C7 Featured on ESPN's OTL

[keefe]

Pitino:

C7 Deserve the BE name
C7 Deserves the MSG tourney home
C7 should have been fed up and left 3 years ago
C7 is getting a great deal from Fox
Football rules sports


Katz:

Fox Deal is driving this to start '13-14
Fox Insists on Xavier and Butler
Fox Working to get Creighton in this year
Fox wants to add SLU and Gonzaga
GU wants another eastern seaboard program
Fox may want 16 teams over time
C7 won't cut check; Will leave majority of Tourney Units (Tourney Units pay out over 6 years)
Remaining Schools (RS) will need ECU & USNA to come in as full members
UND & Louisville will join ACC this fall



Andrew Brandt (Sports Law at Nova; former GB Packer Exec)

BE Name highly valuable
WSJ puts value in excess of $500MM
Brand Equity is in Fox Deal
C7 will flourish financially

[Warriors10]

No mention of Dayton

I would have to believe if Fox wants 16, Fox will get 16 (if not they will get 14 for sure).  I am/have always been for Gonzaga if they are willing to make the trips out east/financially can without the help of the other schools in the conference.  A Marquette trip out west once a year isn't gonna kill us.

[Dawson Rental]

No mention of Dayton

I would have to believe if Fox wants 16, Fox will get 16 (if not they will get 14 for sure).  I am/have always been for Gonzaga if they are willing to make the trips out east/financially can without the help of the other schools in the conference.  A Marquette trip out west once a year isn't gonna kill us.

Are you talking for all sports or just for men's basketball?

[keefe]

Are you talking for all sports or just for men's basketball?

Fox doesn't give a sh1t about anything but basketball as that is all they will be broadcasting.

[Warriors10]

Are you talking for all sports or just for men's basketball?

Outside of soccer, what olympic sport will have to travel out west on a yearly basis?

Track/XC/Tennis/etc. all compete in national inviationals and only have to compete solely against their conference at their conference meets, which if held in Washington once every blue moon can easliy be budgeted.

[mu03eng]

Outside of soccer, what olympic sport will have to travel out west on a yearly basis?

Track/XC/Tennis/etc. all compete in national inviationals and only have to compete solely against their conference at their conference meets, which if held in Washington once every blue moon can easliy be budgeted.

Men's and women's soccer, women's volleyball, men and women's basketball, men's and women's LAX.  It's a fair amount of travel, but again for all schools but Gonzaga, it's not that bad cause each team only does it once.  For Gonzaga they would have to do it up to 15 times depending on the schedule/number of away games.  Could you imagine having to play Georgetown and then St John's on the road in back to back weekends?

[GGGG]

The BE brand is worth nowhere near a half a billion dollars.  That's just silly.

[MUMountin]

The BE brand is worth nowhere near a half a billion dollars.  That's just silly.

based on...?

[GGGG]

Based on the fact that they couldn't get a decent television contract for its product.  A brand is only valuable based on the marginal revenue it produces.  You put the same schools, playing the same games in a differently named conference, the product isn't going to be worth $500M less...even over the course of time.

[keefe]

The BE brand is worth nowhere near a half a billion dollars.  That's just silly.

Brandt's point is that it articulated into a half a billion contract. In that sense he is correct.

I did M&A work for a living...there are many ways to get a fair Market valuation but Brandt did was the easiest from a pragmatic market place standpoint. The BE/C7 have a product. Fox Sports Network just gave them $500MM for the use of it. Guess what? It has a fair market commercial value of $500MM for 10 years. I would have to discount the cash flows but in a liquidity starved market the NPV will likely approximate the $500MM.

An acquisition is a very different animal in which one would ascribe a good will value for the brand name. But that is a very different play and not what Brandt was speaking of when he referenced the WSJ. DO NOT confuse Brand equity with market value with acquisition value.   

Tell me, how much M&A work have you done?

[🏀]

Brandt's point is that it articulated into a half a billion contract. In that sense he is correct.

I did M&A work for a living...there are many ways to get a valuation but this is the easiest from a marketing standpoint. The BE/C7 have a product. Fox Sports Network just gave them $500MM for the use of it. Guess what? It has a fair market value of $500MM for 10 years.

