Big Ten Enterprises

[Goldmember]

No it isn't.

Yeah, it’s worse.

 

[upnorthkid]

the short version is, b10 schools have made a bunch of poor financial decisions, bloated their ath depts, set out on funding a bunch of renovations and projects which all come in over budget and taking longer than expected, and now have been hit with having to pay athletes 20mil a year that they don't have, so they're looking for a quick fix giving up a pretty significant portion of their stake long-term. And University Presidents are looking at the bottom line seeing all the red and are cool with whatever rectifies the red.

They will make more money than this infusion gives with the next media rights deal. you don't kick this can down the road and sell part of your company for a dollar amount that temporizes you with ~100mil/1-2 years of stability (Michigan and OSU will get more) and adds a false promise that the big schools won't leave (they will pay the buyout if they think this is lucrative) for the cost of stake as well as the possibility you lose your tax exempt status.

Absolute definition of slapping a bandaid on a gun shot wound and will 100% trickle down and hurt fan. if anything, fees will go up as via TV, charging students who are a captive population, etc. as PE is only doing this to make themselves a profit and will hunt relentlessly until they do. What will be most curious is if PE views this as a pump and dump or they want to stick around for the long haul. CFB will never compete with the NFL. The very top schools make about 1/5 of what an NFL team does. However, PE will look it, i'm sure, as being incredibly poorly monetized.

The Big Ten media rights deal was 7bil for 7 years. So 1 billion a year. and that's for everything, more game slots, etc.
The NFL gets about 13 billion a year and gets 1 billion from networks that get 1 game a week for 17 weeks a year.
The NFL has embraced sports gambling. Get ready for even more of that. There are currently no sponsors on jerseys, why don't we add that. Naming rights, apparel deals, etc. all will come under the gun.

The B10 and SEC have done this to themselves and inevitably yes we're probably going to get to the point those 2 conferences branch off on their own ("wouldn't that be a fun NFL-lite that's good for the game and in no way an easier way for us to accumulate power for a media rights negotiation we will skim off"-private equity, probably)

 

[GopherGrit]

Here is my question, as I am obviously naive to this stuff (and most stuff, ):

normally if you are a start-up company and you get an investment from PE, they now own X% of your company (some percentage of shares) and may (probably do) have some ability to have a say in the major decisions of the company, perhaps even choosing executives, where you are located, and so on.

They don't then really get paid back their investment (and more) until the company sells ... which is the same thing as all the original investors and creators of the company. Right??


So how does this translate into the PE investment into the Big Ten?? When, how, and to whom, would the Big Ten ever be sold (to)??? How do the PE folks make their money (eventually) off this deal??

 

[Unregistered User]

Here is my question, as I am obviously naive to this stuff (and most stuff, ):

normally if you are a start-up company and you get an investment from PE, they now own X% of your company (some percentage of shares) and may (probably do) have some ability to have a say in the major decisions of the company, perhaps even choosing executives, where you are located, and so on.

They don't then really get paid back their investment (and more) until the company sells ... which is the same thing as all the original investors and creators of the company. Right??


So how does this translate into the PE investment into the Big Ten?? When, how, and to whom, would the Big Ten ever be sold (to)??? How do the PE folks make their money (eventually) off this deal??

VC vs PE

You were describing Venture Capital more than Private Equity

 

[Pompous Elitist]

Here is my question, as I am obviously naive to this stuff (and most stuff, ):

normally if you are a start-up company and you get an investment from PE, they now own X% of your company (some percentage of shares) and may (probably do) have some ability to have a say in the major decisions of the company, perhaps even choosing executives, where you are located, and so on.

They don't then really get paid back their investment (and more) until the company sells ... which is the same thing as all the original investors and creators of the company. Right??


So how does this translate into the PE investment into the Big Ten?? When, how, and to whom, would the Big Ten ever be sold (to)??? How do the PE folks make their money (eventually) off this deal??

They will make distributions on some schedule. The rumored deal runs, what, 20 years (for now).

