The Big Ten is “closing in” on a private equity agreement that could bring in a total of more than $2 billion for member programs, ESPN’s Pete Thamel and Dan Wetzel reported Friday.
There has been recent “momentum” on the deal and “a vote is expected in the near future,” Thamel and Wetzel wrote.
Yahoo Sports’ Ross Dellenger reported the Big Ten is in negotiation with UC Investments, a $190 billion investment fund associated with the University of California pension system.
The agreement could result in up-front payments to schools averaging around $140 million each, Dellenger reported. Some programs’ payments are expected to exceed $150 million, per Dellenger.
Part of the deal would involve the creation of a new subsidiary called Big Ten Enterprises to control media rights and sponsorship deals, Thamel and Wetzel reported.
Ownership shares in Big Ten Enterprises would be split between the 18 member programs, the Big Ten office and UC Investments, per Thamel and Wetzel.
Dellenger reported Friday that Big Ten commissioner Tony Petitti and other league executives had recently “accelerated” negotiations.
He also wrote that stakeholders in influential Big Ten programs Ohio State and Michigan had recently “warmed to the idea, paving the way for a vote as soon as next week.”
Thamel and Wetzel reported that Ohio State and Michigan, the two wealthiest programs in the Big Ten, were “expressing skepticism initially” and had since been “hit with significant lobbying” from both the league and fellow members.
Implementing the proposal will require unanimous league support, per Dellenger. Thamel and Wetzel reported that “the league is still working with leadership to make a final decision.”
Dellenger reported that private equity Apollo Global Management and Blackstone were also “finalists” to make a deal with the Big Ten before getting outbid by UC Investments.
According to details of the proposed deal described by Dellenger, UC Investments would provide a $2.4 billion cash infusion as a “one-time equity distribution.”
In exchange the investment fund would receive a 10 percent stake in Big Ten Enterprises as well as a cut of annual revenue distribution, per Dellenger. UC Investments is expected to remain a “passive investor” without a controlling role in the league’s operation, Dellenger reported.
Big Ten Enterprises is ultimately expected to distribute uneven payouts to member programs in a way similar to the ACC’s new model, which bases program funding on television ratings, per Dellenger.
The pending deal has attracted attention from United States Senator Maria Cantwell (D-Wash.), who sent a letter to each Big Ten program Friday warning schools the deal could impact their tax-exempt status.
This potential deal comes amid the first season of NCAA revenue sharing, which has allowed schools to spend up to $20.5 million per year directly paying athletes.
That cap is based on program budgets and could climb faster if Big Ten and other leagues begin bringing in private capital, Dellenger reported.
The SEC has already been speaking with Goldman Sachs about a potential deal of its own, while the Big 12 has “twice seriously examined capital infusion and equity deals over the past 16 months,” per Dellenger.
