April 2024 Wrestling Talk

[sabremike]

12 hours ago, AxB said:

Clash at the Castle 1 was a Stadium Show (in a city that doesn't have a Castle). Clash at the Castle 2 is in the Glasgow Hydro (also in a city that doesn't have a Castle; They're thinking of Edinburgh). But the first ever Pro-Wrestling show at the Glasgow Hydro, right after it opened, was a TNA House Show. Part of TNA's UK tour that year. There are 4 Football Stadiums in Glasgow (The National Stadium, plus grounds for Rangers, Celtic and Partick Thistle), running a building with a 14,300 capacity as Clash at the Castle just seems like they're devaluing the brand immediately.

Hold it at Firhill and main event with The Rock vs Kingsley.

[Craig H]

Is there a place where we’re discussing how TKO and Endeavor are being sold again?

This time to a company called Silver Lake(?) who will be the one to take them private.

[SirSmUgly]

4 minutes ago, Craig H said:

Is there a place where we’re discussing how TKO and Endeavor are being sold again?

This time to a company called Silver Lake(?) who will be the one to take them private.

Says at Variety that TKO will remain publicly traded 

https://variety.com/2024/tv/news/endeavor-goes-private-silver-lake-13-billion-1235957901/

Edited April 2 by SirSmUgly

[Craig H]

Vince selling off a bunch of shares makes a little more sense because only he would be this dumb to do something like that a week prior to this announcement.

[odessasteps]

Silver Lake is one of those venture capital companies that are now buying up soccer teams around the world. 

They own part of (Manchester) City Football Group. 

[Greggulator]

This is what I write about professionally. I am sleep deprived so bare with me if I mix anything up.

There is something called a private equity fund. Basically, a private equity firm says: “We would like to raise, say, $1 billion. We will go out and ask investors for this money. But we do not mean the general public. We mean pension plans that manage money so teachers are firefighters can retire, college endowment funds, various charitable foundations and incredibly rich people. Then we will take the $1 billion we raise from these investors, buy privately held business, and hopefully sell them for a profit 5 to 7 or 10 years later and we will split those proceeds with our investors.” (Literally — I write about how pensions and endowments and etc. invest in private equity.)

Some of the bigger private equity managers you may have heard of are BlackRock and Apollo and KKR. And private equity is this incredible amount of the global economy. There are only 3,000 or so publicly traded (as you can own a portion of the company by buying shares of it on a stock exchange) and there are probably 3,000 privately held businesses within 10 miles of my house. Literally, private equity managers own trillions of dollars in assets (and are then indirectly held by government employees with a pension plan.)

Silver Lake is a really big private equity manager. They raised $20 billion for their last investment fund. Silver Lake largely focused on buying and selling technology and tech adjacent companies. (It’s all sort of nebulous.)  Or they buy large stakes in these companies. The term used for these are “portfolio companies.” Silver Lake is or was a big investor in AirBnB and Expedia and SoFi and Twitter and Ancestry.Com and Skype and Dell Technologies and a lot of other companies. Silver Lake is really big time. 

Silver Lake has branched out into sports and entertainment recently. They own/own large stakes in AMC and Fanatics and the Australian professional soccer league and Manchester City (and its sister teams around the globe.) They have also been buying assets from Endeavor like a bunch of minor league baseball teams before just deciding to buy Endeavor outright. (Which is today’s news.)

Endeavor was a publicly traded company (and still will be until all the technicalities of this sort of merger and acquisition are completed.) You can buy shares of Endeavor. At the same time, Endeavor owns 51 percent of TKO (WWE and UFC combined) and people like us can buy shares of TKO. (Endeavor is what is referred to as a parent company.)

Private equity firms do something called a “take private” where they will buy a publicly traded company (or like a division of a publicly traded company) and own all of almost all of its shares. Silver Lake just bought Endeavor and now owns it as a private company. But Endeavor still owns over half of the WWE.