The fact this scheme is allegedly being seriously discussed by big ten leadership still boggles the mind. They’re taking a torch to the furniture to heat the house. Other famous public/private missteps include the Chicago parking meter debacle. At the height of the 2008-2009 financial crisis in a temporary bind they leased the city parking meters for 75 years for $1.1B. In 2023, the investors in CPM LLC had recouped their investment plus $500 million, and still had 60 years left on the deal.

If a big then school wants out to join a super league they don’t need PE…this is madness. There are some rats in the big ten house.

 

[stocker08]

Hate it. PE generally makes everything worse as they build a proverbial house of cards based on unsustainable numbers and exploitation of employees. That said.....PE probably won't have much decision making power here.....so who really knows.

 

[LeftofThaDial]

It was reported yesterday that now it would be 2.4 Billion, and that the investor is UC Investments. A fund associated with the University of California pension system. Each school would receive over 100 million with the big schools getting more. I believe UC investments would receive a 1/20 share of future earnings, and a 10% share in BiG Ten Enterprises which is the other 1/20 non school share.

 

[GopherGrit]

It was reported yesterday that now it would be 2.4 Billion, and that the investor is UC Investments. A fund associated with the University of California pension system. Each school would receive over 100 million with the big schools getting more. I believe UC investments would receive a 1/20 share of future earnings, and a 10% share in BiG Ten Enterprises which is the other 1/20 non school share.

OK, Let me see if I got it roughly correct:

- BTE will be a created entity that takes in all of the revenue from league-wide TV deals
- it will probably pay out a small amount off the top to pay for the conference's operating costs itself
- then distributes the rest to all the shareholders: 20 of them, 1 each for each school, and 2 shares for the PE folks

And in exchange for this, each school gets $100M (though OSU and Michigan will get more).

So it's taking the money early, at the risk that the future earnings may actually (far) exceed what the conference is projecting them to be.

 

[GopherGrit]

What are these costs, that are due right now and are so scary??

Do we (I mean the U, of MN) have $100M in the red that we have to pay off right now?



Honestly, I'd rather cut way back on the number of varsity sports. Sorry, but not really sorry, things like tennis, golf, track/cross country, swimming ... these can be club sports.

 

[LeftofThaDial]

OK, Let me see if I got it roughly correct:

- BTE will be a created entity that takes in all of the revenue from league-wide TV deals
- it will probably pay out a small amount off the top to pay for the conference's operating costs itself
- then distributes the rest to all the shareholders: 20 of them, 1 each for each school, and 2 shares for the PE folks

And in exchange for this, each school gets $100M (though OSU and Michigan will get more).

So it's taking the money early, at the risk that the future earnings may actually (far) exceed what the conference is projecting them to be.

Pretty much how I understand it. 1/20 to UC Investments. 1/20 to BTE, which UC Investments would have a 10% share in. BTE would basically be in charge of the leagues TV deals and sponsorships, UC would have a minority investor say in that, but not a say in anything Big Ten football related, scheduling etc. it would push grant of rights to 2046, so the conference would stay together till then.

 

[LeftofThaDial]

What are these costs, that are due right now and are so scary??

Do we (I mean the U, of MN) have $100M in the red that we have to pay off right now?



Honestly, I'd rather cut way back on the number of varsity sports. Sorry, but not really sorry, things like tennis, golf, track/cross country, swimming ... these can be club sports.

The costs schools are struggling with are the 20 million in revenue sharing with the players, and trying to fund the extra 20 scholarships now allowed for football. Weird thing is, revenue sharing is a %. And I don’t know if this investment would raise that 20 million, I believe it’s already slated to go up 4% next year

 

[GopherGrit]

The costs schools are struggling with are the 20 million in revenue sharing with the players, and trying to fund the extra 20 scholarships now allowed for football. Weird thing is, revenue sharing is a %. And I don’t know if this investment would raise that 20 million, I believe it’s already slated to go up 4% next year

There is no requirement to increase football scholarships and I believe the SEC schools instituted a hard (or otherwise an agreement) to stay at 85. You don't need 105 scholarship guys to be successful.

