This news has sort of gotten buried under the semi-finals avalanche, but it’s definitely something to marvel over:
Want to own a piece of a major college football conference?
There may be one for sale shortly.
Pac-12 Conference leadership pitched university presidents and chancellors a strategic plan aimed at bailing out the struggling conference and helping it keep pace with its Power Five Conference peers.
The “Pac-12 NewCo” plan was introduced to the conference presidents and chancellors at their mid-November meeting and was subsequently discussed in a conference call in December, per sources. Private investors would own 10 percent equity in the newly formed entity in exchange for a $500 million investment.
A six-page document obtained by The Oregonian/OregonLive outlines the plan presented by conference commissioner Larry Scott to his bosses during the November meeting of the “Pac-12 CEO Group.”
The document outlines the conference’s current lagging media rights projections and introduces an ambitious plan that involves taking on a strategic private investor.
Sure, this is schools weighing a proposal to sell a piece of a collegiate athletic conference to an outside investor, but it hardly poses an existential threat to the nature of college sports the way a kid sitting out a bowl game to prep for the NFL draft does, amirite?
Larry Scott, genius.
Get The Picture 
PAC12 struggling? How is it hard to get kids to play games for free and get a good education at these schools? WashSt is nothing to write home about, and maybe Utah (don’t @me), but there are compelling reasons to attend the other schools. Great campuses, coeds that rival the SEC, they’re all research schools. I don’t get it.
LikeLike
I think Larry Scott must have been Bill Lumbergh in a past life. It appears he’s banking on potential investors being attracted by the prospect of a fat new TV deal in a few years. But if the Pac-12 keeps getting eliminated from the playoff conversation by Halloween every year, that golden egg won’t be nearly as fat as he’s hoping for.
But this is all emblematic of corporate America in the 21st century—focus on branding, on “synergies,” on creative accounting, on “maximizing shareholder value,” anything except making the product any better.
LikeLiked by 1 person
I’m trying to figure out how much of a market there is out there for someone to hand over half a billion bucks and say, “sure, Larry, just keep doing what you’ve been doing, works for us”.
LikeLike
Exactly right Senator. Also, no one invest in a company that is not considered a money making business. How can it be an amatuer organization while the goal is to make money for it’s investors?
LikeLike
Forgetting all the other things that are so wrong with this, would you invest in Larry Scott? If this were to happen, you are turning over 1/2 a billion dollars to a man who has shows no aptitude for the job. We see things in business all the time that make absolutely no sense, so don’t bet against this happening.
LikeLike
I wouldn’t invest in Larry Scott, but you’re missing the point here. The Pac-12 is pondering a proposal to sell a piece of itself to outside investors. Whether or not a market exists, that the conference is even considering the possibility is a massive statement about how far afield the business of college sports has gotten.
LikeLike
No, not missing the point at all which is why I said “Forgetting all the other things that are so wrong with this”. The thought of a conference selling itself is “Alice through the looking glass crazy” or is it? Has CFB already de facto sold it’s soul to ESPN? My comment on Larry Scott was looking at it from the investors side. Even if it was the right thing to do (it is not), would you get into bed with Larry Scott?
LikeLike
Studied the charts in the article some and come away with these impressions of the proposal:
NewCo would be a separate for profit entity controlling the sale of media rights and merchandising, 90% controlled by the conference.
At an average of $400mm of projected gross revenue over the next several years, that $5B valuation is better than a 12x multiple. Maybe an NFL franchise can earn that, but I don’t see private equity going for it unless alumni motivated. Anyone think Mark Cuban would take this deal?
Then initial $500m investment is immediately distributed to the member schools. The formula for this is not stated, but the comparison was to the SEC media payments of $41m to each school this year so presumption is they would be equal. Would PE agree to that? What does the money go for? Can Cal raid the bounty to build student “safe zones of modern thinking” while USC adds skyboxes to the Coliseum? Does Phil Knight lose control over Oregon uniforms?
This proposal is crazy but worth watching. I could see the SEC again taking the lead on creating a NewCo for media rights and then going public with it to get the capital to gobble up other media sports rights. Mickey best beware!
LikeLike
I’d love to see another example of a private equity firm taking a stake in a tax exempt organization.
LikeLike
The playoff system is sending college football into shambles much quicker than I thought it would. There’s a reason the meteoric rise of CFB happened under the BCS. Not only did it legitemize a national champion, it provided automatic legitimacy to the big conferences through the BCS Bowls. Now that all that is gone, you’re seeing “nothing matter” other than making the playoffs, the inevitable expansion due to that attitude, and the end of high regular season ratings. Those billions-dollar contracts will prove to he poor investments.
LikeLiked by 1 person
Does that put the value of the pac-12 @ 50 billion?
I guess it depends on where you cut that 10% from. But if it is 10% of the same pie that the schools are eating from, that means that the private money would be getting a larger portion of the pie than the schools.
I guess it will be interesting to see exactly how much damage this can do to a school like Utah.
Silicon Valley private equity bankrupts state of Utah with debt after pac12 NewCo(ke) files for bankruptcy.
LikeLike
CFB is getting so far away from the original mission/model that IMHO we ought to just blow it all up and start over.
LikeLike
I’m starting to agree, Mayor.
LikeLike
Isn’t this the storyline for the next season of “Ballers”? Does Larry really think a PE firm will cough up $500mm and just sit back and let him run things? First day a young Wall St. kid will strut into his office and announce he is now in charge of the finances, reporting back to his cabal in NYC. 6 months later talks of an IPO will commence. PE won’t stick around to “build programs”, they’ll focus on one (likely USC) and pour money in to compete with the Bama brand until it’s time to flip their shares. This is so bad on so many levels I can’t organize the snark fast enough.
LikeLike
College football, it is changing. And in my opinion, not for the better.
Free agency and official replays done ruint the game and now they gonna have investors. Can’t wait for the salary negotiations to start.
LikeLike
How in the Sam Hill am I supposed to get my return on investment from nonprofit institutions?
LikeLike
First thing I’d do as an investor is fire Larry Scott.
LikeLike
They’ve somehow managed to come up with an investment worse than Hartman Fund points.
LikeLike
In my view the Pac-12 has a conundrum. If they schedule games at times their fans can consistently attend them the TV networks aren’t happy. If the networks schedule as they want the fans aren’t going to consistently show up. Because of the time difference the Western games will never garner the TV viewers and thus revenue the Eastern and Midwestern games do.If UCLA and USC were competitive again it would certainly help but they don’t look like they are headed in the right direction. If I were Larry Scott I would be much more focused on encouraging the schools to take the necessary steps to be competitive than selling 10% of the conference for a short term infusion of cash that will only leave the conference in the same shape and add to that a number of angry investors.
LikeLike
So, they already have vice presidents with zero officiating experience dictating replay decisions. You know, for the good of the game.
Now they want to invite in outside money. Which is going to bring all sorts of odd entanglements and yet more layers of opaque, behind-the-scenes influences tugging in competing directions.
A massive competitive scandal is brewing in college sports, and its epicenter is going to be the P12.
LikeLike
Agree with the Mayor also
LikeLike
I can see the AD’s at each school going to the alumni hat in hand asking for more donations so they can satisfy the investors need to get a return on their investment.
LikeLike
I would short that shot in a New York minute. Notre Dame should pay close attention here.
LikeLike