So, what does this mean for the WWE? This from here is just speculation. Silver Lake has to sell Endeavor over the next few years (they are contractually obligated almost certainly) and give their share of the proceeds back to its investors (pension funds, college endowments, etc.) There are all kinds of technqiues private equity managers can use to hopefully make a company more profitable. Sometimes, they will put in place their own leadership team. Other times, they will use their own expertise to help a company they acquired grow the business. Or other times they will, say, lay off 25 percent of the company to “save expenses.” 

In this case, it’s probably highly likely that Silver Lake will give Endeavor’s current leadership team some degree of autonomy in how they run the company. Ari Emmanuel is the Endeavor CEO and he’s a power broker in entertainment so Silver Lake is likely saying “Hey, Ari Emmanuel and your team. We bought your company because we like you, now go make us more money.” But there could easily be a time where Silver Lake does not like what Endeavor is doing and will decide to put their own people in place.

As far as TKO itself goes: Who really knows. No one who works in this space would Be surprised at all if Silver Lake was to buy TKO or the WWE separate from that. I have no insider knowledge of this — just that Silver Lake owns Endeavor, which owns just over half of TKO, so why wouldn’t Silver Lake just buy TKO outright? Or someone like Comcast or Disney could approach Silver Lake and say “hey, we really want to buy TKO” or even “We really just want to buy the WWE half of TKO.”  None of that would really surprise anyone.

But Silver Lake now owns Endeavor. And it has to sell Endeavor at some point over the next 7-10 years so it can give money back to its investors so people who work for your state’s public works department can have a monthly check sent to them when they retire.

[Technico Support]

Thanks, @Greggulator!!  That was incredible.  Now please explain to the plebeians how Mitt Romney killed Toys R Us.

[hammerva]

So who had Drew Gulak accused of sexual harassment on their 2024 bingo card?  According to Ronda Rousey,  Drew grabbed the strings on her sweatpants.   

[odessasteps]

Must not have gone to his SHARP training. 

[Sex Machine Gun]

He was obviously trying to drag her to see a PowerPoint presentation.

(that was him, right?)

[Godfrey]

10 hours ago, Greggulator said:

But Silver Lake now owns Endeavor. And it has to sell Endeavor at some point over the next 7-10 years so it can give money back to its investors so people who work for your state’s public works department can have a monthly check sent to them when they retire.

What happens to the retirement funds if the investment is a loss?

[Raziel]

18 minutes ago, Godfrey said:

What happens to the retirement funds if the investment is a loss?

The people with said fund have to work for another 10 years while the guys that made the investment move on to the next one without a thought, care, or consequence.

[Greggulator]

15 minutes ago, Godfrey said:

What happens to the retirement funds if the investment is a loss?

So what happens is this:

There is a private equity fund and it raises $1 million. It puts in $100,000 of its own money. And then it gets nine investors (pensions, etc.) to each kick in $100,000. (All math is hypothetical math and it is more complicated in reality.)

The private equity fund takes that $1 million and will use it to buy 5 companies at $200,000 a pop. Maybe they are able to sell all five for $400,000 each later on for a total $2 million. Then  the proceeds are split between the investors (pensions, etc.) and each investor did well with returns (they put up $100,000 and got $400K back.)

But maybe what happens (and it can happen) is they will have four successful “exits” (when you sell a company) but one company will be a bust and goes out of business.

So what happens is that the fund made $1.6 million instead of $2 million. 

Think of it like this: Silver Lake raised $20 billion for its 15th private equity fund — think of it as an Easter basket. They will buy probably 10 companies with that $20 billion — each one an Easter egg. Endeavor will be one of those 10 Easter eggs. Maybe one egg will break. But will all 10? 

[Greggulator]

9 minutes ago, Raziel said:

The people with said fund have to work for another 10 years while the guys that made the investment move on to the next one without a thought, care, or consequence.