But sure the $20M rev share. But that should be paid for by the increase in TV deals, shouldn't it?

 

[LeftofThaDial]

There is no requirement to increase football scholarships and I believe the SEC schools instituted a hard (or otherwise an agreement) to stay at 85. You don't need 105 scholarship guys to be successful.

But sure the $20M rev share. But that should be paid for by the increase in TV deals, shouldn't it?

Considering the U is now charging its 57,000 students a $200 fee to the athletic dept. No I don’t think the rights deal covers it. At least at lower revenue schools.

 

[TruthSeeker]

They're privatizing public gains. Go after their tax status.

 

[Pompous Elitist]

The costs schools are struggling with are the 20 million in revenue sharing with the players, and trying to fund the extra 20 scholarships now allowed for football. Weird thing is, revenue sharing is a %. And I don’t know if this investment would raise that 20 million, I believe it’s already slated to go up 4% next year

I believe the 4% is only for the next two cycles then will ne reevaluated based on _____.

 

[Pompous Elitist]

Color me surprised…

Of course, Congress is out of session for the foreseeable future.


On Monday, Rep. Michael Baumgartner (R., Wash.) introduced a bill aimed at blocking private-equity deals with athletic departments or conferences, according to a draft of the bill obtained by Front Office Sports. It also attempts to block deals with hedge funds or foreign sovereign funds.

The seven-page “Protect College Sports from Private Equity and Foreign Influence Act” (the PROTECT Act), would amend the Higher Education Act of 1965 to say that no school or conference could sell an ownership stake or transfer “profit, net-revenue, or gross revenue” to a sovereign wealth fund, private equity fund, or hedge fund. (That includes outside entities created to spin off assets like media rights or real estate.)

…Agreements that convey ownership, revenue-sharing, control rights, or security interests in intercollegiate athletics to private equity, hedge funds, or similar vehicles are inherently conflicted, create pressure to maximize short-term cash flows at the expense of educational and Title IX obligations, and risk extracting wealth from publicly supported institutions and their students—undermining transparency, accountability, and the public purposes for which those institutions exist,” the bill reads.

New Bill Aims to Prohibit Athletic Department, Conference PE Deals

The legislation was introduced just days after reports came out that the Big Ten was considering a $2 billion private-capital deal.

frontofficesports.com

 

[Pompous Elitist]

Pretty much how I understand it. 1/20 to UC Investments. 1/20 to BTE, which UC Investments would have a 10% share in. BTE would basically be in charge of the leagues TV deals and sponsorships, UC would have a minority investor say in that, but not a say in anything Big Ten football related, scheduling etc. it would push grant of rights to 2046, so the conference would stay together till then.

They could cut/freeze costs, renegotiate deals, dream up innovative partial public ownership or funding alternatives, wait until the next tv deal rolls around and shake the money tree. Or, they could give all that future money to the vultures. Money that will be burned immediately and they inevitably need to sell off more to keep the scheme going.

 

[LeftofThaDial]

They could cut/freeze costs, renegotiate deals, dream up innovative partial public ownership or funding alternatives, wait until the next tv deal rolls around and shake the money tree. Or, they could give all that future money to the vultures. Money that will be burned immediately and they inevitably need to sell off more to keep the scheme going.

I completely agree, I’m just posting what’s being reported, trying to understand it myself. I also read that the pension fund would have the right to sell their share after x amount of years, which is probably when it would really start to go downhill.

 

[GopherGrit]

Considering the U is now charging its 57,000 students a $200 fee to the athletic dept. No I don’t think the rights deal covers it. At least at lower revenue schools.

OK, let me try my thought process this way. (Fully granted, my thought process may still have never been right in the first place!)

