PEUs Need Tony Bennett: Is Feeling Mutual?

UVA basketball head coach Tony Bennett resigned his position saying he is "a square peg in a round hole."  His comments on the state of college athletics included:

"I think it's right for student-athletes to receive revenue. Please don't mistake me," he said Friday. "The game and college athletics is not in a healthy spot. It's not. And there needs to be change, and it's not going to go back. I think I was equipped to do the job here the old way. That's who I am. "

It's going to be closer to a professional model. There's got to be collective bargaining. There has to be a restriction on the salary pool. There has to be transfer regulation restrictions. There has to be some limits on the agent involvement to these young guys. ... And I worry a lot about the mental health of the student-athletes as all this stuff comes down."

Who's leading the change charge in college athletics?  Private equity underwriters (PEU).  The greed and leverage boys have invaded professional sports around the globe.  Most recent professional team sales involved a PEU or a storied founder.  PEU or PEU founder:  the management shenanigans are the same.    

Coach Bennett's principled retirement will be followed by something.  I hope it's not employment in one of the least principled businesses in our country.  The buying and selling of companies is bad enough.  The flipping of college kids athletic futures sounds downright sinister.  

Tony Bennett likely has heard much about private equity from wealthy alumni boosters.  One close supporter got in early with The Carlyle Group and unfortunately died from a Covid-19 infection in 2021.  In an article titled "A Faithful Fan" Bennett remembered his friend:

“Greg was one of the first people I had dinner with when I got the job 13 years ago,” remembered Bennett. “At the time, I remembered thinking, ‘Wow, this guy is passionate and knowledgeable about UVA Athletics.’ He knew more about my coaching career than I did! Over the years, he became a faithful supporter and friend to our program through the great years and the challenging years. That spoke volumes to me.” Bennett continued: “My wife Laurel and I loved him. He donated a well for the needy in Africa in Laurel's and my names, and to this day, it's one of the most remarkable things someone has done for us. We are all sad that Greg is no longer with us, but we are beyond grateful to have known him and will forever appreciate who he was and what he did for all of us.”

A dear friend's employer is not a predictor of Coach Bennett's next step career wise.  Nearly everything Tony Bennett has done has been principled, focused on doing the right things in the right way because that's who you are (intrinsic motivation).  

PEUs are all about incentives, do this to get that, money, power, political influence.  I can't think of a worse next job for Tony Bennett than employment with the greed and leverage boys.  However, that is the tidal wave getting ready to engulf college athletics.  They need someone like Tony.  The question is does Tony need them?

Update 2-25-26:  Former UVA head basketball coach Tony Bennett has been named Draft Advisor for the TWG Global owned LA Lakers.  I thought the greed and leverage boys would want to ride Bennett's squeaky clean image.  I can't wait for Tony's first meeting with Palantir's Alex Karp over possible draft candidates.   

Voters Can Use Head to Examine Trump Financial Disclosure

Red Team Presidential nominee former President Donald Trump has business operations throughout the globe.  Some are under his name while others are under DTTM Operations LLC or another Trump corporate entity.  

Consider this when he proposes throwing 20% tariffs on everything.

Trumps filings are not searchable but a review showed his monthly pension of nearly $6,500 from the Screen Actors Guild.  

Flashback to early 2021:

Donald Trump has resigned from the Screen Actors Guild after the union threatened to expel him for his role in the Capitol riot in January.

“I no longer wish to be associated with your union,” wrote Trump in a letter shared by the actors guild. “As such, this letter is to inform you of my immediate resignation from SAG-AFTRA. You have done nothing for me.”

I wouldn't call a pension "nothing."  In 2022 Trump valued the pension benefit "as much as $1 million."  Two months ago he declared the value "not readily ascertainable."  

Trump declared a $300,000 royalty related to the Greenwood Bible.  That's a handsome sum.  And yes, the "God Bless the USA Bible" is manufactured in China.  

I suggest voters use their head to examine Trump's six part financial disclosure filing.  It may strike some as odd that a financial genius is not able to determine the value of so many of his holdings.

Is that the new way to toss aside conflict of interest concerns, pretend there is no real value?  

Update 1-20-24:  Prior to the coronation of Trump II, the digital Caligula. the President elect revealed a Trump memecoin followed by a Melania memecoin.

80% of the coin’s supply is held by Trump Organization-affiliate CIC Digital and Fight Fight Fight LLC

Is Trump Signaling PEU Love with Financial Disclosures?