See below. There are certainly criticisms to be made about how this all works, but one company in a private equity fund failing isn’t going to ruin a pension plan.

[Technico Support]

5 minutes ago, Greggulator said:

So what happens is this:

There is a private equity fund and it raises $1 million. It puts in $100,000 of its own money. And then it gets nine investors (pensions, etc.) to each kick in $100,000. (All math is hypothetical math and it is more complicated in reality.)

The private equity fund takes that $1 million and will use it to buy 5 companies at $200,000 a pop. Maybe they are able to sell all five for $400,000 each later on for a total $2 million. Then  the proceeds are split between the investors (pensions, etc.) and each investor did well with returns (they put up $100,000 and got $400K back.)

But maybe what happens (and it can happen) is they will have four successful “exits” (when you sell a company) but one company will be a bust and goes out of business.

So what happens is that the fund made $1.6 million instead of $2 million. 

Think of it like this: Silver Lake raised $20 billion for its 15th private equity fund — think of it as an Easter basket. They will buy probably 10 companies with that $20 billion — each one an Easter egg. Endeavor will be one of those 10 Easter eggs. Maybe one egg will break. But will all 10? 

I guess I’m an idealist just wrapped in cynic clothes, but shit like this, hedge funds, venture capitalists, and really the stock market in general, just gross me out about my country.  Just all these people making money but not producing anything of tangible value, just making money by making money all the way down while regular people can’t afford shit.  It’s sickening.

[Godfrey]

16 minutes ago, Greggulator said:

Think of it like this: Silver Lake raised $20 billion for its 15th private equity fund — think of it as an Easter basket. They will buy probably 10 companies with that $20 billion — each one an Easter egg. Endeavor will be one of those 10 Easter eggs. Maybe one egg will break. But will all 10? 

Thanks, that was my understanding too but it’s good to have experts weigh in. So it would only be affected in a 2008 type crash?

Edited April 3 by Godfrey

[Greggulator]

1 minute ago, Technico Support said:

I guess I’m an idealist just wrapped in cynic clothes, but shit like this, hedge funds, venture capitalists, and really the stock market in general, just gross me out about my country.  Just all these people making money but not producing anything of tangible value, just making money by making money all the way down while regular people can’t afford shit.  It’s sickening.

Well, there is tangible value in a lot (if not most) cases. A private equity fund bought a company I used to work for. That gave the company a huge injection of cash. And then the company used that to hire a lot more people to grow. The company I used to work for wasn’t going to be able to do that on its own.  

Venture Capital — that’s essentially a private equity fund, but it instead looks to buy stakes in companies that are just starting out. It’s riskier since it is really hard to start a company. But entrepreneurs need to get money to start and grow from somewhere.

There are certainly many other cases where things are not as rosy. I will write about some of those later. But it’s not a “blanket statement” thing where this is all bad or it is a perfectly run sysytem. 

[Greggulator]

1 minute ago, Godfrey said:

Thanks, that was my understanding too but it’s good to have experts weigh in. So it would only be affected in a 2008 type crash?

 That’s the idea behind it. You are diversifying and reducing your overall risk. 

[Greggulator]

11 minutes ago, Technico Support said:

I guess I’m an idealist just wrapped in cynic clothes, but shit like this, hedge funds, venture capitalists, and really the stock market in general, just gross me out about my country.  Just all these people making money but not producing anything of tangible value, just making money by making money all the way down while regular people can’t afford shit.  It’s sickening.

So with what I write about — pensions are absolutely for regular people. The people who get pensions are teachers or firefighters or people who work for the state roads division and pave roads or the people who answer the phone at the state DMV office. They worked in public service and in return get a guaranteed monthly payment during their retirement years. 

But in order to make it work, you need to make sure they have enough money. And that requires investing that money. Pensions invest money across all sorts of assets — the general stock market, government bonds, real estate and then riskier things like what I write about. There are also retirement plans and endowments that own very large amounts of timberland.

