The Big Ten’s move to capture private equity capital comes amid a rapidly changing college sports landscape that favors those who can spend big for on-field talent and coaching. A recent legal ruling opened the door for athletic departments to participate in direct revenue sharing with athletes, a decision that has contributed to the financial arms race across college athletics and has private capital groups circling.
“Were a deal with private equity to be approved, college sports will have become more corporate than professional sports,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business, who added that the one being considered by the Big Ten is one of the more “complicated” private equity deals he’s seen.
“In times of change like with college sports, you’re looking for flexibility, because you don’t know what your business model will look like in five to 10 years and this isn’t that,” Gordon said.
Under the reported plan, the league would spin off a new entity, Big Ten Enterprises, that would hold all or a percentage of league-wide television rights and sponsorship contracts through 2046. Individual schools still would retain local radio and other deals.
A Big Ten spokesperson did not comment on specifics of the proposal, but told Crain’s Big Ten members have “clearly expressed the need to modernize the operations and structure of our conference to ensure that the Big Ten remains best positioned to offer the highest level of athletic and academic excellence in a rapidly evolving landscape.”
“Over a year ago, we initiated a comprehensive evaluation of our practices to identify partnerships that could secure the financial stability of our member institutions and allow us to not only protect, but expand opportunities for our student-athletes. This is an ongoing process, and we remain committed to finding a path that strengthens the conference for the future,” the spokesperson said in a written statement from the Rosemont-based conference.
While it’s unclear if the deal would proceed without all Big Ten schools involved, the potential absence of one of its biggest football schools in the conference would be significant.
The University of Michigan’s governing board yesterday delivered a harsh rebuke of the proposed deal. Selling equity for a long-term share of conference revenue would undermine the value of college sports, which should prioritize student athletes, alumni, communities and taxpayers, two regents on the eight-member board said.
“It’s time someone said so, so I’m just going to say it: Enough is enough,” UM regent and attorney Jordan Acker said during the university’s board meeting yesterday afternoon.
And when asked if the university’s opposition could be a deathblow to the whole deal, regent board member Mark Bernstein replied, “With regard to this particular deal, I hope so.”
Northwestern University and the University of Illinois Urbana-Champaign did not immediately respond to requests for comment on the deal.
Crain’s Detroit Business reporter Sherri Welch and Ryan Prete, a senior reporter at Crain’s sister publication Pensions & Investments, contributed to this report.
