Was discussed on the radio in Raleigh. The understanding is that equity firm provides some amount of capital - $50M to $200M to a University athletic department or the University. In return the University is required to pay back an annual percentage starting at 20% of athletic revenue in the first year. This percentage slowly reduces until 100% of initial investment is paid back. After that, the equity firm is guaranteed 2% of all sports revenue for the University in perpetuity - i.e., forever. I do not know where the percentages come from, but the key discussion point was in perpetuity. The argument was that regardless of what happens in the future, it is anticipated that revenue will continue to increase over the next century and beyond. In general, the discussion was that no state or public entity could legally (or wisely) promise a portion of their revenues for perpetuity. It was discussed it would only be helpful in the case of a major one time expense (such as a stadium upgrade OR buying out of a conference). It was also discussed that inevitably the government and politicians would be involved and that it is likely even illegal in many states to allow any agreement in perpetuity. In terms of long term agreements, even the British lease on Hong Kong and our base on Guantanamo Bay were limited to 99 or 100 year terms (my observation, not on the radio). The related discussion was that a much more traditional and well established path for these large expenses is a loan - which universities can get and have gotten with very favorable terms as a public entity ultimately backed by the state. All this said, if I was the private equity firm, I can think of no school that may be a higher risk in this scenario than Florida State. They have proven that they will do everything in the power to get out of a 25 year GOR agreement let alone providing a portion of their revenue in perpetuity. All of this said, I have no idea as to the source of the numbers, etc, but it did provide some insights into how private equity would likely work. At the base is that the private equity firm's legal obligation is maximizing their return on investment for the shareholders. ** Edited by mjfhokie at 5/22/2024, 10:46:27 PM ** Edited by mjfhokie at 5/22/2024, 10:52:13 PM ** Edited by mjfhokie at 5/22/2024, 10:54:22 PM