[Godfrey]

It’s the real estate portion that I have beef with. Companies like BlackRock and groups like Real Estate Investment Trusts gambling on land/housing are what’s driving up rent and associated costs across Canada, but sometimes they’re tied to teacher pensions and it keeps people from fighting too hard even though they are getting screwed in the moment

[Greggulator]

3 minutes ago, Godfrey said:

It’s the real estate portion that I have beef with. Companies like BlackRock and groups like Real Estate Investment Trusts gambling on land/housing are what’s driving up rent and associated costs across Canada, but sometimes they’re tied to teacher pensions and it keeps people from fighting too hard even though they are getting screwed in the moment

I would also say that is a very complicated issue. There is never a one size fits all or east answer. I am not a private real estate expert but my company writes a lot about it and it comes up a lot in my work. 

Here is a contrary point of view. There are a lot of reasons why housing costs the way it does. But everything with prices always at the end comes down to supply and demand. There is an incredible amount of demand for housing (everyone needs somewhere to live) but there is limited supply because it takes a long time to build new housing and a lot of resources to maintain what already exists.

So… you need money and expertise to make that happen.  And that has to come from somewhere. 

Do people on the financier side do things to profit by controlling supply or not spending enough (or spending poorly) to maintain what they own? Certainly. But do they also spend money to make money by building new houses or refurbishing properties or etc? They do that, too. 

Here is where I come down as someone who writes about finance professionally: 

There are certainly many criticisms to be lobbied at this practice. But many of the critics stand to gain by exaggerating the criticisms — politicians want your votes, people want to sell books and get booked on speaker tours, advocacy groups want to grow their influence.

And there are many people in finance who defend this system night and day, make very good livings doing so, and then completely wash away any of the bad side of finance while enjoying comfortable lives.

In the middle are the people who work for pensions and college endowments who allocate that money. And while they make decent money (I would love to have a six figure income), and while there are certainly opportunities to end up working for someone on the finance side to make a lot more money, most are in the business because they feel a duty to be stewards of the money that is needed for teachers/firefighters/etc. have a good quality of life. And many of the people in this role are very thoughtful people and want to invest not just to make money but to make money in positive ways. After all, it’s one thing to provide a retirement for a teacher, but it doesn’t really matter if you’re retired as the world crumbles.

[Technico Support]

Thanks for clarifying, @Greggulator  Aside from @Godfrey's point about real estate, one thing that kills me is private equity companies or venture capitalists  buying companies like Toys R US and Sears, playing accounting games, artificially pumping up valuations, sucking the company dry, bankrupting them, and then leaning on their rich buddies who own media outlets to create stories blaming these companies' failures on market forces.  

One example I remember was buying Sears stores AND the land they're built on, creating a separate "company" to own each, and then renting the land back to the stores at crazy high rates.   

Then Sears eventually dies and the majority of news stories are about how Amazon and the changing market killed Sears, never mentioning the robber barons who stripmined the company.

Edited April 3 by Technico Support

[Curt McGirt]

2 hours ago, Greggulator said:

So what happens is this:

There is a private equity fund and it raises $1 million. It puts in $100,000 of its own money. And then it gets nine investors (pensions, etc.) to each kick in $100,000. (All math is hypothetical math and it is more complicated in reality.)

The private equity fund takes that $1 million and will use it to buy 5 companies at $200,000 a pop. Maybe they are able to sell all five for $400,000 each later on for a total $2 million. Then  the proceeds are split between the investors (pensions, etc.) and each investor did well with returns (they put up $100,000 and got $400K back.)

But maybe what happens (and it can happen) is they will have four successful “exits” (when you sell a company) but one company will be a bust and goes out of business.

So what happens is that the fund made $1.6 million instead of $2 million. 

Think of it like this: Silver Lake raised $20 billion for its 15th private equity fund — think of it as an Easter basket. They will buy probably 10 companies with that $20 billion — each one an Easter egg. Endeavor will be one of those 10 Easter eggs. Maybe one egg will break. But will all 10? 

