Speaker 1: Stats.
Speaker 2: Let's talk about stats.
Speaker 1: Ben Kreval and his team of former players and insiders
give you the latest stats, data and analytics that are
trending in the world of Cougar sports stats.
Speaker 3: Welcome back to your sports one of three nine ninety
eight point three ESB and the fan. I've been truital
broadcasting from our Banterwealth Studios Banterwealth dot com. Get on
a free Q and A no obligation to invest Q
and A with our tax smart wealth advisors today. And
we have our tax mot wealth advisor on the line
right now. He's NFLPA certified financial planner, Blaine Anderson, to
discuss private equity in sports.
Speaker 4: Blaine, how the heck are you?
Speaker 5: I'm doing good. This is a big topic.
Speaker 1: Ben.
Speaker 5: Happy to join you and be on the show today.
Speaker 4: Thank you, Thank yah Man.
Speaker 3: I want to lean into your expertise and your knowledge.
We've been very, you know, kind of hesitant to go
all in on on private equity and sports. It's been
a bit of a hissing of I word for many
that appine on this within the media, sometimes within fan base.
Is Private equity has been flirting with athletic departments for
a while now, and athletic departments have been flirtatious with them.
University of Utah the first to jump into this and
decide that this is for them. Private equity is obviously pointed,
but both both professional and now college athletics now, so
help us understand why investors are so attracted to this
space right now?
Speaker 2: Well, as you mentioned, Utah became the first university to
formalize what schools across the country have been evaluating for
really at least for the past two years. And someone
was going to take the first step, and Utah decided
that waiting.
Speaker 5: Was riskier than acting.
Speaker 2: And so here we are the first introduction to private
equity within college sports. I can say I've been seeing
it on the professional level. We've had funds present their
funds to us, and vander does a lot in the
private space, so this area is not foreign to us,
the private equity and the private investments. To answer your question,
private equity has taken over a lot of industries. We're
all seeing it, whether it's real estate, even land. We're
finding a lot of farmers private equity coming in buying
a lot of land. But the thing about private equity is,
as we know, they're not looking for five percent returns.
They typically target mid teens to twenty percent annual returns
with two to five times multiples over seven to ten years.
That's why a deal like Utah's has real estate or
has real expectations tied to revenue growth. And that's why
private equity and investors they're in it to win, and
they're going to look to drive up that return on investment.
It's usually twenty plus percent that they expect.
Speaker 3: Yeah, so there's a certain number that they're going to
get right off the top, it seems right. They're going
to take the revenue right at the top of Hey,
this is ours for this investment.
Speaker 4: Correct.
Speaker 2: Yes, oftentimes there's going to be a capital infusion. My
understanding is that this this deal here to start. Is
it five hundred million dollars?
Speaker 4: Yeah, pretty crazy.
Speaker 3: They're also inviting donors to have an equity stake in
it as well. I think that's I don't know if
that's been a part of all of these private equity deals,
but they're inviting donors to have.
Speaker 4: Ownership.
Speaker 3: It used to be as me, you know, tax deduction, right,
tax deduction we're talking about at the end of the year,
you're looking for tax deductions. You got a few million
in the bank, You're like, oh, well, I'll give it
to the university that I love, the athletic department that
I love, and you get the tax deduction. How does
it work if you're a donor and you put that
money as an investment, as an equity stakeholder in this
new Utah Rands LLC. I know I'm gonna, you know,
kind of throwing one at you here, but I wonder
what that would be.
Speaker 2: Well, the comparison I can give is with a fund
that we've been working with in professional sports. So this
is for private equity, and there's a number of professional
teams that many of our listeners, even the Yankees, the
San Francisco Giants, the Las Vegas Athletics, These are all
teams that have opened up minority stakes in their club
for investors to come in. And so investors usually come
in with investments as.
Speaker 5: Low as one hundred thousand dollars.
