Howard U basketball program valued at $300 million in IPO

[Hibush]

The professionalization of the college sports business is opening a new chapter. Howard University is offering an equity stake in the basketball program in order to raise enough capital to compete in the NCAA tournament. (Actually, a private placement rather than a public offering, but I liked the headline.)

From The Washington Post. "College athletics is full-fledged business now," [Howard Coach] Blakeney said in a July interview. "The whole idea is to not get left behind. It's, 'How do we include ourselves in this?'

"I don't want to have a two-tiered system where we're not able to compete for the NCAA tournament or the national championship. And from what I'm hearing right now, that is a real possibility, that there's going to be an NCAA tournament that isn't going to include everyone else, it's just going to include those Power Four [conference] universities and maybe the Big East. That's not what I signed up for."

That is the challenge for every school without a bit TV contract. They spell out the value proposition:

"Blakeney knows people who want to own NBA teams but aren't quite rich enough. Buying Howard could be their opportunity to sit behind the bench and ride on the team plane. With the SEC and Big Ten separating from the pack with their TV money, the Big 12 is considering a private equity investment to keep up."

That obviously makes business sense. The slippery slope is well greased and steep now. Where will your school end up?

[Mobius]

The TV networks don't want a basketball tournament with just the Power Four. A lot of interest comes from brackets and betting on the mid-majors pulling off an upset.

Football playoffs are fine where they are with room for one Group of Five.

Other sports just don't matter in terms of TV rights. Plus, you see mid-majors having success in lacrosse, hockey, and baseball.


If there is a move to just a Power Four tournament, anyone who thinks money is to be made at a lower level is delusional. No one is giving money to Howard to be a D-League type feeder program.

Investors don't just want to spend money. Owners want their money back at some point, or at least enjoy the ride. There is no "ride" being the bucks behind an also-ran. Plenty of opportunities to invest in minor league sports, as it stands, and plenty of people go broke.

[Hibush]

The TV networks don't want a basketball tournament with just the Power Four. A lot of interest comes from brackets and betting on the mid-majors pulling off an upset.

Football playoffs are fine where they are with room for one Group of Five.

Other sports just don't matter in terms of TV rights. Plus, you see mid-majors having success in lacrosse, hockey, and baseball.


If there is a move to just a Power Four tournament, anyone who thinks money is to be made at a lower level is delusional. No one is giving money to Howard to be a D-League type feeder program.

Investors don't just want to spend money. Owners want their money back at some point, or at least enjoy the ride. There is no "ride" being the bucks behind an also-ran. Plenty of opportunities to invest in minor league sports, as it stands, and plenty of people go broke.

Blakeney is clear that the return to investors is the opportunity to sit behind the bench at [televised] games, and to fly on the team airplane. This is for people who already have too much money, but not quite enough to buy an NBA team. I'm impressed by how well he has defined the target investor.

[Mobius]

These investors don't exist at the mid-major level. You barely have anyone willing to give NIL money at that level.

Plenty of opportunities to be a big shot at the minor-league level, and not many people willing to put money in for more than a year or two. Donors can give a lot less and get the red-carpet treatment at many institutions below the G5.

[treeoflife]

How will they sell the equity? pink sheets?

[Hibush]

How will they sell the equity? pink sheets?

He may be envisioning private placements. The guy has clearly though this through.

[Mobius]

Howard isn't worth $300 million. The company put $14 million into Miami (Fl.) athletics and went broke.

[Hibush]

I have gathered that Blakeney is holding off on checking with the university's administration until he has investors lined up. The administration hasn't been worried enough about the coach getting too far ahead on this for them to make a statement.

Even if the impressive plan will fail because there indeed are no investors willing to buy in, the important message is that this is what it will cost to field a competitive team in today's NCAA. If private equity funding is not available, where will that money come from? If it is not forthcoming, the talent will leave.

[apl68]

I've seen concerns aired to the effect that high-dollar sports will suck all the funding out of other university sports and cause mass losses of sports programs.  Including most of the programs that nurture young Olympic hopefuls.

[ciao_yall]

I have gathered that Blakeney is holding off on checking with the university's administration until he has investors lined up. The administration hasn't been worried enough about the coach getting too far ahead on this for them to make a statement.

Even if the impressive plan will fail because there indeed are no investors willing to buy in, the important message is that this is what it will cost to field a competitive team in today's NCAA. If private equity funding is not available, where will that money come from? If it is not forthcoming, the talent will leave.

Private equity is really good at finding money-making opportunities.

If universities claim that big dollar sports investments "generate a return" for the institution, and private equity won't touch these opportunities, then I'm going to question that return argument.

[Hibush]

I have gathered that Blakeney is holding off on checking with the university's administration until he has investors lined up. The administration hasn't been worried enough about the coach getting too far ahead on this for them to make a statement.

Even if the impressive plan will fail because there indeed are no investors willing to buy in, the important message is that this is what it will cost to field a competitive team in today's NCAA. If private equity funding is not available, where will that money come from? If it is not forthcoming, the talent will leave.

Private equity is really good at finding money-making opportunities.

If universities claim that big dollar sports investments "generate a return" for the institution, and private equity won't touch these opportunities, then I'm going to question that return argument.

There are two angles to this.
The value proposition is distinctive. Blakeney is not claiming that the return will be the kind expected by universities when they spend the money, nor the kind expected by investors when they spend the money. The return will be in the kind on ego boosting that mere dollar returns doesn't.

The question is whether this value proposition attract any real people. Moebius thinks not, that Howard just does not have the cachet required for anyone with the relevant funds. But what if the multi-hecto-millionaire Howard alum was a classmate of a US president? Who knows.

The other piece is the alternative. Coach says that either you get this kind of money--and he knows it won't come from the college operating funds--or you get out of tournament-level sports. The gulf will simply be too wide between the haves and the have nots.

The gulf has grown enormously just in the last year, and schools, boosters and athletes are just starting to figure out how to game it.

If we accept that new reality, as well as the fact that billionare angel investors is not a scalable solution, what should the rest of the DI schools do. Should Howard go back to Div II or III? Does NCAA needs to split between the academic association and the ESPN subsidiary? Should schools that depend on intercollegiate athletics to draw students then charge those student athletes the full cost of their sport experience, rather than give athletic scholarships?