So this sounds like a pyramid scheme to me, or a vertical organization like the mafia: collected funds rise upward, trickle down economics will mean some people get money and some get fucked, but there is enough profit to ensure that the top survies. 

EDIT: I did a Google and this is the exact first thing that came up.

Quote

A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of "investors." The initial promoters recruit investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because at each level, the number of investors increases.

This is different how?

Edited April 3 by Curt McGirt

[Greggulator]

11 minutes ago, Technico Support said:

Thanks for clarifying, @Greggulator  Aside from @Godfrey's point about real estate, one thing that kills me is private equity companies or venture capitalists  buying companies like Toys R US and Sears, playing accounting games, artificially pumping up valuations, sucking the company dry, bankrupting them, and then leaning on their rich buddies who own media outlets to create stories blaming these companies' failures on market forces.  

One example I remember was buying Sears stores AND the land they're built on, creating a separate "company" to own each, and then renting the land back to the stores at crazy high rates.   

Then Sears eventually dies and we see nothing but stores about how Amazon and the changing market killed Sears, never mentioning the robber barons who stripmined the company.

Toys R Us is one of the biggest negative headline stories. So here's my take on what happened with Toys R Us.

1)  Here's how a private equity company makes money, using hypothetical money and very simplified examples. They go out to investors (pensions, etc.) and raise $1 million. They have roughly 5 years to buy 10 companies with that $1 million. They then have up to an additional 7 years to sell those companies at a profit -- either by selling them to another entity. Or they can take them to the stock market. 

The private equity fund usually charges a 2% annual management fee for the first five years on the money they have collected in the fund. The general idea behind this is: "Hey, we're working hard to find good investment opportunities, so we're charging you for that." Those fees are then reduced (0.5%) if not eliminated after those first five they. Then they make the bulk of their money when they sell a company. How this works is the investors say: "Thank you for the good work. We will get the entirety of the first 8% of the profits you sent back to us. Then after that, you'll get 20% of everything that was made, and we will split the remaining 80% amongst us."  (This 20% is called carried interest.) The private equity manager will also usually put in a certain amount of money in the fund it raises (say 5% of the initial $1 million) and they don't have to split their share of those profits.

Does that 2% annual management feed result in a lot of money for a private equity company that manages a fund? Absolutely. A good amount of money. I have been using $1 million as an example just for math purposes. In reality, a private equity fund that's $1 billion in size is on the smaller side. So those 2% in fees is absolutely a lot of money. 

I'm too busy to find the exact numbers for Toys R Us now, and it was a more complicated investment. But using the math above for a $1 billion fund -- the private equity fund would receive $200 million in management fees for those first five years. But like I said above -- a private equity fund is a basket of companies that you can look at as Easter eggs. So those $200 million are for management fees not just for Toys R Us, but all of the other companies in that basket. (Which was probably 7 or 8 other really big companies.)

The private equity funds pay a lot more for a company like Toys R Us than it makes in the management fees. And the private equity fund also puts in a lot of money(*) in ways to make a company grow. The private equity fund's money is made by successfully selling a company and earning that 20% in carried interest. 

So -- buying Toys R Us and then having it go into bankruptcy and having your investment in Toys R Us as a complete and total loss means the private equity fund lost money. They bought the company. They invested in the company. But the deal went bust and they lost a lot of money. A lot of people read the management fees (and it's an insane amount of money) and think the private equity funds walked away holding the bag. They didn't. THose management fees acted as a buffer for their losses, so they didn't take a full hit. (And, chances are, the other companies in their basket did well.) But they absolutely lost money in the transaction. 

2) This is where the * comes in. Here is a hypothetical example. (It's also probably very flawed since I don't gamble, but just bare with me.) You have a DraftKings account. You see a point spread that shows Northern Iowa favored to beat Southern Illinois by 8.5 points. But you've been following Northern Iowa basketball intently this year and think there's no way they'll beat Southern Illinois by 8.5 points. So, you want to bet $100 on this game, because you're going to make a lot of money doing so -- thinking you can even get $1,000.