 

A review of part three of former President Donald Trump's latest financial disclosure produced a number of private equity underwriters (PEU).  None were over $15,000 and several were less than $1,000.  That raises the question.

Is Trump virtue signaling the greed and leverage boys with his disclosure filings?

Today I heard a corporate executive describes Trump's 21% tax rate for corporations as their "fair share."  I did not realize taxes were like United Way donations.  

Long ago Trump's VP sidekick JD Vance showed he is a man of the PEUple.  Politicians Red and Blue love PEU and increasingly, more are one. 

Did PEU Directors Help Break Boeing Quality?

Much has been written about Boeing's series of stumbles.  The latest "fall" involves the company's credit rating.  My wise friend wrote:

Just to reiterate and solidify what a joke we are when it comes to credit. S&P placed Boeing on credit watch negative because of strike related financial risk?

Meanwhile, the financial engineering over the past two decades, the lack of real leadership, the reduction of quality control in their supply lines due to efficiency ratios for financial performance, among many other factors, never enter the credit rating. How is that for burying the real bodies of a crisis situation? Boeing is just a prime example of the blame shifting and lack of accountability throughout the financial sector.

Twelve years ago the majority of Boeing board members had direct private equity underwriter (PEU) affiliations (6 out of 11) while a seventh lobbied for the PEU association.   Board members are recruited for their specific skills and background.  Over half of the 2012 Boeing board knew PEU financial machinations which includes significant cost cutting.  

The public has seen Emergency Room care plummet quality wise under PEU ownership.  Vox reported:

When private equity comes for health care, though, the result is human suffering: Elderly and intellectually disabled people sitting in puddles of their own waste, sick patients not getting the care they need, worse outcomes for patients. 

Oddly enough, I recently flew next to a Medical Ambulance pilot.  His employer is private equity owned.  He'd recently reached out to friends, professionals in a variety of industries, and they all said the same thing.  "You can't believe what they (executives) are doing here!"   Across the board senior leaders were blowing through basic and longstanding practices.  

I'm sure some worked for PEU affiliates while others, like Boeing, had PEUs on their board.  The game will continue as long as capital can be had.

PEU Sports Interviews

CNBC interviewed the CEO of Sportscorp regarding private equity money flooding sports.

Yahoo Finance interviewed Carlyle co-founder David Rubenstein.  Asked about the impact of private equity investment in sports.  His answer:  "Well, drive up prices."  Just as they've done in housing, healthcare, pharmaceuticals and nearly everything they touch.

Rubenstein is the lead owner for the Baltimore Orioles and Carlyle holds a stake in the Seattle Reign.  A longtime Baltimore sports writer sent a letter to Mr. Rubenstein.  The author hopes for a better hand from lead owner Rubenstein relative to the prior team owner:

Over my three decades in dealing with the emissaries of Peter G. Angelos, this was not considered a bug but far more of a feature ­– pettiness, anger and retribution.

Private equity underwriters (PEU) typically take a steamroller to people expressing legitimate concerns.  Winning the game of financial profit maximization, obtaining public subsidies (direct and indirect) and cultivating political influence (which produced "policy making billionaires") usually requires a signature focus that excludes listening to real people.  

The Baltimore sports writer can appeal to other new Orioles owners, three of whom made their fortune with Ares Management.  However, the threesome may be busy as Ares is close to striking a deal to buy a portion of the Miami Dolphins.

 

The Sportscorp CEO noted the other announced deal for Tom Gores to buy a stake in the Los Angeles Charges is not a PEU deal.  It is however with a PEU founder.

Platinum Equity - A Global Private Equity Firm Founded by Tom Gores (on Forbes billionaire list)

So what can people expect?  Platinum Equity bought the NBA's Detroit Pistons in 2011.  The Pistons:

have been the league’s worst franchise for 15 years or so.

Gores bought out Platinum Equity's stake in the Pistons in 2015.   The City of Detroit provided $34.5 million in subsidy for the Pistons to move into a new facility.  Check out the name on the Pistons' home court.

Platinum Equity, another PEU arms length agreement.

Carlyle's Rubenstein located his firm in Washington, D.C. in 1987 to access Uncle Sam's wallet and intermittently non-lobby to keep his PEU preferred "carried interest" taxation.  He's predicting more tax cuts regardless of who wins the White House in November.