Speaker 2: They have an expectation usually around fifteen to even twenty
five percent per year return. The life cycles are often
seven to ten years. And what I'm seeing on the
professional level and with some of the funds that we've
been presented, is that these teams are looking to expand
more than just the game itself. They're getting into the
real estate around the stadium. They're getting into the hotels,
the hospitality, they're getting into the marketing. Of course we
know about the media contracts, but the restaurants, all of
the shopping around the stadiums. It's becoming much more than
just the game itself. And they want to open up
pieces of the business ownership of the company and the
teams usually in five ten percent, but to investors so
that they can make an investment with an expectation for
a return on that investment. And there's some tax implications
and benefits, but really it's more about that return on investment,
their expectation to get a cash return for their initial investment.
Speaker 3: Yeah, it's an interesting foray, no doubt about it.
Speaker 4: And so you know you taught.
Speaker 3: Is this the first program to jump into, the first
domino to fall?
Speaker 4: Why do you think they move first in all of
this mess?
Speaker 5: Well, really, if as I think about it, there's a
couple of things.
Speaker 2: But when we look at it from a national scale,
the big twelve schools are tens of millions of.
Speaker 5: Dollars behind the sec behind the Big.
Speaker 2: Ten and annual revenue.
Speaker 5: We know that the new cost for.
Speaker 2: The media rights and the revenue shares about twenty and
a half million dollars a year. Utah mentions that they
refuse to raise student fees, cut sports, cut academic research programs,
and that the status quo jeopardize their future. And so
there's a few nuances things that I've read about this
deal that i'll mention here in just a minute that
I think give them some outs. But now they're wanting
to maximize efficiencies from a business standpoint, from a private
equity standpoint on ticketing, events, sponsorships, inil distribution. So they're
definitely commercializing that side even more, looking to enhance the
efficiencies of the business. Ultra Capital, which is the PE partner,
now owns a minority stake in the business. UTAH owns
most of it, and they still control athletics, whether it's coaches, scheduling,
who gets the Nile, etc. But I'm confident that it's
a to raise the bar within the conference but also
to improve their positioning across the country as a team,
and money and expanded resources are going to drive that.
There's some risk to it, but I see the reward.
Speaker 3: What does this process look like? How does the deal
actually work? Utah had to essentially create a new company
and separate their football program from their ad How does
that actually work?
Speaker 2: Yeah, from what I've seen, this is a test case
really for the entire country. It's a first of its
kind partnership. Universities nationwide have been exploring this, and there's
been a few in particular, I know the Big twelve
considered this with a PE. The Big Ten almost did
a multi billion dollar deal with UC Investments. Kentucky and
Clemson haveablished internal companies for athletic business operations. From what
I've seen and read, they have essentially sold out a
portion of the athletic department to a private equity group
who will now manage the business operations. And there is
one piece that I read to this that I found
very interesting, and that's that Utah can buy backtro is
the name of the PE group Ultra Capital stake in
the future, and so I think that does leave them a.
Speaker 5: Good option.
Speaker 2: To still have some control. But they've established a board,
a seven person board. It'll have four Utah reps, two
Ultra Capital reps, and then one university supporter or investor,
and they'll run it even more.
Speaker 5: So like a business.
Speaker 2: And with that, it's a for profit business, so I'm
sure there'll be some trickle down effects to us as fans,
but definitely the idea is bring in more money, maximize efficiencies,
and expand their operation.
Speaker 3: Crazy times, no doubt about it. What kind of returns
do you think these private equity firms expect, right, I
mean you talked about a few numbers here, like what
are they looking at as far as an ROI for
their private equity stakeholders.
Speaker 2: Well, most private equity funds target around fifteen to twenty
five percent net internal rate of return and that's a
two to five times multiple, so doubling or even five
times multiple on invested capital over a seven to ten
year period. So these are higher risk, higher return opportunities.
They're not entering polished sports to simply stabilize. They expect
significant commercial growth and that's why U task business operations, ticketing, sponsorships,
and il concessions will be run with professional revenue focus
toency And to answer your question, I would say they're
in it for at least twenty percent of year is
what I would expect that investors want to see with
their investments.
Speaker 3: I mean when you compare that to other investments, twenty percent,
I mean that's hard to hit that that mark twenty percent.
You talk to any investor, you say twenty percent return
on your money, they tell you there's no way, Like
that's too good to be true.
Speaker 2: Well, absolutely, and private equity is known for being the
type investment going for a triple or even a home run.
