The Big Ten Conference's consideration of an unprecedented $2.4 billion private equity investment may prove costly, if the 18-member league loses the likes of co-founder Michigan and newcomer USC.
Both schools have expressed opposition to the conference becoming the first to bring private equity into the collegiate athletics equation.
As reported by Kevin Skiver of USA TODAY, the $2.4 billion is not a loan, but rather a direct investment into the conference. "The transaction would create a standalone company called Big Ten Enterprises, in which the investor — UC Investments, the University of California's portfolio manager — would get shares," Skiver wrote. "Big Ten Enterprises would also control the conference's media and sponsorship rights.
"The deal would lock the 18 Big Ten schools together until 2046. In that sense, it's easy to see why the smaller schools with less athletic prestige would be drawn in. It would protect them from realignment while also guaranteeing their share of the revenue pie.
"Then, however, the other shoe drops. UC Investments would get 10% of the Big Ten's media and sponsorship rights earnings for 15 years, at which point it could sell its stake. The other 90% would be divided among the schools involved in the deal (unevenly, based on those schools' earning potentials)."
According to the UC Investments website, its portfolio of investments is currently $190 billion, "which includes retirement, endowment, and cash assets."
Michigan's Board of Regents has spoken publicly against the proposal.
“The U-M Board opposes this private equity deal and urges others to do the same,” said board chair Mark Bernstein.
"The Big Ten does not need to be sold to save college sports," regent Jordan Acker added. "It needs to lead. ... We can’t cry poverty while spending tens of millions on buyouts. We can’t have college sports, the collegiate experience, dictated by private equity."
Michigan and USC could both become independent, according to Skiver, which would change the value of the conference considerably, but likely not enough to prevent a deal with a remaining 16-member conference.
