IMG

[Perspective]

I'm not exactly sure what to say about this, so I'll simply point out that it was announced today that IMG Academy has been sold to a private equity group for $1.25 billion.  

[Nulli Secundus]

1 hour ago, Perspective said:

I'm not exactly sure what to say about this, so I'll simply point out that it was announced today that IMG Academy has been sold to a private equity group for $1.25 billion.  

That means that IMG (students and staff) are going to be squeezed for every penny the firm paid for them, lol.  It could also mean that a potential more lucrative deal on the backend.  Also possible is rebranding, IMG relocation and/or the dismantling of IMG altogether.  Either way, I can guarantee that changes are coming.

[DarterBlue2]

9 hours ago, Perspective said:

I'm not exactly sure what to say about this, so I'll simply point out that it was announced today that IMG Academy has been sold to a private equity group for $1.25 billion.  

Private Equity has been venturing into areas well outside the area of "traditional" Wall Street investing. From residential housing, to CPA firms, to, now, a "sports themed" school. It is largely a reflection of surplus money looking for a home. Look for a reduction in the number of substantially subsidized free rides for highly talented athletes, and a substantial increase in the cost of tuition for those that can afford it. Also look for increased lobbying for assistance from the state for funding subsidized by us, the taxpayers of Florida. 

[Perspective]

7 hours ago, DarterBlue2 said:

 Also look for increased lobbying for assistance from the state for funding subsidized by us, the taxpayers of Florida. 

Two things: 

First, I've now seen reports that IMG is the prototype and that the new owner wants to replicate the concept in several other states.

Second, to your point above (and open question to everyone), why should the state subsidize IMG? 

[DarterBlue2]

On 4/26/2023 at 9:42 AM, Perspective said:

Two things: 

First, I've now seen reports that IMG is the prototype and that the new owner wants to replicate the concept in several other states.

Second, to your point above (and open question to everyone), why should the state subsidize IMG? 

Regarding both items above, I did a little reading up on the matter and the first thing I noticed was that the buyer was Hong Kong based. I found that to be quite interesting given China's clamp down on Hong Kong in recent years and our own deteriorating relationship with the PRC. If the new owner wants and is allowed to proceed with the concept, this may be a good thing. Personally, I am not a big fan of the IMG concept, but to each his/her own. I guess the Academy was put up for sale because of the pending merger of its current owner with the WWE. In short, the new combined company wants to go is a different direction from "mainstream sports", and focus on professional wrestling and MMA.

In any event, given where the acquirer is based, it will likely not be able to avail itself of taxpayer funding. Had it been a domestic acquirer, my guess is it would lobby the state hard for this.

My guess is that given the current political climate, this deal may not get done, but I have seen stranger things happen. 

[gatorman-uf]

I will never understand the IMG school model as a whole in terms of how they make any real money.
The boarding school is 89,900 a year! How many parents/community members can afford that type of tuition. 
Is there really that much of a gap in terms of coaching/sport education from a school like Bolles/STA and IMG. I just don't see it. 
For every other sport, I just don't see the economic justification whether those kids turn pro or earn a scholarship, they have to know the odds of that investment being worth it. 
 

If you are a non 4* or  5* kid, is paying 90K each year going to get you your money back in the long run. I just don't see it. As a coach, why are you taking that job. It isn't a college job where you get paid well or a high school job where you can actually be part of a community or mold young men. These young men are mercenaries. 

[Dr. D]

This may help explain their business model:

From Business Standard:

About IMG Academy:

IMG Academy is the world's leading sports education brand, providing a holistic education model that empowers student-athletes to win their future, preparing them for college and for life. IMG Academy provides growth opportunities for all student-athletes through an innovative suite of on-campus and online experiences:

- Boarding school and camps, via a state-of-the-art campus in Bradenton, Fla.

- Online coaching via the IMG Academy+ brand, with a focus on personal development through the lens of sport and performance

- Online college recruiting, via the NCSA brand, providing content, tools, coaching and access to a network of 40,000 college coaches

 

From Patch:

 

Endeavor purchased the school’s parent company, IMG, for $2.4 billion in 2014, the Tampa Bay Business Journal reported. Since then, IMG Academy has generated $83 million in revenue each year.

 

So their business model has three parts, and they're making a pretty good chunk of change somehow.

[Perspective]

17 hours ago, Dr. D said:

So their business model has three parts, and they're making a pretty good chunk of change somehow.

I'm no economist, but if my math is right, $83 million on a $2.4 billion investment is slightly less than a 3.5% annual rate of return.  I can pretty much assure you the new buyer is hoping to improve those numbers. 

[DarterBlue2]

1 hour ago, Perspective said:

I'm no economist, but if my math is right, $83 million on a $2.4 billion investment is slightly less than a 3.5% annual rate of return.  I can pretty much assure you the new buyer is hoping to improve those numbers. 

I  was a CPA. It is not clear whether that revenue generated was gross or net. So, things could be way worse than a 3.5% rate of return.

[Dr. D]

Which is probably why the new owners only paid $1.25 billion.  If there can grow revenue by $40 million a year, they're up to a 10% ROI.  Of course, the sellers would have been better off putting their money in Netflix (or similar) instead in 2014.

[PinellasFB]

On 4/26/2023 at 1:52 PM, gatorman-uf said:

If you are a non 4* or  5* kid, is paying 90K each year going to get you your money back in the long run. I just don't see it. As a coach, why are you taking that job. It isn't a college job where you get paid well or a high school job where you can actually be part of a community or mold young men. These young men are mercenaries. 

You're kidding yourself if you think players are actually paying anything to play there.  Maybe their non-scholarship lower level team but not the travel team.

[Perspective]

3 hours ago, PinellasFB said:

You're kidding yourself if you think players are actually paying anything to play there.  Maybe their non-scholarship lower level team but not the travel team.

Agreed.   For me, IMG is like an AAU basketball team on steroids.   You've got the doctor and the orthodontist who have visions of their 12-year old sons earning scholarships and playing college basketball.  So, they start up a team that is comprised of the sons of all their wealthy friends.   They quickly figure out that without some additional talent, they're going to continue to get their clocks cleaned at every tournament that they play in.   So, they go out and find a few kids that have the talent, but not the resources.   And the families of the original team members kick in a few extra bucks so that the talented kids can play for free.  The irony, of course, is that their kids won't get nearly the playing time they otherwise would get, and much of the playing time will be in the later stages of blow-out games, but the team will win games and tournaments because the talent is there now and their kids will be able to hold up the trophies and tell their friends their team won the tournament. 

IMG is the same.  They attract kids from, literally, all over the world, whose families can afford to pay full freight chasing the dream of getting a college scholarship.  And those kids play basketball, tennis and baseball.  And some play football, but on the "White Team" or the "Green Team" or the "Purple Team."  But if you can attract enough kids who are paying full price, you can then afford to bring in (i.e., recruit) the ultra-talented kids who don't have the resources and you can create a "Blue" team that competes for national championships.

Simply put, those who have the means, but not necessarily the talent, are subsidizing those who don't have the means, but who do have the talent.