but as long as state legislatures have a voice in public schools, public schools should stay public investment and/or "Private capital" only. WSU and OSU, being public schools, should re-examine what their roles are. Instead of trying to stay at the same financial/competitive level as SEC, Big10 and Big-12 schools without the high-level media contracts and donors like Uncle Phil, WSU and OSU should accept that they are playing in a lower tier conference with only 2/3 star athletes, smaller stadiums, limited resources, geographical limitations, and target their programs accordingly. When they do, they can concentrate on what they do best - delivering quality education at a decent price point, at land grant universities. And their Athletic Departments can return to delivering fun entertainment without the constant harassment of alumni to donate, and the drive to keep up with the Jones.
Wouldn't it be ironic if OSU and WSU ended up with the more pure product in the end?
"....pure product," now there's an interesting concept.
"the more" being a key part of the sentence here, dear Louis. Of course, nothing is pure. Especially in football.
Great post, Steve.
Ultimately the fans will pay the toll for all of this.
And if they don't, their programs will sink like a stone. That's what PE changes.
How so? If the program does not compete effectively and does not draw viewers or media contracts it is the PEs that will lose, not the program. It is money that allows a program to be competitive. Without the money the program is what the Beavers or PSU were this year. Is non-competitive, losing football better because there is no money? You aren't even making sense
The Oregon Ducks have taken "Private Equity". It is in the form of Phil Knight's investments in Oregon sports, especially football. So this is not a new concept in the Pac NW. The difference is that PK does not care if he gets a financial return on his investment, though there is some implicit return in his company's (Nike's) very direct association with the Ducks. Most investors, even if they are alums, want some promised return before plugging several hundred million or a billion into a sports program, just as NFL owners do. Taking on a PE investor is just acknowledging the obvious.
This comment is ignorant. Private equity=ownership. Phil Knight DONATED his money. Zero ownership. Very, very big difference. Every school, yes even OSU with REESER money, receive donations. UO is just better at it.
If you believe Mr. Knight exerts no influence in Oregon athletic affairs, I have a bridge in which you might be interested.
As any big donor will, yes, PK has influence. John writes about this influence regularly. But PK is NOT an owner with a profit motive. Again, comparing the relationship of a donor, yes even one as powerful as PK, to the impact private equity will have is just dumb. An owner with a profit motive is a totally different thing and is only being brought up here because Beaver fans continue to be butt hurt and refuse to face reality.
Which matters most, cause or effect? In this case, I submit that cause doesn't matter because the effect is the same. When PK or any spokesperson for major donors to a program, lifts the phone, the effect is the same. Heads roll or whatever.
Again. A donors influence is not ownership.
You have lost the plot.
"The plot's the thing." Have I lost it? Many of my friends would agree.
It’s not ignorant if it’s true that Oregon coach Lanning has Nike stock shares options as part of his contract, and only eligible to strike them if he remains a certain XX of years as coach, as it’s rumored. This would also explain why Dan is rarely part of any new coach vacancy speculations.
You are ignorant if you don't think Phil Knight "owns" the University of Oregon. Go visit the campus sometime and see his name all over many buildings. "Donation" is a relative term, used for the purpose of reducing taxes. If it were anonymous donations that might be different, but it wasn't and isn't. PEs aren't going to "own" FBS football programs. They are taking a 15% stake, which is far from a controlling interest. Phil Knight has absolute control over UofO sports to the point he names the AD and makes sure the coach hires meet his approval (Dan Lanning)
PE ownership seeking profit is a totally different thing. Every university in the country is filled with buildings funded by donors, including OSU. It is part of the funding model. You don't understand ownership and PE if you think it is even comparable.
@Brian M, seems to me this is just a continuation of a Beaver fans obsession with Oregon and PK. Oregon and PK are not responsible for OSU losing to Sam Houston this year (along with a bunch of other embarrassing losses). If OSU would focus on building a competitive program rather than a constant obsession with what UO is doing they might be better off. The mindset you are putting out with this line of thinking is the reason the Beavers are where they are. Grasp reality, move on and work the problem.
UO is not “ better at it” !; UO just has “ MORE of it “!…
Nailed it, hit it right on the button hole! Well said!
Exactamente!!!!
I am afraid that the leadership at Oregon State University does not have the creativity to try something new and different, especially the AD Barnes.
This whole scenario is nearly beyond comprehension and is morphing into something that has nothing to do with how a college/university's mission statement reads! Perhaps it's time to take football away from college's and give it a new home somewhere else.
A good soldier is nor forgot whether he dies by musket or pot…
You mean like, gasp, the NFL?
True.... I would say that ship has sailed. We have blogged about this before. The idea of amateur football with no money influence with the players is toast with recent court decisions and a toothless NCAA
The problem is you have a line of investment bankers who talk about 32 NFL franchises that are collectively worth over $200BN, and chancellors/presidents get stars in their eyes and lose their situational awareness. They didn't hand over control of their academic medical systems, and they need to exercise similar diligence on athletics.
Both in what you do - and don’t do - it’s evident you zealously have hewed to your vision for this enterprise. It’s why I’m invested in it — and in you, John. Love you for it.
Private equity is like water. It moves everywhere, fills every crack it finds, and is damned hard to remediate once it’s there. Nothing inherently bad about it; access to outside resources and (theoretically) the expertise accompanying it can be hugely beneficial - in the right environments and circumstances.
But you gotta know up front: private equity investors are in the game for one reason: profit. If the investment also benefits society, all the better. An investment that makes a positive impact but doesn’t make money? Nooooo. And if you about me, go take a look at the private equity plays that were followed by mass layoffs, wholesale cuts to operations, and in many cases, sell-offs. Those stories aren’t hard to find.
