NFL feeding itself to the sharks (Private Equity)

[SoCal Deek]

9 hours ago, paulmm3 said:

Meh. I worked in private equity for a year. It's literally just people with money thinking about how to turn it into more money. Don't see much wrong with that

In general you’re correct, but in an ‘industry’ like professional football that doesn’t operate under the standard competitive free market competition that acts as the check and balance in other industries it might prove to be a serious problem. For example, if a team doesn’t need to win to collect the shared television revenue then where’s the incentive to a soulless private equity firm? Just cut players and front office salaries and fly under the cap radar. 

[without a drought]

Get back to me when they allow a controlling interest in teams. Until then I'll let everyone else go on with the gloom and doom takes.

 

 

[Mr. WEO]

19 hours ago, PromoTheRobot said:

NFL teams aren't that profitable, at least not to the level most venture capitalists look for. But they increase in value rapidly. So you won't see that big payoff until a team sells. Do I have that right?

The camel's nose is slipping into the tent.

 

 

their profits are massive every year.

 

 

19 hours ago, T.E. said:

Honest question - what about the NFL now is objectively better than it was in the pre-Goodell era?

 

what has this to do with Goodell??  He's not the one ***** out bits of NFL teams.  That would be Terry, and Jerry and the rest.

 

your question is why Goodell gets $40 million a year.

[frostbitmic]

20 hours ago, Lost said:

Super Bowl LXII

 

Blackrock Bills vs. Vanguard 49ers

Bummer, I'd have to root for the 49ers ... What's good for Vanguard is good for me.

[In Summary]

From Fortune.com,

 

"The NFL still had some restrictions, only allowing investments from a select group of investors. The pre-approved firms include Arctos Partners, Ares Management Corporation, Sixth Street, Blackstone, Carlyle, CVC Capital Partners, Dynasty Equity, and Ludis, which is an investment company run by former NFL player Curtis Martin."

[ColoradoBills]

Blue Horseshoe loves Anacott Steel.

[RoyBatty is alive]

20 hours ago, DrDawkinstein said:

 

Not fear. Hate. Hate for private equity firms that are a cancer on the world.

 

All they do is put people out of work, kill small business and competition, and drive up costs.

 

Housing, the trades (plumbers, electricians, etc), veterinarians, dentists, hospitals, even ***** renaissance fairs. All are being bought out, to the tune of billions a year, by private equity looking to suck the life and profit out of these entities before they dump the asset.

 

Of course there is some hyperbole in the thread about the NFL because the owners may be greedy but I dont see them losing their teams either. But letting these vultures in the door wont lead to anything being better for us fans.

"Not fear.  Hate.  "are a cancer on the world".  Wont waste more time reading more of your hysteria.

 

Underscore my point  fear and ignorance.  Trying to have a rational conversation with you on this matter is fruitless.

[Simon]

Just now, RoyBatty is alive said:

"Not fear.  Hate.  "are a cancer on the world".  Wont waste more time reading more of your hysteria.

 

Underscore my point  fear and ignorance.  Trying to have a rational conversation with you on this matter is fruitless.

 

Good to know we have a venture capitalist on board 

[RousseauRage]

22 hours ago, T.E. said:

Honest question - what about the NFL now is objectively better than it was in the pre-Goodell era?

The players and therefore the game. 

[Jauronimo]

I understand that private equity, Blackrock, and our financial system in general represents the boogey man for many people but in my experience of providing services for many a PE deal I see quite a few transactions where the target is a company with serious growth potential in need of the access to capital and stewardship from a PE partner to take things to the next level. 

 

Of course I also see the deals where PE buys a floundering company.  Usually the first to get fired are the old management team.  These are companies that are usually dead men walking.  The idea of corporate raiders enacting hostile takeovers and scrapping healthy companies for parts is highly inconsistent with my nearly 20 years of transaction services.  

 

Can't do much raiding with a minority stake in an entity where pretty much any major decision requires the approval of 31 other owners.  This is all about owners giving themselves an opportunity to de-risk the fact that a majority of their wealth is tied up in a franchise and get an infusion of cash when needed.  

 

 

Edited August 30 by Jauronimo

[corta765]

I have felt this way for a bit that the NFL is nearing a cliff where the fans will start saying enough either out of frustration or cost or both.

 

Ever since the NFL approved the Rams to move out of St Louis specifically the priorities of the league v fanbase were crystal clear that $ over anything. To recap the Rams fanbase in St Louis did everything required, the city did also, and the city approved a new stadium that the Rams had signed off on. The league allowed Kroenke to get off on a technicality regards to the improvement of the Dome, but league bi-laws state that a franchise must work in good faith with the city they are in before exploring moving and only if the city is not working with a true option to stay can you leave. There is a reason the courts keep hammering the NFL/Rams in court and awarding money back to St. Louis in a settlement of $519 million, the league broke its own rules to get the Rams to LA. The Raiders actually had a joint stadium with the Chargers set to go, but Kroenkes stadium was too much to miss and the league did what it did.