An acquisition is a very different animal in which one would ascribe a good will value for the brand name. But that is a different play.

Tell me, how much M&A work have you done?

Can you knock it off with the cock measuring competitions around here?

We finally got CBB to ease up a bit and now you're fully-torqued out.

[LON]

Can you knock it off with the cock measuring competitions around here?

We finally got CBB to ease up a bit and now you're fully-torqued out.

http://www.youtube.com/watch?v=5E1JLR-h_bE

[Ellenson Guerrero]

Brandt's point is that it articulated into a half a billion contract. In that sense he is correct.

I did M&A work for a living...there are many ways to get a valuation but this is the easiest from a marketing standpoint. The BE/C7 have a product. Fox Sports Network just gave them $500MM for the use of it. Guess what? It has a fair market value of $500MM for 10 years.

An acquisition is a very different animal in which one would ascribe a good will value for the brand name. But that is a different play.

Tell me, how much M&A work have you done?

Ya but Fox paid 500mm for the brand name AND the actual content of basketball games.

Besides, the best measure of something's worth is what someone will pay for it. Didn't we just get it for 60mm or whatever our NCAA units were worth?

I'm only in M&A right now, haven't practiced yet, so maybe you're right...

[🏀]

http://www.youtube.com/watch?v=5E1JLR-h_bE

CRANK IT DOWN

[chapman]

Fox wants to add SLU and Gonzaga
GU wants another eastern seaboard program

Compromise: SLU and Richmond.  No Dayton.  Deal!

[🏀]

Compromise: SLU and Richmond.  No Dayton.  Deal!

Tag 'em and bag 'em.

[keefe]

Ya but Fox paid 500mm for the brand name AND the actual content of basketball games.

Besides, the best measure of something's worth is what someone will pay for it. Didn't we just get it for 60mm or whatever our NCAA units were worth?

I'm only in M&A right now, haven't practiced yet, so maybe you're right...

He confused fair market commercial value with acquisition value. I don't think the negotiations are complete on the C7's acquisition cost for the name but one mitigant for the remaining members is that Big East is silly in the context of the history and go-forward composition of the league. Therefore, the value to them is degraded though for the C7 members it has significant upside.

An example of this would be a company exiting an industry by selling off a product line to a competitor. A local WI case would be the old American Motors selling the Jeep Brand to Chrysler. Chrysler only wanted the Jeep brand and had no interest in AMC's PPE in places like Kenosha so, not wishing to screw up their Balance Sheet, declined to purchase many of these capital assets. Some of these assets had a much higher book value for AMC but without a product to manufacture, it had a significantly degraded market value. Malaysia's Proton was looking for increased manufacturing capacity and snapped them up for pennies on the dollar. 

So, the C7/BE can acquire the BE Brand for its residual value then lever that into $500MM cash, thereby capturing the uptick in valuation. This is why M&A exists - to extract unrealized value from undervalued or underperforming assets.

[keefe]

The BE brand is worth nowhere near a half a billion dollars.  That's just silly.

I believe you misunderstood some of the terms. Please reference my other posts here on the subject.

[Avenue Commons]

I believe you misunderstood some of the terms. Please reference my other posts here on the subject.

You're obviously a bright guy and I enjoy your excellent analysis and insights, but you sometimes sound like a former high school football star trying to impress his friends ten years after graduation with all his past success stories.

Let the past go. Enjoy your current life. The past is behind us for a reason.

[Ellenson Guerrero]

He confused fair market commercial value with acquisition value. I don't think the negotiations are complete on the C7's acquisition cost for the name but one mitigant for the remaining members is that Big East is silly in the context of the history and go-forward composition of the league. Therefore, the value to them is degraded though for the C7 members it has significant upside.

An example of this would be a company exiting an industry by selling off a product line to a competitor. A local WI case would be the old American Motors selling the Jeep Brand to Chrysler. Chrysler only wanted the Jeep brand and had no interest in AMC's PPE in places like Kenosha so, not wishing to screw up their Balance Sheet, declined to purchase many of these capital assets. Some of these assets had a much higher book value for AMC but without a product to manufacture, it had a significantly degraded market value. Malaysia's Proton was looking for increased manufacturing capacity and snapped them up for pennies on the dollar. 

