So I just read the article, and, LOL….this is exactly what’s happening. Except it’s even more obvious than I thought it would be.
From the article:
“The project includes a fascinating wrinkle. The university is offering a prominent group of donors the ability to purchase a stake in Utah Brands & Entertainment. Already, university officials have culled a small donor base to generate millions in purchase agreements. The more than $500 million capital figure includes both the nine-figure cash infusion from Otro as well as those capital commitments from donors.
Utah Brands & Entertainment will house most of the components traditionally held within the university’s athletic department, including many athletic personnel and divisions. However, fundraising will remain with the school.”
This is wild…
1) PE buys Utah Athletics and creates new for-profit entity that is still majority controlled by the university - called Utah Brands and Entertainment.
2) Otro and the university sell stake in the new entity to the boosters / donors. Essentially that is where the cashflow is coming from. The PE firm isn’t even really providing any cashflow at the end of the day. This is just a shell game.
3) The control of “Utah Brands and Entertainment” will thus be siloed within Otro, under the control of the boosters and donors.
They are essentially selling the athletic department to the boosters. The PE firm owning / controlling the athletics department isn’t even the end game. They are simply the medium for exchange, because Utah can’t just directly sell the entire department to Cigar Boys Incorporated.
This is 100% a ploy to set up an annuity to pay out tens of millions in NIL annually, with extravagant tax benefits for the donors. Somebody has figured out that this is the cheapest way to keep these funds rolling in.