But you have an even better idea. What if you bet $1,000? You could get $10,000 if your hunch is true. But you only have $100. So, you ask someone you know to loan you the $900, along with a 5 percent interest ($45) he'll charge for taking the risk in lending you the $900. That way, you'll win $10,000 but will only spend $100 of your own money. You'll pay the person giving you your loan back, along with interest. Even after all of that, you'll still make $9,055 ($10,000 minus the $900 loan and $45 in interest.) 

But what if you lost? You'll have to pay him back the $945. But you don't have that $945, and you can't pay back this loan. So you make an agreement -- if I lose and I can't get the $945, you can take possession of my $945 couch instead. No one really wants that to happen -- you'd like the couch. And the person who lent you the money would rather have the money than your couch, because he has to go and then sell your couch and hope he can get $945 for it. 

This type of thing happens in finance. It's called "leverage." You will hear the phrase "leveraged buyout" or "LBO" a lot. The people who work for private equity funds do a lot of research. They examine industries and companies for potential acquisitions. They (especially the biggest firms) have these very hardcore debates about what companies to buy and when to sell them. They look for what they see as opportunities to make money -- they think they see an opportunity where others don't, just like the Northern Iowa and Southern Illinois example above.

But they also know that you can make a lot more money by using leverage (loans) to do so. So they take out these loans with the interest (who they take out loans from is incredibly complicated and I'll spare you) and then will use the assets of the company they just purchased as collateral. The private equity company hopes that along the way the company becomes more and more profitable so they can pay back these loans as quickly as possible, because the more you wait to pay them back, the most you have to pay in interest. (People even do this to buy stocks on RobinHood. Please don't do this.)

If you can't pay back these loans, the lenders get to take possession of these assets. This is bankruptcy. It will usually go to bankruptcy court or something similar and everyone will fight about who gets what and how much things are valued at and then eventually a judge or someone similar decides on all of that. Then there's essentially a new company with new owners who probably don't want to own a new company. 

So the private equity funds who owned Toys R Us -- on top of losing their initial investment, they also had to pay back all of the loans they used to buy Toys R Us, and then they had to spend even more money for the resources needed when you're trying to salvage what you can in a bankruptcy proceeding. 

3)  When a private equity fund buys a company, they have a timeline with which they have to sell the company -- usually within 10 years of when the fund was started. (There's complications to this.) Willa private equity company "cut expenses" (code for "lay people off") when they buy a company. Or they'll replace a company's entire management team. In many cases, yes. But that's not an absolute truth. It really depends on the company and the private equity manager's strategy. Like I said before -- I worked for a company that a private equity fund bought a huge stake in. Nobody there got laid off. We opened up an office in a different region and expanded. And companies lay off people all of the time if they think they need to do a better job managing expenses and they think they can do so because they hired too many people. And are there examples of when a private equity company took on too much leverage when it bought the company, and the debt expenses become too much? Absolutely. But companies themselves can take on debt to grow, and that can backfire. 

(I'm not defending any of this. But it's the sad, ugly reality of capitalism. We aren't guaranteed jobs. But that's a whole other fucking topic.) 

4) As far as media relations and private equity -- I say this as someone who writes specifically about private equity. People in the more general media really don't like private equity at all. There are a few reasons for this. A primary one -- a lot of private equity companies bought newspapers, cut their staffs, saddled them with debt and then lost a lot of money when they tried to hawk them off. It war really bad for the industry. 

One trend in private equity that has gotten a lot of negative press the past few years is in healthcare. A lot of PE firms buy companies that manage/own a bundle of nursing homes or hospitals or doctors practices. There's plenty of examples where they are not managed well by a PE fund -- closing a local hospital, trimming costs at a hospice facility meaning there's less employees -- and that's actively awful, and there is a ton of bad press about when this happens. And there should be. 

