Big Ten isn’t backing down on private equity

The Big Ten isn’t backing down from its private equity play without a fight.

Yahoo Sports’ Ross Dellenger reported Sunday that the conference has functionally given USC and Michigan an ultimatum to get on board with its proposed $2.4 billion cash infusion from UC investments or risk it moving on without them (The Big Ten has denied a vote is coming over the next two weeks, but these things have a habit of coming together quickly).

Since news of the Big Ten’s forays into PE money became public, the question I’ve posed to a number of folks around the industry is almost exactly this: Can a deal go through if some schools don’t sign on?

The answers have been mixed, but the Big Ten is seemingly testing that theory.

USC’s and Michigan’s consternation over the PE deal largely centers on two things: 1) How much involvement should university board of regents have in this discussion; and 2) Do they want to tie themselves to the conference via the grant of rights through 2046?

The board of regents question is valid, especially considering the power vacuums in Ann Arbor and L.A. Neither school has a permanent president in place, while both schools’ boards hold considerable sway over their respective institutional dealings. That shouldn’t be discounted.

But as important as anything in this fight to get Commissioner Tony Petitti’s PE deal across the line is the grant of rights. Any sane investor is going to want to know what they’re investing in and an extension of the grant of rights from 2036 through 2046 is the Big Ten’s way of ensuring what it’s selling.

How that plays out without the blessing or the signatures of two of its biggest brands isn’t altogether clear.

USC and Michigan represent two of, at worst, the five most visible brands in the conference. It’s hard to imagine an investor ponying up the same kind of cash for an asset that doesn’t include two of its most valuable pieces.

There’s also a question of longer-term plays. If the Giants didn’t like the media rights deal they’re getting from the NFL, they can’t shop themselves to the Premier League. But in college football, where self interest and revenue drives all these days, schools are reluctant to bind themselves within a system that seems primed for mass changes.

If USC and Michigan don’t get on board, is any of this worth it?

There’s already a schism between Michigan and the Big Ten office over the conference’s handling of the Wolverines’ sign-stealing scandal. USC now finds itself at odds with Petitti, who has spent considerable personal capital on getting this deal to the finish line, and his staff.

The Big Ten’s mercurial commissioner has promised plenty of — forgive the pun — big ideas in his two-plus years on the job. He has plenty of support from rank-and-file conference members, along with notable power broker Ohio State.

But for a league that already stands head and shoulders above the rest in revenue, has won the last two college football national titles and may make a run at a third straight, is this all really worth a growing fracture between the conference, its commissioner and two significant members?

Sure seems like we’re going to find out.