Jump to content

The Big 10 is pushing ahead with massive private investment deal over objections from Michigan and USC


Recommended Posts

Posted (edited)

I felt this is worth of a new thread because it's such a monumental shakeup for college football. Here's the basic parameters of the deal, from a Ross Dellenger article this morning:

Quote

UC Investments is proposing to buy a 10% stake in the league at a $2.4 billion cost. The deal with the Big Ten not only would infuse those billions in upfront payments to schools — an average of $135 million a school — but it requires an extension of the grant of rights, the establishment of a for-profit business subsidiary (Big Ten Enterprises) and the creation of a future uneven distribution of league revenues.

For more than 15 months, Big Ten commissioner Tony Petitti and his executives have worked to amass a capital plan that they believe addresses four main priorities from their membership: (1) long-term stability (grant-of-rights extension); (2) the creation of a privatized business entity to better monetize the league’s assets (Big Ten Enterprises); (3) immediate cash at a financially stressful time (the $2.4 billion that UC Investments agreed to commit by purchasing 10% of Big Ten Enterprises); and (4) the establishment of uneven revenue distributions (keeping its big brands happy).

So basically, selling 10 percent of your university's athletic department for $135 billion. As part of this agreement member universities also must agree to unequal revenue sharing. USC is not on board for this reason. In public comments made last month, University of Michigan trustees described the deal as a “payday loan” and called it an unnecessary step and a “bail out” for those Big Ten schools that have mismanaged their finances. The Big 10 is moving ahead anyway.

Quote

The league has signaled to schools that it may hold a vote in two weeks to potentially adopt a 20-year, $2.4 billion deal with a California pension fund and extend the conference grant of rights an additional 10 years in what would be an unprecedented decision from a major conference — striking a membership extension without all of its current schools.

The move for a vote, supported and encouraged by many university administrators at 16 Big Ten schools, threatens to drive a schism within the league — between those supportive universities and the Wolverines and Trojans, who are not in support of the measure.

In messages sent to Michigan and USC, the Big Ten has signaled that it is moving forward with the deal, even delivering to each program a proposed deadline for their decision. If they don’t agree to the deal, the schools may lose the additional capital as part of the landmark proposal and risk their future within the conference beyond 2036, the current end of the existing grant-of-rights agreement. League officials are socializing a specific date — Nov. 21 — for a vote on the capital investment proposal.

Administrators and board members at both Michigan and USC were informed earlier this week that, if a 16-school agreement is reached, the two programs would be granted a grace period — three to six months — to agree to join the deal if they wish to reap the full financial benefits. That period is only a proposal for now.

I find this fascinating, and I am sympathetic to Michigan. This is effectively a payday loan, and could be a slippery slope. I'd be livid if Texas were considering something like this.

It also is interesting because if Michigan and USC don't sign, they're out of the Big 10.

Edited by SimkinsMan
  • Hook 'Em 6
  • Rage+1 2
Posted

I love all these stupid people that think that "private equity" comes in with newly found free money and everyone they deal with makes lots more money

when in reality they pay up front money for a large stake in something that will give PRIVATE EQUITY a large return on their money while those that deal with them give up a lot more over the long term than they receive in the short term 

worse yet I am really not even sure how this deal can work out since you are dealing with public universities in multiple states that may well have vastly different control mechanisms and laws over their public universities and a couple of private universities mixed in as well that may well have rules in their charter that prevent selling off parts of their assets 

the ONLY way this will work out in the favor of any program in the Big 10 (much less all of them) is if the TV and other media values of the Big 10 eat shit in the next contract and "pe" does not have a mechanism to protect their rates of return on investment.....that does have a possibility of happening, but I think it would still be as bad or worse for the Big 10 members vs. what they would get without "pe" 

  • Hook 'Em 1
  • Rage+1 1
Posted

I don’t think there’s any question they should leave, which probably accelerates the demise of the existing conference structures.

There‘s about 7 schools in their conference that have at or less than $100m in athletic department revenue and the “haves” in the conference are all over $200m or have a patron with basically unlimited means (Oregon).  That’s a lot of dead weight for OSU and Michigan to carry and I think they are figuring out that no one gives a shit to watch Rutgers play Purdue.  
 

 

 

  • Hook 'Em 5
Posted
Just now, LCHorn said:

I don’t think there’s any question they should leave, which probably accelerates the demise of the existing conference structures.

There‘s about 7 schools in their conference that have at or less than $100m in athletic department revenue and the “haves” in the conference are all over $200m or have a patron with basically unlimited means (Oregon).  That’s a lot of dead weight for OSU and Michigan to carry and I think they are figuring out that no one gives a shit to watch Rutgers play Purdue.  