There's higher risk, there's higher reward. And I'm just speaking
in general when I talk about those returns. I don't
know about this one specifically, but I do know private
equity funds target fifteen to twenty five percent, and you're right,
those aren't higher risk, higher returns. But maybe some of
the people will be doing it also because they can
support a program where they can support and entertainment that
they like. We all know that we as a society
are the ones that push a lot of this. I
mean it's we make memories together, we enjoy going to
the games. There may be some I don't know if
you call it altruistic, but maybe just some internal motivations
for some investors to support the program.
Speaker 5: But instead of.
Speaker 2: Just going after a text right off now they can
do it with an expectation for a return on investment.
I don't know how much of this will be opened
up to everyday investors. I know, even the fund that
we work with is pretty limited, so I don't know
how much of that will be shared or displayed. But
I'll be following it closely and interested to see.
Speaker 3: Very intriguing private equity getting into collegiate athletics and right
here in the great state of Utah. You've talked a
little bit about how players have felt underpaid for years.
Right You've been involved in life five years with the
student athletes representing these football players, basketball players. What is
that feeling that you've gotten from them, Like, how underpaid
have they been?
Speaker 4: Do you feel well?
Speaker 2: And that's why, just me personally, with my own perspective,
I have been somewhat conflicted on this because I remember,
even pre in IL, I remember players being mobbed for
autographs and interviews and then going back to extremely modest
living situations and conditions.
Speaker 5: And then I did feel like in IL finally gave athletes.
Speaker 2: As a share of the value that they create, the
entertainment that they provide all of us, but the cost
of doing what's fair created financial pressure that has led
to deals like this where now it's swamm back the
other way. And I've always preferred college sports over professionals,
so to me, this is definitely a step more towards
professional It's certainly seems right and fair for the players,
especially coming from where they did pre nil, but that
pendulum is swinging, and it's swinging hard back the other way.
And this is a huge step and commercializing college sports
and maybe even losing some of those things that we
liked before as fans, but that probably weren't all that
equitable to players.
Speaker 3: Yeah, Like, you know, people got to they got to
be paid a fair market rate, right.
Speaker 4: We talk a lot about that on the show.
Speaker 3: It's you know, are we honest in our dealings with
our fellow man. Well, to me, being honest is given
a fair market rate for a fair day's work.
Speaker 5: Totally, totally.
Speaker 2: And I remember seeing some of the players before and
I would think, gosh, it's such a shift where they
got seventy thousand fans rooting for him at a game
and we know the hard work, and really they're one percenters.
I mean, there's not a lot of people that could
go and do what they do, but yet they were
so significantly under paid before. And of course there's been
a lot of evolving that's taken place in the last
five years, and I think this is just the new
reality and the new world of college sports. And there's
not much you or I or many of us can
do about it. It's just the capitalistic world and the.
Speaker 5: Society we live in. And you know.
Speaker 2: Certainly paying players and having them received more of that
pie to me makes a lot of sense.
Speaker 5: It wasn't. I didn't like the way it was before either.
Speaker 4: Yeah.
Speaker 3: Yeah, there's definitely a balance to it all, no doubt
about it. As you love sports, right you know, you
love college and professional I thought he's look like collegiate
athletics as professional sports. Now are you Are you worried
that that we're losing the identity of collegiate athletics right now?
Do you feel like it's going too far to professionalism
and transactionality rather than transform transformational in this collegiate world.
Speaker 2: Well, for me being honest, yeah, a little bit. I am.
Speaker 5: I mean, I am one that has always.
Speaker 2: Enjoyed college athletics, and I think we as friends and
family haven't made many memories together around college sports, and
we've always said we like the college athletes. They're playing
for something. They seem to care a little bit more.
And I don't know if that'll go away, but it's
definitely moving more towards professional sports. And there's not really
much that I can do about it, of course, but
there is a little bit of that fear, and I
don't know if there's anything we can do about it.
But I'll still be supporting our team and probably still
more of a college guy than I am professional. But
private equity coming into the college landscape is a step
towards commercializing this in a way that we've never seen before.
Speaker 5: It will be different after this.
