As someone who has worked in PE, specifically for a firm that has bid against CVC on sport assets, I was quite curious about this episode. I do think it missed several parts that are (likely, though unconfirmed) parts of the investment thesis.
Obviously, to Doomberg’s point, CFB Assets are undervalued on a revenue multiple basis. But, mos…
As someone who has worked in PE, specifically for a firm that has bid against CVC on sport assets, I was quite curious about this episode. I do think it missed several parts that are (likely, though unconfirmed) parts of the investment thesis.
Obviously, to Doomberg’s point, CFB Assets are undervalued on a revenue multiple basis. But, most importantly, CFB is a fractured industry with a lot of the upside on top & bottom line that it implies.
On the topline portion, CFB lacks the weight to be able to negotiate TV deals in their favor. Compare the NFL deals, with their auctions for multiple assets to drive competition, vs. the ACC multi-decade agreement without even an inflation rachet. Conferences and programs are unsophisticated and get taken advantage of by the major TV networks. PE, by creating cross conference tranches of cooperation can provide leverage over top line.
On the bottomline portion, the cost savings will not be on the players – these are the core assets of the product that cannot be substituted, to Doomberg’s point you will likely see more investment in this cost line. Where the cuts and savings will come will be mostly admin staff. Does every school need an NIL coordinator? Does every school need a roster management specialist? Does every school need a swimming coordinator? Ultimately, the idea will be to centralized the back office functions into one centralized pool, get the benefits of scale and build verticalized software to do most of the work, establish best practices etc.
The one interesting point of discussion is how they will ultimately structure the investments. The firms will want a senior/secured asset that has significant liquidation value to justify the investment. However, the way CFB is set up it’s usually done through shells (university owns the real estate, not the athletic department). I assume they will have to shuffle these around to provide the downside security necessary.
As someone who has worked in PE, specifically for a firm that has bid against CVC on sport assets, I was quite curious about this episode. I do think it missed several parts that are (likely, though unconfirmed) parts of the investment thesis.
Obviously, to Doomberg’s point, CFB Assets are undervalued on a revenue multiple basis. But, most importantly, CFB is a fractured industry with a lot of the upside on top & bottom line that it implies.
On the topline portion, CFB lacks the weight to be able to negotiate TV deals in their favor. Compare the NFL deals, with their auctions for multiple assets to drive competition, vs. the ACC multi-decade agreement without even an inflation rachet. Conferences and programs are unsophisticated and get taken advantage of by the major TV networks. PE, by creating cross conference tranches of cooperation can provide leverage over top line.
On the bottomline portion, the cost savings will not be on the players – these are the core assets of the product that cannot be substituted, to Doomberg’s point you will likely see more investment in this cost line. Where the cuts and savings will come will be mostly admin staff. Does every school need an NIL coordinator? Does every school need a roster management specialist? Does every school need a swimming coordinator? Ultimately, the idea will be to centralized the back office functions into one centralized pool, get the benefits of scale and build verticalized software to do most of the work, establish best practices etc.
The one interesting point of discussion is how they will ultimately structure the investments. The firms will want a senior/secured asset that has significant liquidation value to justify the investment. However, the way CFB is set up it’s usually done through shells (university owns the real estate, not the athletic department). I assume they will have to shuffle these around to provide the downside security necessary.