Where are they gonna go?

Posted
Just now, David Dennison said:

Where are they gonna go?

You think the SEC is going to let Michigan and OSU go to the ACC?  
 

I could also see a scenario where this results in a cross-conference divisional re-alignment, which is what all of this has been headed towards, anyway, with the top 50-60 revenue teams doing their own thing.  

  • Hook 'Em 1
Posted
2 minutes ago, LCHorn said:

You think the SEC is going to let Michigan and OSU go to the ACC?  
 

I could also see a scenario where this results in a cross-conference divisional re-alignment, which is what all of this has been headed towards, anyway, with the top 50-60 revenue teams doing their own thing.  

I don't think they're ever leaving the Big Ten.

Posted
7 minutes ago, ButtFumble said:

I love all these stupid people that think that "private equity" comes in with newly found free money and everyone they deal with makes lots more money

when in reality they pay up front money for a large stake in something that will give PRIVATE EQUITY a large return on their money while those that deal with them give up a lot more over the long term than they receive in the short term 

This is so true. In the industries I follow closely, private equity typically comes in and looks for a high rate of immediate return. Often times they're taking complete control of a company (perhaps acquiring a stressed asset at a discount), shaving costs, and seeking a maximum return before the business goes to shit. In this case they're going to be minority owners, but they're going to propose all sorts of gross and crass marketing or business opportunities to monetize their investment. This will prove to be a terrible deal for Big 10 fans.

  • Hook 'Em 1
Posted
3 minutes ago, LCHorn said:

You think the SEC is going to let Michigan and OSU go to the ACC?  
 

I could also see a scenario where this results in a cross-conference divisional re-alignment, which is what all of this has been headed towards, anyway, with the top 50-60 revenue teams doing their own thing.  

This seems to be where we're heading but I think the number will be a lot smaller than 50-60. 

It will come to this in the secsecsec too.  It made no sense for Texas and Oklahoma to throw away century-long rivalries to go subsidize the likes of Kentucky, Vanderbilt, Auburn, Arkansas, and the Mississippis instead.

  • Hook 'Em 1
Posted
9 minutes ago, David Dennison said:

Where are they gonna go?

Could pull an ND and be “independent” like ND. Hell, have Mich, ND, and USC all on each other’s schedules.

  • Hook 'Em 1
  • Drool 1
Posted
1 minute ago, David Dennison said:

I don't think they're ever leaving the Big Ten.

It might still be called the big 10, but it’s going to be run by Greg Sankey’s nominated leader and it’ll be a folded under some umbrella org.  
 

OSU was the most profitable program in the NCAA in 2024 and still lost money.  I realize they like to use the same accountants as Hollywood studios, but it’s clear there’s going to be a desire for the richer teams to keep more of the money they are generating.  

Posted
2 minutes ago, WBT said:

Texas and Oklahoma to throw away century-long rivalries to go subsidize the likes of Kentucky, Vanderbilt, Auburn, Arkansas, and the Mississippis instead.

I thought about that, too, but I think the SEC membership is a little more ride or die and the 100 year rivalries with the shit SWC squads are ones I’m quite happy to abandon.  

Posted
1 minute ago, WBT said:

It made no sense for Texas and Oklahoma to throw away century-long rivalries to go subsidize the likes of Kentucky, Vanderbilt, Auburn, Arkansas, and the Mississippis instead.

Century long rivalries with who? Iowa State, Cincinnati, West Virginia, and UCF? 

Are you actually upset that we finally jettisoned Baylor? You miss TCU and Houston?

  • Hook 'Em 1
Posted
5 minutes ago, WBT said:

It made no sense for Texas and Oklahoma to throw away century-long rivalries to go subsidize the likes of Kentucky, Vanderbilt, Auburn, Arkansas, and the Mississippis instead.

Leaving the Big XII for the SEC was the best decision Texas ever made.

  • Hook 'Em 1
Posted

Let’s do what everyone does and strike a deal with PE for a great injection of cash! We’ll use it to smartly get on a sound, long-term footing and then we will be healthy AND PE will make their money back.


image.thumb.jpeg.8f571b054bebf40eaacafd712d191ea9.jpeg

  • Hook 'Em 2
  • Like 1
  • Haha 2
Posted
3 minutes ago, Parliament said:

Independent.  The bigs are big enough to do their own scheduling.

 

12 minutes ago, randomhorn said:

Could pull an ND and be “independent” like ND. Hell, have Mich, ND, and USC all on each other’s schedules.

How would they get in on Domers tv deal? That’s what affords ND their economic fu freedom, and prob decides their fate ultimately. 