Speaker 3: Blaine Anderson, Certified Financial Planner, tax Mart Wealth Advisor, n
f l P, A certified financial planner from Banterwealth Bantterwealth
dot Com. Here on your Utah ESPN Radio Network talking
private equity in sports? Uh is, well, let me give
me give me your takeaway right now? Your final kind
of takeaway for listeners about private equity in college sports?
Is this going to be a good thing or a
bad thing for the overall product for the players, for
these universities as well.
Speaker 4: There's multitude there's.
Speaker 3: A there's multiple facets to this, and multiple impactful parties
or impacted parties rather.
Speaker 2: Yeah, it's a I've thought about that a lot, and
I think this will definitely become a trend. I think
we'll see more of it. I didn't like the way
it was before, and especially getting to know some of
the players on a personal level, I remember feeling like
something had to be done about uh their situation.
Speaker 5: So I do see this as.
Speaker 2: Maybe even an over correction in a way. But like
I said, I don't think there's much we can do
about it. I think it's the new reality and I'm
surprised you taught me in the first really significant private
equity investment in the country. My take on it is
that it was bound to happen at some point. I
do like that it's now more transparent and everything's on
the table. I think that gives a university like us,
even at BYU, more of a competitive edge, and we're
seeing that the last couple of years. I think my
response to that, Ben would be I'm still a believer
in a capitalistic society, and this is just one way
that this is materializing and demonstrating itself. So at the
end of the day, I've got to be supportive of it.
It applies to my greater principles and view on life.
Speaker 4: Love that man.
Speaker 3: Well, we all know BYU ain't getting into the private
equity game, right like you don't ever see that happening.
Speaker 2: Not necessarily, I don't think that they, I mean, at
least right now, it doesn't seem like they need it
quite as much.
Speaker 5: I mean, there seems to be pretty good support.
Speaker 2: But who knows. This could be like the N I
L and and materialize and even developed quickly and like
it's like it did with an I L.
Speaker 3: Yep, Let's we'll see how it all plays out. I
think b Way's in a great spot all things considered.
I think this move from the from the University of
Utah is has been a bit pressured by by US
moves in the NIL space and how the donors have
rallied in my opinion, So we'll see how the the
what the reaction is up on the hill and how
it ultimately pays dividends for those stakeholders. But Blaine always
appreciate our time together for those that would like to
get on a free Q and a no obligation to
invest Q and a with the tax mort Wealth advisors
of band Or Wealth.
Speaker 4: How can they do such?
Speaker 2: Yeah, visit our website at Banderwealth dot com. You can
request Banderwealth Tax Smart playbook. We have one for real
estate investors, for business owners and it's a great way
to see some additional strategies that are out there. Perhaps
have a conversation with your accountant or you give us
a call. We're happy to talk shop. We love talking
to tax smart wealth strategies. We do both private investments
and also public investments. So visit our website Banderwelth dot
com for some good information and get a copy of
a Banderwilth Tax Smart playbook.
Speaker 4: There you go.
Speaker 3: Check it out today. Ladies and gentlemen, Betterwelthbetterwell dot com.
Thanks so much, Blaine, appreciate you.
Speaker 5: Hopping on always a pleasure. Thank you, Ben, love the show, Love.
Speaker 4: And appreciate Blaine Anderson.
Speaker 3: That segment brought to you by Primo Golf Apparel Primo
Golf Apparel dot com. Tis the season to be buying
gifts for your friends and family member, especially for that
special golfer in your life. Primo Golf Apparel has the best,
has the best golf apparel in the business. You can
look good, feel good, and golf good with the fine
twined linens of Premo Golf Apparel.
Speaker 4: Check it all out right now.
Speaker 3: They have some great deals going on through December for
the holiday season. Utilize the ESPN twenty five coupon code
for twenty five percent off. They got some awesome deals
going on right now for blade, polos, that's right, quarter zips, joggers,
you name it, they got deals for you. Go to
Premo Golf Apparel Premo golf Apparel dot com and check
out with those coupons ESPN twenty five that's ESPN twenty
five for the holidays special. Let's go to break tokawadyhe
We're going to get you a little sports score coming
up next here on your Uti ESPN Radio Network one
oh three nine ninety eight point three esp