 

To me this jaded me in the sense of no team really ever was outside of the grasp of moving if the $ was that great. The NFL would move Green Bay if they could history and fans be damned.

 

This has continued in all avenues across the board where SB tickets are impossible for casual fans, the stadiums themselves are becoming corporate love fests, and streaming wise they are now working to monetize that. Prior league commissioners understood that they were stewards to the game and long term health of the league and the fans had to come first in some regard. I cannot see how a private equity firm which sole goal is more money will do anything but make the experience worse and more expensive.

[NoSaint]

23 hours ago, T.E. said:

Honest question - what about the NFL now is objectively better than it was in the pre-Goodell era?

ownership profitability!

 

jokes aside- I think there’s a lot of mixed bag items in safety, fan accessibility, home viewing experience where there are ups and downs in the categories from the fan perspective. 

[Malazan]

Team revenues grow around 4-6% annually. Team sale prices are increasing by a lot more than that annually (~20%). Owners weren't gonna wait until they sell their teams to get a piece of that.

[Lost]

26 minutes ago, Jauronimo said:

I understand that private equity, Blackrock, and our financial system in general represents the boogey man for many people but in my experience of providing services for many a PE deal I see quite a few transactions where the target is a company with serious growth potential in need of the access to capital and stewardship from a PE partner to take things to the next level. 

 

 

Yeah growth potential and access to PE money is good for the company and financials but less good for the consumer.   Either prices escalate and/or quality deteriorates.   

[first_and_ten]

 

So what does the private equity firm get out of this deal? 

 

-GPs(general partners) typically receive 20% of the profit after the hurdle rate is reached. Carried interest is taxed at a lower rate than regular income. 

 

-they measure their performance by how much cash they put into a deal and how much cash they get out. They prefer to use debt rather than cash, and like to put as little cash in as possible

 

-they are organized as private partnerships, so they don't pay corporate tax on capital gains from selling businesses. 

 

-Dividend recaps : a type of leveraged recapitalization that involves the issuing of new debt by a private company, that is later used to pay a special dividend to shareholders

 

Moreover, private equity firms can take out additional loans through their leveraged companies to pay dividends to themselves and their investors, and the companies are on the hook for those loans too. The share of profits private equity managers earn, carried interest, gets special tax treatment, and is taxed at a lower rate than regular income.

 

The controversy surrounding private equity is that whatever happens to the company acquired, private equity makes money anyway. Firms generally have a 2-20 fee structure, which means they get a 2 percent management fee from their investors and then a 20 percent performance fee on the money they make from their deals.Basically, if an investment goes well, they get 20 percent of that. But regardless of what happens, they get 2 percent of the money they’re managing altogether, which is a lot. According to data from consultancy firm McKinsey, the global private equity industry’s asset value has grown to nearly $6 trillion.

Edited August 30 by first_and_ten

[DrDawkinstein]

3 hours ago, Simon said:

 

Good to know we have a venture capitalist on board 

 

Bootlickin for the billionaires as they put Americans out of work.

[SoCal Deek]

3 hours ago, Jauronimo said:

I understand that private equity, Blackrock, and our financial system in general represents the boogey man for many people but in my experience of providing services for many a PE deal I see quite a few transactions where the target is a company with serious growth potential in need of the access to capital and stewardship from a PE partner to take things to the next level. 

 

Of course I also see the deals where PE buys a floundering company.  Usually the first to get fired are the old management team.  These are companies that are usually dead men walking.  The idea of corporate raiders enacting hostile takeovers and scrapping healthy companies for parts is highly inconsistent with my nearly 20 years of transaction services.  

 

Can't do much raiding with a minority stake in an entity where pretty much any major decision requires the approval of 31 other owners.  This is all about owners giving themselves an opportunity to de-risk the fact that a majority of their wealth is tied up in a franchise and get an infusion of cash when needed.  

 

 

Understood....but see my post above. The NFL is not like other industries. Where's the growth potential for the Buffalo Bills? The team is essentially a branch office  of a larger league. They are not allowed to 'grow' into Cleveland for example. The better analogy might be if a PE firm bought into a single branch office of a large accounting firm. That branch isn't allowed to 'grow' into the sales/client territory of a neighboring branch, nor would they be allowed to set off on a new marketing or branding strategy.

[stuvian]

Coaches to be replaced by AI

[HOUSE]

Be prepared for the "I own the Bills" threads

 

[WhitewalkerInPhilly]

Oof. Private equity is the equivalent of the  Richard Gere in Pretty Woman/Gordan Gecko 80s stereotype of running the companies they get a stake in to the proverbial chop shop.

 

Remember Red Lobster a few months ago? They got acquired by private equity who sold the real estate their locations were built on from under them. They will have the companies they bought take on debt to purchase assets the firm can flip for a profit and then leave the company they used to borrow against out to dry

 

And the owners were ok with this?!?