  • Hook 'Em 1
Posted
6 minutes ago, LCHorn said:

It might still be called the big 10, but it’s going to be run by Greg Sankey’s nominated leader and it’ll be a folded under some umbrella org.  
 

OSU was the most profitable program in the NCAA in 2024 and still lost money.  I realize they like to use the same accountants as Hollywood studios, but it’s clear there’s going to be a desire for the richer teams to keep more of the money they are generating.  

The problems really come from teams acting in their own best interest and that a couple of programs at the college level are being asked to carry the weight of their entire athletic programs.

The NFL definitely has higher profile teams and those that are just part of the group, but the league continues to grow because of the overall product and not the number of eyes a Dallas game or a winning New York team brings with them.  

Individual owners can do things to maximize their revenues , but the overall principle is remembering that there is value in doing what is best for the shield.

Unfortunately, schools have never wanted to act like a business and the idea that an individual sport or two is supposed to pay the way works about as way as "health insurance" being a primary vehicle for paying for health care.

Posted
19 minutes ago, WBT said:

This seems to be where we're heading but I think the number will be a lot smaller than 50-60. 

It will come to this in the secsecsec too.  It made no sense for Texas and Oklahoma to throw away century-long rivalries to go subsidize the likes of Kentucky, Vanderbilt, Auburn, Arkansas, and the Mississippis instead.

I will die on the hill that CFB was perfect and needed no fix pre-BCS and mega-conferences. You got plenty of joy in winning your conference and enjoying wins over schools close to you— needling the people at work, church, the PTA. Bowl games were a fun bonus.  The newspaper would crown a MNC and it was a distraction to read about and then move on from. The only NC trophy handed out was a gimmick from Trick Dick as a little dogwhistle for the last all-white teams and their fans.

A “real” NC, playoff, etc is something thet talking heads on 24/7 sports media and then the internet created for their own benefit and then convinced fans they needed. Has not made the alum and fan experience at all better. 

  • Hook 'Em 6
  • Like 1
Posted

(2) the creation of a privatized business entity to better monetize the league’s assets (Big Ten Enterprises);

What this actually means is that the PE boys have found a way they believe will increase the likelihood to achieve their expected return of investment while minimizing the risk. If you have unlimited control over this moneymaking venture, that is less susceptible to the whims of television contracts with the future unknown as to how media ad revenue will be generated.

Posted

I still think having 3 divisions, a relegation system, each division having 4 regional conferences would be the best thing for CFB.

  • Hook 'Em 1
Posted
10 minutes ago, 956 Worldwide said:

You got plenty of joy in winning your conference and enjoying wins over schools close to you— needling the people at work, church, the PTA. Bowl games were a fun bonus.

I am chortling a little because this was written by an Aggie.  

Posted
43 minutes ago, SimkinsMan said:

In this case they're going to be minority owners,

There will be some type of management agreement that gives them veto power over pretty much everything regardless of their stake

Posted
7 minutes ago, JBJ said:

I still think having 3 divisions, a relegation system, each division having 4 regional conferences would be the best thing for CFB.

Invitation to a death spiral for lots of programs. It’s hard to make it work now for most of the NCAA, sticking half the teams in a consolation league will not help and drive fans away. 
 

It is not good for college football to make seasons less meaningful and fun for mid-tier teams. 

  • Hook 'Em 2
  • Rage+1 1
Posted
Just now, 956 Worldwide said:

Invitation to a death spiral for lots of programs. It’s hard to make it work now for most of the NCAA, sticking half the teams in a consolation league will not help and drive fans away. 
 

It is not good for college football to make seasons less meaningful and fun for mid-tier teams. 

Honest question, do you think fanbases of Boston College, Syracuse, Purdue, etc. would actually shrink if they were put into a competitive league of their own peers?   I think it'd be the opposite since these teams would actually be playing for more than the experience.

Posted
2 minutes ago, JBJ said:

Honest question, do you think fanbases of Boston College, Syracuse, Purdue, etc. would actually shrink if they were put into a competitive league of their own peers?   I think it'd be the opposite since these teams would actually be playing for more than the experience.

I do, but most of that comes from being a legit long-time fan of the DII/FCS ranks and seeing how tenuous it is to get engagement and how hard they work to move their programs up even when it will be harder to win. FWIW, being engaged at that level of play also plays a big role in my continue CFP agnosticism. 
 

Not just for the fan experience but the resources that come in when playing at the harder level. 
 

In the streaming era it’s very hard to get someone to show for a perceived B-league contest. 