The PEU boys love a public subsidy but hate paying taxes.  So why is all this going on?  Because politicians Red and Blue love PEU and increasingly, more are one.  Professional sports is the newest PEU love and as Mr. Rubenstein said prices are going up.

Carlyle, Unison Target Strapped Homeowners

The Carlyle Group and new affiliate Unison want to be on both the debt and equity side of your home.  FT reported:

The company will buy as much as a 15 per cent interest in homes, spending between $30,000 and $500,000 per home. The homeowner will pay for an appraisal and Unison will invest at a 5 per cent discount to that appraised value. There is also a 3.9 per cent transaction fee.

At the end of the 10-year loan, Unison would, however, get its 1.5x appreciation share as well as the capitalized sum total of the 1.8 per cent initial cash interest rate savings (that’s the 7 per cent minus 5.2 per cent).

Carlyle plans to buy $300 million in Unison Equity Sharing Home Loans.  It would then market those to insurance companies (clients of Carlyle's Credit Strategic Solutions group).  

Unison said its typical customer has a Fico score over 700 and that typical use of proceeds are home improvements or paying down credit card debt.

Credit card debt raises red flags and calls into question someone being able to pay off a large loan, plus an outsized amount of the home's appreciation, plus making up for the interest rate break given on the loan.  

I expect a large number of Unison clients not being able to keep their home after the 10 year loan comes due.  

What happens when unsatisfied borrowers go to regulators and complain about Carlyle's Unison?  They might get, "Which Unison?"  Home equity Unison follows government procurement contractor Unison in the Carlyle family tree. 

Carlyle held government procurement contractor Unison from 2005 to 2010, then repurchased the firm in June 2020.  After a two year hold Carlyle flipped its majority stake to Madison Dearborn Partners but retained a minority investment (which it still holds).

Carlyle just wants their share of well, everything.  It's the PEU way.  Don't give it to them.

Home equity Unison's CEO Thomas Sponholtz said "We are trying to democratize the rich relative."  Carlyle's billionaire co-founders qualify as rich relatives.  

Sponholtz' worked for Bear Stearns, where he and the company were sued for negligence and negligent misrepresentation.  The parties settled for $130,000."   That was a long time ago in a world that no longer exists.  

Unfortunately, our current world has far more conflicted entanglements.  Sponholtz and Carlyle want you to bite on their sales pitch.  Read all the fine print before you sign, every blanking word.

Banks, PEUs Join Hands for Private Credit Offerings

Big banks and storied private equity underwriters (PEU) are joining to offer credit to private companies. The Federal Reserve Bank put out a "Fed Notes" on private credit in February 2024.  It states:

Private credit or private debt investments are debt-like, non-publicly traded instruments provided by non-bank entities, such as private credit funds or business development companies (BDCs), to fund private businesses.2 Private credit is typically extended to middle-market firms with annual revenues between $10 million and $1 billion, but has grown rapidly in recent years to fund larger companies that were traditionally funded by leveraged loans.

The Fed piece closes with a section on Interconnections with Banks:

While bank lending to private credit funds appears moderate, there are growing interconnections between these two types of lenders. First, banks are increasingly partnering with private credit funds to fund new deals. Second, banks are progressively selling complex debt instruments to private fund managers in so-called "synthetic risk transfers" in order to reduce regulatory capital charges on the loans they make. Such instruments have limited transparency and pose hidden risks to the financial system, especially as the industry has yet to endure a prolonged recession. Relatedly, there is growing concern that tighter regulations such as Basel III endgame could intensify migration of credit from banks to private credit lenders. Considering borrower risk profiles, such substitution is less likely to occur to bank-held loans, and more so with syndicated leveraged loans. In such cases, banks stand to lose underwriting fees to private credit funds. These developments suggest that private credit will become increasingly important to credit market functioning.

Yes, lets count more on instruments with limited transparency that pose hidden risks to the financial system.  More, please!

Thank heaven the PEU boys have found more ways to make fees.  Recognize any of these names?

 

  

It's a who's who of people who speak directly to elected officials without designating themselves as lobbyists.  It's also the list of people who hate paying taxes.

My wise friend wrote regarding the Fed and private credit:

It's kind of sad when a regulator puts out a note of the risks of private credit and stands by as the PEU conductors drive their train off the tracks. The fact that they recognize banks provide a higher form of regulatory framework to establish loans is the first red flag. As you read through the report there are so many factors they minimize.

Once a PEU boy, always a PEU boy.  Right Jay?   Residual PEU holdings, nobody declares those....