One of the most dizzying weeks in a wild college football season featured major news from the Big Ten, where Michigan fired coach Sherrone Moore for personal transgressions with a staff member, and from the ACC, where Notre Dame lambasted the conference office for promoting Miami’s playoff case at the Irish’s expense.
But the Big 12 was not to be outdone, offering a double-whammy of news on the business front last week — first with Utah revealing a first-of-its-kind partnership with private equity and then, on Friday afternoon, with the conference acknowledging it, too, was plunging into private capital.
In a statement to Yahoo, which first reported the deal, the Big 12 revealed it was close to “a multifaceted strategic business partnership” with two private equity firms that carries a maximum value of $500 million.
The agreement with RedBird and Weatherford Capital, which isn’t yet official, would feature an “opt-in capital solution” for the member schools and pursue “complementary investment opportunities inside and outside of the collegiate athletics ecosystem.”
How much cash is involved? What does it mean for the Big 12 schools? Are public institutions at risk of becoming private equity pawns? Will the partnership impact the balance of power that plays out on Saturdays throughout the fall?
Also, how does the deal differ from the Big Ten’s controversial, unsuccessful (thus far) attempt to embrace private capital?
Let’s start there, because the Big Ten’s venture into capital markets nearly ripped the conference apart with Michigan and USC opposing commissioner Tony Petitti and the other 16 schools. The standoff lasted weeks and dominated college football’s off-the-field news cycle because of the long-haul implications for the sport.
In exchange for a $2.4 billion cash infusion, Big Ten schools would have extended their grant-of-rights agreement by 10 years, until 2046, thus binding them to each other and effectively killing the formation of a college football super league in the 2030s.
Additionally, the conference would have created a for-profit commercial arm designed to house all revenue-generating ventures, including the media rights contracts, and sold 10 percent of the entity to UC Investments, the pension fund serving the University of California that provided the $2.4 billion infusion.
The final piece of the Big Ten’s plan: creating revenue tiers within the conference that would establish amounts for both the up-front cash infusion and the annual distributions of media rights and postseason revenue.
Given the money involved, the equity sale (of the commercial arm) and the momentous 20-year grant-of-rights lockup, the deal was both sweeping in nature for the industry and strategically misguided for the Big Ten’s biggest brands.
By comparison, Big 12 commissioner Brett Yormark’s private capital plunge is tame, low-risk and shrewd:
— It does not create a commercial arm or sell equity to RedBird or Weatherford. The schools would continue to own 100 percent of all conference operations.
— There is no grant-of-rights extension. The 16 schools would remain bound to the Big 12 through the current media rights cycle (until the summer of 2031) and not beyond that point.
— Each campus would have access to $30 million in up-front cash, according to Yahoo, but not in a mandatory fashion. The line of credit (presumably at below-market rates) would be available on an opt-in basis.
— At its core, the arrangement would allow the Big 12 to lean into RedBird, which has an extensive portfolio of partnerships in the sports world, for support identifying new and creative revenue streams.
After all, the Big 12 has already used RedBird to generate $145 million in contracted revenue for the conference office and the schools. For example, the investment firm helped broker the Big 12’s deal with PayPal in July that allowed the company to become the schools’ revenue-sharing platform in the wake of the House v. NCAA lawsuit settlement.
The capital deal currently on the table would deepen the relationship with RedBird, allowing the conference to find revenue streams beyond its traditional framework, and offer a $30 million credit line to any school in need of cash.
(For context: That amount is less than the annual distributions Big 12 schools receive from the conference for media rights, NCAA Tournament units and College Football Playoff cash.)
Bottom line: Yormark’s plan isn’t a game-changer; it’s more like a game-enhancer.
The schools don’t receive trajectory-altering cash, but they retain vital flexibility in case a super league forms or the SEC and Big Ten expand in the early 2030s.
It’s not nearly as aggressive as the Big Ten’s private capital plan — or even Utah’s partnership with the private equity firm Otro — but it doesn’t come with as many risks.
That tradeoff seemingly suits the Big 12 just fine.
The conference has stronger internal alignment than the ACC and Big Ten. It thinks radically but acts rationally. And every available lever, both on the campuses and at HQ, it is working to best position the schools within a dynamic landscape.
View the capital deal with RedBird and Weatherford as another tool in the Big 12’s kit as it braces for the next iteration of college sports. Nobody knows what’s coming, but everyone knows something’s coming.
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