So, the C7/BE can acquire the BE Brand for its residual value then lever that into $500MM cash, thereby capturing the uptick in valuation. This is why M&A exists - to extract unrealized value from undervalued or underperforming assets.

He isn't understanding that the Big East's product is more than just the brand name. Fox isn't paying us 500mm so they can show commercials with the words Big East and use the logo. They are paying us to broadcast basketball games. What would Fox have paid us if we didn't have the name Big East? 450mm? 400mm? Whatever the difference, it's a lot closer to 60mm than 500mm?

[GGGG]

Ugh....

The point is keefe that bringing up the "brand is worth $500M" is irrelevant to a discussion about how much the C7 going to pay for it because it is completely misleading.  Let's say that all in, he is correct.  You could label the same exact schools playing the same exact number of games the "Metro Conference," and it would be only marginally less valuable - perhaps $495M.

Can you knock it off with the cock measuring competitions around here?

No sh*t.  Just because he uses big words and lots of paragraphs, I guess we are supposed to be impressed.

[ATWizJr]

You're obviously a bright guy and I enjoy your excellent analysis and insights, but you sometimes sound like a former high school football star trying to impress his friends ten years after graduation with all his past success stories.

Let the past go. Enjoy your current life. The past is behind us for a reason.

the past is behind us for a reason?  is it the same reason that the future is in front of us and the present is, well, right now?

[keefe]

Ugh....

The point is keefe that bringing up the "brand is worth $500M" is irrelevant to a discussion about how much the C7 going to pay for it because it is completely misleading.  Let's say that all in, he is correct.  You could label the same exact schools playing the same exact number of games the "Metro Conference," and it would be only marginally less valuable - perhaps $495M.


No sh*t.  Just because he uses big words and lots of paragraphs, I guess we are supposed to be impressed.

Please look over what I posted and see that you are mistaken. I never wrote, "brand is worth $500M." Not sure where you got that. I transcribed what was being said in the interviews, Brandt never said the "Brand is worth $500MM" and I did not quote him as saying that. What Brandt said was

1. The Big East name is highly valuable
2. WSJ values the portfolio in excess of $500MM

You either misread or misunderstood what I wrote but you nevertheless jumped all over it, misquoting me as saying that the brand was worth $500. I never said that nor did Andrew Brandt. Clearly you have not done valuation work in an M&A environment. Nothing wrong with that as not everybody wants to do it or has the training to do it. The naivete of your statements makes it clear this is not an area of expertise for you.

What the Brand is worth to the remaining schools is very different than what it is worth to the C7. And that is the job of venture people to identify those opportunities and extract the value from an undervalued or underperforming asset.

You think by screaming longest and loudest when people disagree with you that somehow makes you correct or right. Fact is, you are just a silly bully.   

[hoyasincebirth]

You're also ignoring all the money saved by having an established brand and not having to rebrand. No need to create new logos or advertise the name of a new conference. That's a lot of the value of the brand too. And yes the conference would be worth less with out the BE name. There's a reason Fox made it a part of the deal. Keeping the BE name gives the league a ton of credibility that it would not have had with a new name.

[keefe]

You're also ignoring all the money saved by having an established brand and not having to rebrand. No need to create new logos or advertise the name of a new conference. That's a lot of the value of the brand too. And yes the conference would be worth less with out the BE name. There's a reason Fox made it a part of the deal. Keeping the BE name gives the league a ton of credibility that it would not have had with a new name.

You obviously missed a separate thread where the discussion was on the power of brands. Our Wizard of South Wayne stated that launching a new brand is "easy, and cheap to do, too."

fact is, creating and successfully launching a new brand is bloody difficult and terribly expensive. At PepsiCo there was a huge uptick in share value just on the strength of our brands.  If you looked at our P:E's it was easy to see the equity in our brands and this was critical as a FMCG company. That's why each and every Annual Report always said, "Power Brands" on the cover and featured logos.

If one is interested in how you extract value from a brand some of the best work is done by PepsiCo. There are HBS cases on Gatorade, Cracker Jack, and California Pizza Kitchen. Each was a PepsiCo acquisition and went from being either unloved/mismanaged, dying, or incipient and turned into cash machines. But for every Gatorade there are a dozen Snapples.