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GoState99755

12-Pac considers plan to sell 10% of conf for $500m

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On 12/30/2018 at 9:05 PM, Headbutt said:

LOL!!  You ain't gonna' get $5 billion for the fluffs.  Hell, the 12Pack will give you $50K just to take them off of their hands.

Don't get too excited...that means CSU can be sold for a Happy Meal if true.

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On 12/31/2018 at 4:09 PM, RSF said:

ESPN is not a carrier.

 

 

What they should do is sell a stake of P12N to someone who can leverage better distribution.  Going it alone was a mistake from the beginning. 

Some may beg to differ. They've infected college sports like Andre's mom infected the Navy...

Image result for h.l. mencken quotes

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This goes under the heading of 'not good news' for the Pac 12 and their plan.

 

https://www.mercurynews.com/2019/05/08/is-the-pac-12-really-worth-5-billion-finally-we-have-the-ingredients-for-a-valuation-estimate/

Two pieces of information were required for an assessment of the valuation:

Private Pac-12 financial data, and an open-market point of comparison.  Fortunately, we have both.  Thanks to Hotline sources, we have the Pac-12 Networks and Pac-12 Conference financial data.  And thanks to Disney’s sale of 21 Fox Regional Sports Networks (RSNs) to Sinclair broadcasting, we have a reasonable market benchmark.  (The approach is good enough for Mark Cuban, who drew the comparison in an email to the Oregonian’s John Canzano.)   The Fox RSNs were valued at 10.6 billion in the sale, which is 6X EBITDA, or earnings before interest, taxes, depreciation and amortization.  That 6X multiple for the Fox RSNs gives us a benchmark to value the Pac-12’s media-rights holding company.  Of course, the Pac-12 doesn’t have earnings in the traditional sense. Instead, we’ll use the total revenue (revenue less operating expenses) as our starting point.  We know the Pac-12 Networks were projected to generate $35 million in FY19.  And we know the conference was projected to generate $349 million in FY19, with the networks adding another $35 million (the profit that gets distributed to the campuses).  That’s $384 million in what we’ll call net revenue.  If we then apply the same 6X multiple the Fox RSNs received, that would place an open market valuation of $2.3 billion on the Pac-12 media assets — far less than the figure Scott and his investment advisors (The Raine Group) have projected.

 

However, it’s not quite so simple.

 

The 6X multiple assigned to the Fox RSNs could be viewed as too high for the Pac-12 Networks, because the 21 RSNs have enormous collective reach (74 million homes) in addition to a national sales force and Tier 1 media partners — all of which act as a force multiplier for the valuation.  The Pac-12 Networks have none of that: small footprint, small staff, small revenue … small everything.  However, the networks also account for just nine percent of the net revenue figure ($384 million) we’re using.  The remainder comes from conference-side revenue streams, the largest of which is the Tier 1 deal with Fox and ESPN for premium football and men’s basketball games.  

 

But even there, the situation is nuanced.

 

Approximately one-third of the conference revenue comes from the college football postseason and NCAA Tournament units. Should those streams be included in an open-market valuation of the Pac-12 media rights?  For the purposes of this exercise, we’ll include both: the March Madness cash comes from CBS/Turner and flows through the NCAA to the conferences, while the football postseason revenue is courtesy of ESPN, which owns the rights to the Rose Bowl and the College Football Playoff.  Both revenue streams, therefore, originate with third party media deals.  One could argue that the conference buckets (premium football content, March Madness and the CFP/Rose Bowl) would command a multiple greater than 6X.  Should we adjust? And if so, by how much?  If we randomly doubled the multiple, to 12X the Pac-12 operating revenue, that would produce a valuation of $4.6 billion on the conference’s media assets — still less than the self-assigned number.  

 

But 12X is probably high, and here’s why:

 

Before 21 of the 22 Fox RSNs were sold to Sinclair, the most valuable of them all — the crown jewel — was sold separately: The YES Network.  For those unfamiliar, that’s the Yankee Entertainment and Sports Network. And it went for 8.4X earnings.  (Also worth noting: The Pac-12 is counting on digital media giants to bid for the conference’s media rights in 2024, thereby driving up the price, but none of them made a serious play for the Fox RSNs. While plenty could change in the next few years, that’s hardly an encouraging sign for the Pac-12. Or any other sports property).  Even if we were to apply the same Yankee-esque multiple of 8.4X to the Pac-12’s media rights holding company, the result would be a $3.2 billion valuation.  That’s substantially less than the conference’s internal estimate.

In the beginning the Universe was created.
This has made a lot of people very angry and been widely regarded as a bad move.

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Quote

Smith reported this week that the Pac-12 has received “multiple bids of at least $750 million in hand from companies looking to become equity investors,” with those bids “based on a valuation of $5 billion or more.”

https://www.mercurynews.com/2019/06/07/hotline-newsletter-pac-12-receives-750-million-bids-from-potential-partners-reportedly-but-details-are-the-key/

I think organizations still realize that sports is still a money making venture, despite all the cries that things have peaked and are trending downward.

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Are athletic departments non-profit like their universities?  If so, how can the 12-Pac remain non-profit if they're sell equity interests?

If this doesn't violate the letter of the law, doesn't it violate the spirt of the law?

 

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2 hours ago, GoState99755 said:

 

 

Are athletic departments non-profit like their universities?  If so, how can the 12-Pac remain non-profit if they're sell equity interests?

If this doesn't violate the letter of the law, doesn't it violate the spirt of the law?

 

Some states recognize the ADs as businesses ventures separate from the University   I know this applies to the Kansas schools from CU's days in the Big 12.  Not sure about the others.

Sometimes the private schools within the conference allows the conference to operate under different financial rules.

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