You are mixing the concepts of debt and equity. There is no note or bond or any of those kind of structures (from what we know and what makes logical sense). It's equity.
You hit the key right here:
It won't be forever because the investor wants to make a profit sometime in the next 3-5 years most likely. Different groups have different time lines.
I think it's important for people to really see this as a win for the "academic" side of the University house. Keeping it very high level-you have two businesses in one. The "school side of all these places and the "sports" side, let's call it.
By doing it this way, you are keeping all risk, any kind of contagion from a blow up in sports, firewalled away from the "school" side of the balance sheet. The same concept applies when people ask why do it this way. If you don't go get the money this way then you have to borrow it or take it from the school side of the ledger. Borrowing would indeed create the nightmare scenario a lot of people are expressing here in which school side assets get put at risk for sports side borrowing.
This is a win for the school side and for the record, I very much believe in and hope we continue to see them go this way. I've been on record many times saying they should split sports off entirely. The University mission is far mar important (and bigger money) so sports shouldn't be out there as a possible risk t it.
Well, now we are seeing that play out in a way. This new venture is keeping sports from hurting school.