Posted

Would also say that in the portal era, relegating a team down to FCS or whatever will really blow up a roster and make it tough to bounce back from. And you lose a bunch of good home games.  It’s pushing factory reset on a program. 

Posted

I don’t know if there’s appetite for a relegation system for reasons stated. However, in the NIL and portal era, there’s haves and have nots and thus space for a super conference of them is, imo, an eventual outcome.

Posted
54 minutes ago, Mdhorn said:

 

How would they get in on Domers tv deal? That’s what affords ND their economic fu freedom, and prob decides their fate ultimately. 

Ohio State's brand power may not be quite ND, but big enough to have its own gravity.  We'd have offers.

Posted
2 minutes ago, Parliament said:

Ohio State's brand power may not be quite ND, but big enough to have its own gravity.  We'd have offers.

The only opportunity for some type of stability for a select group of college football teams is that they somehow work together for their collective good and not looking out for their individual selves.

The networks have made easy work out of pitting schools and conferences against each other and that isn't going to change.

At some point there will be a culling down to a select group and I think the impact for those left behind is going to be harsh, but might be a bit freeing from current trend of burning money and hoping to keep pace.

  • Hook 'Em 1
Posted
10 minutes ago, PGFrog said:

The only opportunity for some type of stability for a select group of college football teams is that they somehow work together for their collective good and not looking out for their individual selves.

The networks have made easy work out of pitting schools and conferences against each other and that isn't going to change.

At some point there will be a culling down to a select group and I think the impact for those left behind is going to be harsh, but might be a bit freeing from current trend of burning money and hoping to keep pace.

I just wish that someone would create a football format where about 30 relatively evenly matched teams would play each other and about half make the playoffs to crown an undisputed champion. Maybe some form of revenue sharing, and you just openly pay the players.

  • Hook 'Em 1
  • Rage+1 1
  • Fuck Around and Find Out 1
Posted
42 minutes ago, 956 Worldwide said:

I do, but most of that comes from being a legit long-time fan of the DII/FCS ranks and seeing how tenuous it is to get engagement and how hard they work to move their programs up even when it will be harder to win. FWIW, being engaged at that level of play also plays a big role in my continue CFP agnosticism. 

Not just for the fan experience but the resources that come in when playing at the harder level. 

In the streaming era it’s very hard to get someone to show for a perceived B-league contest. 

 

36 minutes ago, 956 Worldwide said:

Would also say that in the portal era, relegating a team down to FCS or whatever will really blow up a roster and make it tough to bounce back from. And you lose a bunch of good home games.  It’s pushing factory reset on a program. 

These are existing problems.  In a regulation system, at least the results on the field are the driving factor instead of politics, history, and media.

If Clemson, FSU, and Miami leave the ACC in a few years, are the remaining teams better off in this system or in a relegation system, that's really the pertinent question.

Posted (edited)
10 minutes ago, 956 Worldwide said:

I just wish that someone would create a football format where about 30 relatively evenly matched teams would play each other and about half make the playoffs to crown an undisputed champion. Maybe some form of revenue sharing, and you just openly pay the players.

Agreed, but that means too many people are cut off from the gravy train such as conference commissioners....etc....

The amount of people who feed at the trough of college football revenues is rivaled only by governments and tax dollars.  

I had a discussion with a friend who was a Regent at TCU at the time the Frogs were being invited into the Big 12.  He warned other Board members that getting the invitation didn't mean TCU had arrived or made it to anything other than an annual commitment to raise more money each and every year simply to keep up.

The other issue is the financial impact on all the other programs in a school's athletic department.  

Edited by PGFrog
Posted
3 minutes ago, PGFrog said:

Agreed, but that means too many people are cut off from the gravy train such as conference commissioners....etc....

The amount of people who feed at the trough of college football revenues is rivaled only by governments and tax dollars.  

I had a discussion with a friend who was a Regent at TCU at the time the Frogs were being invited into the Big 12.  He warned other Board members that getting the invitation didn't mean TCU had arrived or made it to anything other than an annual commitment to raise more money each and every year simply to keep up.

The other issue is the financial impact on all the other programs in a school's athletic department.  

I was being tongue in cheek. Today is Sunday and I dont care about that format as much as Saturday. For me, anything that sterilizes CFB sucks. 

  • Hook 'Em 1
Posted
1 hour ago, immamac said:

Michigan should leave and go independent for sure. I would be surprised if they sign this would be very very bad and they don't need it. 


Private equity is the most expensive form of capital. They will require high percentage dividend payments (often 10% or more) or look to sell that investment in the medium term. Unless the Big 10 is strapped for cash, I do not understand this move at all. 