5) As far as Toys R Us goes -- I can't say one way or the other about how it was managed. Retail's not my expertise (aside from working in retail in my teenage years) and I wasn't writing about the industry yet. But, yes, the whole Amazon excuse literally just came up at something I'm writing about. That's certainly not the only reason why Toys R Us went bankrupt. I would say that, yes, the debt costs probably were a gigantic burden on the company. But Amazon really did completely change the ways we buy and shop, and other big retailers (Borders comes to mind immediately) and even shopping malls also went bankrupt or were severely impacted by Amazon. 

[Greggulator]

39 minutes ago, Curt McGirt said:

So this sounds like a pyramid scheme to me, or a vertical organization like the mafia: collected funds rise upward, trickle down economics will mean some people get money and some get fucked, but there is enough profit to ensure that the top survies. 

EDIT: I did a Google and this is the exact first thing that came up.

This is different how?

I see your point. But the difference is:

A pyramid scheme/MLM requires a never ending stream of new participants on the bottom end to make it work. Until it doesn't.

A private equity fund has a timeline to raise the amount of money it wants to raise. Usually it's something like 2 years. It usually takes less than that, but that's the general rule-of-thumb. And a private equity fund only has room for a limited amount of investors in the fund. The bigger ones will get more investors than smaller ones. But there's still a limited pool of investors. And when a private equity fund decides it's time to start raising a new fund (which sometimes comes pretty quickly), the current investors are given the first opportunity to re-up but the fund might be big enough to allow for some new investors. 

There's also governance. The SEC and FTC have a lot of oversight over how private equity and mergers/acquisitions. And, under Biden, they've put in a lot of new regulations to increase oversight on the industry and provide for more protections for the pensions and endowments and etc. who are the investors. 

And within the private equity fund itself there's governance. Each private equity fund has something called an LPAC. This is a special group of the investor pool (usually saved for the biggest or most influential investors) who act in an advisory role for the private equity firm that manages the fund. And the LPAC will have certain veto powers within the fund to approve/deny different things the private equity manager may want to do or propose. 

So -- that's where it's not a pyramid scheme, besides the pyramid scheme that is capitalism overall.

But where PE gets gross in my opinion is that there's a mad rush among institutional investors to increase how much they participation in private equity. There's a lot of pressure on those on the allocation side (who I write about) and that can be brutal.

And there's also different talent levels and resources among allocators. For example: Massachusetts has a really big public pension for people who work for the state or local governments. (And this means teachers and etc.) They'll have more to work with since they can hire more people to manage the investments and can pay them higher salaries. Plus, it's also based in Boston where you have job candidates from top-level universities and plenty of people who work in finance. And living in Boston itself is attractive to a lot of people. (I lived there myself for a few years -- not attractive to me, personally, but I get it.) The people who work for a pension system like that (along with the board that has governance over them) are really sophisticated and know what questions to ask and who does a good job and who is reputable and looming economic trends.

But then there are all sorts of really friggin' insane and random pensions across the country. They'll have names like "Western Oklahoma Policeman's and Utility Workers Retirement System." I love watching these meetings (since a lot are streamed.) But they pay a lot less money. The investment team might consist of one or two people. There aren't going to be a lot of finance professionals interested in moving to wherever such an entity would be located. There's even less experienced people interested in job openings at such a place, because you'll probably have a wife and kids by the time you have a good amount of experience to make these decisions and why would you uproot them? The governing board consists of police officers and utility workers of Western Oklahoma and a bunch of people connected to the local government, and good luck explaining any of this to them. 

There's so much pressure at these sorts of pensions and the like to invest in really complicated investments, and there's not as many people who can make those decisions. There's something like 7,000 private equity managers who manage tens of thousands of private equity funds who are all looking for money from investors -- and the grosser ones know who to target.