Putting private equity inside college sports? Oof. I can just imagine the conversations when an AD sits down with the “experts” deployed by the equity investors.
Can we see your budget?
Can we see your travel itineraries?
Can we see your NIL agreements?
Can we see your org charts?
Can we see your compensation agreements?
We just want to help you find “efficiencies” wherever we can. No desire to meddle in your business. You’re the experts. Trust us. We won’t interfere.
Uh huh.
I guarantee you: athletic departments accepting private equity will be hollowed out. HR? PR? Finance? Capital planning? Why can’t the campus cover that?
Gosh. Your season ticket plans are underpriced. Your sponsor agreements are too lean. Your concessions are too affordable. Why aren’t you selling alcohol? Why are you sending your athletes to road games a day early? Can’t they fly same day for a night game? Can’t they fly home on a red eye after a night game?
Each of the five colleges and universities I served had some bloat in their back office operations. (I was laid off from one job during a cost-containment kick. I know how it works.) But there never was confusion about the business we were in: supporting people who were delivering a public good. And the students. Always the students.
University athletics and private equity? Nah.
Once the hands gets in the door watch out.
Excellent points.
You mean like the camel getting his nose into the tent?
Sorry, I had to say that.
So good, Barry.
Well said. Large public universities already benefit from a lower cost of capital than virtually any private enterprise. Universities were some of the first limited partners in institutional PE/LBO funds going back to the late 70s and early 80s, and they've reaped huge returns along with substantial losses, at times. There's no reason why they should be looking to these outside profiteers who know less about the business of college athletics than anyone else in the room.
They would indeed make all of those demands, and many more. But they wouldn’t apologize, defend, or claim not to interfere.
It won't end good with private equity. It's basically propping up this house of cards, pushing the can down the road to a later date of implosion. Utah just kicked off the beginning of the end. The system is now morally and ethically bankrupt. I'd run for the hills if private equity approached me and something tells me that is why Utah's coach had finally had enough.
Wait until the alumni find out their information has been given to a PE group. Hoo boy...
Oh boy
This should end well. 😏Investment firms expect a positive ROI. Since most athletic departments lose money, what’s the attraction? Apparently there is one.🤔
A share of the TV revenue. A share of ticket sales. A share of merch sales. A share of commercials put on by NIL athletes. A share of licensing for anything branded w/ University logo. A share of travel packages (think Costco travel) for fans to attend CFP games. A share from Nike/Adidas/Under Armour for jerseys and other apparel worn by players and adorned w/ those companies logos. All revenue streams would be defined in a NewCo deal. But it’s only visible to the private parties.
My contention remains the same, these programs are losing money. Would be interesting to see the business plans as to how these investments will grow the athletic department’s pie enough to accomplish their ultimate goal. Win!!
Furthermore, this reminds me of the arms race axiom. Once one school does it, others will follow and the advantage is quickly neutralized.
There lies the problem. When the ultimate goal is to win rather than provide a platform for competition the seeds of destruction have been sewn.
Yes that’s what’s missing in these discussions.
Common sense?
If some PE firm just gave Utah $500MM I would almost guarantee it is based partially on current cash flows and not just projected cash flows. When these departments say that they "lose" money take it with a grain of salt. None publish segmented financial statements that break out athletic department revenues and expenses and all likely include significant payments from the department to the university for overhead etc. that is just random transfer pricing. Part of the problem I have giving the athletic department any more money is exactly because their financial reporting is completely opaque. One thing's for sure though, if PE gets involved, the fans and non revenue sports will get the shaft.
We'll know as soon as we see the amortization schedule on the debt. I'm gonna bet whatever it is ends up looking a lot more like a mezzanine deal than a bank loan.
My accountant has never mentioned a "mezzanine deal" to me. What am I missing?
Utah's is straight PE but you're right on the Big 12. Hopefully they just don't blow all the debt proceeds on ever increasing coaching, admin and player salaries or other items that produce no positive return. Good financial practices and athletic departments generally do not mix well...
Private equity or capital doesn't matter, this will be the final nail in educational systems with sports activities for students and alumni. Just another business looking to gouge customers, or in this case fans. John, glad you are keeping yours clean, a major reason I subscribe to you and not to $ driven rags.
Why "gouge." No one is twisting your arm to buy a ticket.
John, I appreciate this clear explanation. So much happens that I don't understand everything. It's great to read your writing and walk away feeling a little bit smarter.
Sometimes, I don't understand. I keep asking, tho. Thank you Ken.
That is key, keep asking.
I was looked at suspiciously once, at a firm, because I asked questions at the quarterly "all hands"!
Excellent piece. Seattle has 15 Fortune 500 companies. I think the goal is to get them directly involved with the university and create relationships with the student athletes that will lead to NIL opportunities. If this can be done successfully on a large scale, it will help to keep private equity out of the university space which I think is the proper thing to do.
PE direct involvement will lead to opt out in bowl games (not worth the $ spend) and (potentially) pressure for injured talent to return to gridiron earlier than they should. The next stage in this is for players to be officially W-2 employees of the University (and no longer student-athletes). I wonder if there will be any rude awakenings for students already receiving NIL $ come April 15th.
Yes
Most of those Fortune 500 companies in Seattle are run by people who did not go to UW and are far more likely to support the schools they attended.
Yeah, if you can keep those 15 firms in Washington. A big if these days as Democrats in the state get increasingly desperate for revenue.
So true…. The last 41 years of having a Democrat in the Governor’s Mansion has been a total disaster. Oh - maybe not.
Since when did a Fortune 500 company cease to be private equity? Are you saying that such companies exert no influence on the beneficiaries of their donations?