Posted

It's highly likely the bottom 2/3rds of the league are strapped for cash, though.  Rust Belt money flight + covid + NIL.

Posted
1 hour ago, 956 Worldwide said:

I will die on the hill that CFB was perfect and needed no fix pre-BCS and mega-conferences. You got plenty of joy in winning your conference and enjoying wins over schools close to you— needling the people at work, church, the PTA. Bowl games were a fun bonus.  The newspaper would crown a MNC and it was a distraction to read about and then move on from. The only NC trophy handed out was a gimmick from Trick Dick as a little dogwhistle for the last all-white teams and their fans.

A “real” NC, playoff, etc is something thet talking heads on 24/7 sports media and then the internet created for their own benefit and then convinced fans they needed. Has not made the alum and fan experience at all better. 

100% agree

  • Like 1
Posted
1 hour ago, JBJ said:

I still think having 3 divisions, a relegation system, each division having 4 regional conferences would be the best thing for CFB.

I’ve been saying for a while that there should be one conference, a Super Best Friends conference with 84 teams, 12 pods and one TV contract. Winners of the pods go to the playoffs.

If the Big Ten goes to uneven revenue distribution we are at the beginning of the end. It’s like when the top European soccer teams wanted to do their Super League which would have fucked everyone else.

Posted
32 minutes ago, 956 Worldwide said:

I just wish that someone would create a football format where about 30 relatively evenly matched teams would play each other and about half make the playoffs to crown an undisputed champion. Maybe some form of revenue sharing, and you just openly pay the players.

They could use National in the name, so it encompasses the whole country. I think it could work.

 

  • Haha 1
Posted
2 hours ago, randomhorn said:

Could pull an ND and be “independent” like ND. Hell, have Mich, ND, and USC all on each other’s schedules.

That was a thing for ND for like 20 years. Michagan and USC have played each other the last 2 years and neither game meant jack shit in the grand scheme of things. It's funny that USC is balking at the private equity when they took the money and ran to break up their own conference two years ago.

Posted
1 hour ago, immamac said:

Michigan should leave and go independent for sure. I would be surprised if they sign this would be very very bad and they don't need it. 

'Member when Texas was totally going independent because reasons?

I 'member.

Posted

There's also a religious element keeping ND (and formerly BYU) independent even in times that it wasn't the best thing for them.

Independent Michigan (or Texas) would work but it just wouldn't last in the same way.

Posted

the issues I see are

1. "pe" will want dumb shit to make money (like stated just below my first post).....all type of crass/stupid shit that is anything to bring in another dollar

2. I think there is a thought that they will negotiate better, but I cannot see ESPN or anyone else giving a shit that private equity is suddenly at the table negotiating....in fact I can see them saying fuck off here is a low ball offer take it or leave it we control the channels

3. I think this is where private equity thinks they will have the upper hand.....they will try and go to an all streaming model and get some cheap ass streaming company with little overhead (or create their own) and "go directly to market"......but of course there will be quality issues.....there is the issue that a large % of the USA still has shit quality internet that does not support high quality video streaming, internet companies are not going to give a shit about catering to them 

you also run into the no more "cramming" aspect of selling your produce....ESPN and the rest still make a shit tonne of money off of forced subscriptions to people that do not give a shit about college football or conference networks 

4. the last part of the above is also the issue with "super conferences".....people do not give a shit about UH because they live in Houston.....(or in general)....that is not their "home town team" like with pro sports......people do not give up on their college team because they move to a city with another team or teams....in a few places (Arkansas, Louisiana, and maybe a couple of others) people do go crazy for the "state team", but it is not like 75% of the people in Texas, 50% in Oklahoma, 50% in Arkansas, and 25% in AZ being Cowboys fans.....and making the super conference will not change that and it will probably turn a lot of fans off from that 

5. relegation will never work because of the long term scheduling issues, the massive issues that creates for fans and their scheduling to see a road game, and the overall issue of so many teams to move around each year and trying to make their new schedules on short notice.....plus the TV aspect with conferences having different media contracts.....that is a pro sports concept and belongs on the trash heap for college sports 

6. if there was big new money still out there either the current (shit bag) media partners would be after it or conferences need to stop hiring dick heads for conference commissioners and hire someone that actually knows how to get that money for the conference instead of scraps up front for the conference and the meat for "pe".....tennis larry for the PAC 12 tried, but he was not good enough, could not fully sell it, was more interested in being a network executive, and the PAC 12 was scared to do things that the other conferences might look down or or that might have made the PAC 12 look like they gave a shit about sports instead of being so cheap with sports until they realized they were not competing and chased the money to the point that most of them are totally fucked 

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



×
×
  • Create New...