Here are the Gopher athletic dept financial reports: https://gophersports.com/sports/2018/5/21/ot-financial-reports-html

The NCAA ones have way more detail. The latest was published Jan 2025, so for the 2023-24 athletic year. (Guessing there will be a new one in Jan 2026, for the 2024-25, and so on)

In that report, you can see that the total revenue is $151.1M and total expenses are $152.5M. So not exactly, but pretty much even. For 2023-24, so two seasons ago.

That shows $50M from the Big Ten for media deal. But we know with the new one that is going to go up to at least $80M (I've heard maybe even $100M ??) So that's $30M more.

Then you also pointed out the new fee. So say that's a couple million more per year.


The new expenses are $20.5M max for rev sharing, then whatever they chose to increase scholarships. (I don't think they're going from 85 to 105 in football, by the way, no need for that, plus gotta think about Title IX and so on.)


So I'm still not seeing, at least for the U, where there is this great need for $100M right now ...

 

[WAGopher]

How is this even being seriously considered? Big Ten athletics are not broke and have serious incoming cash flow. If they do need a 2 billion dollar infusion of money for some expansion or upgrades, they can easily take out a sub 5% loan, with an amortized schedule and no early payoff penalty. The problem with giving investors a chunk of future earnings is that in all likelihood those earnings will dwarf today’s income, making the 5% stake costing more in future dollars than 5% in today’s income.

I agree there is a spending problem, but how to manage that isn’t the same for all schools.

 

[TruthSeeker]

How is this even being seriously considered? Big Ten athletics are not broke and have serious incoming cash flow. If they do need a 2 billion dollar infusion of money for some expansion or upgrades, they can easily take out a sub 5% loan, with an amortized schedule and no early payoff penalty. The problem with giving investors a chunk of future earnings is that in all likelihood those earnings will dwarf today’s income, making the 5% stake costing more in future dollars than 5% in today’s income.

I agree there is a spending problem, but how to manage that isn’t the same for all schools.

You've gotta pay buyouts and for out clauses somehow.

 

[Unregistered User]

 

[Pompous Elitist]

OK, let me try my thought process this way. (Fully granted, my thought process may still have never been right in the first place!)

Here are the Gopher athletic dept financial reports: https://gophersports.com/sports/2018/5/21/ot-financial-reports-html

The NCAA ones have way more detail. The latest was published Jan 2025, so for the 2023-24 athletic year. (Guessing there will be a new one in Jan 2026, for the 2024-25, and so on)

In that report, you can see that the total revenue is $151.1M and total expenses are $152.5M. So not exactly, but pretty much even. For 2023-24, so two seasons ago.

That shows $50M from the Big Ten for media deal. But we know with the new one that is going to go up to at least $80M (I've heard maybe even $100M ??) So that's $30M more.

Then you also pointed out the new fee. So say that's a couple million more per year.


The new expenses are $20.5M max for rev sharing, then whatever they chose to increase scholarships. (I don't think they're going from 85 to 105 in football, by the way, no need for that, plus gotta think about Title IX and so on.)


So I'm still not seeing, at least for the U, where there is this great need for $100M right now ...

^
It doesn’t have to make sense. Some people have indicated this is more about the little sisters trying to keep the blue bloods from running off with the other hot chick. And probably some people trying to elevate their personal wealth. How much of one vs the other, dunno.

 

[caliGopher]

How is this even being seriously considered? Big Ten athletics are not broke and have serious incoming cash flow. If they do need a 2 billion dollar infusion of money for some expansion or upgrades, they can easily take out a sub 5% loan, with an amortized schedule and no early payoff penalty. The problem with giving investors a chunk of future earnings is that in all likelihood those earnings will dwarf today’s income, making the 5% stake costing more in future dollars than 5% in today’s income.

I agree there is a spending problem, but how to manage that isn’t the same for all schools.

The spending cuts hinted at in the spending problem is what's behind all of the non-revenue sports running political ads to save the olympic sports at the collegiate level.

I think it's fair to assume the football and basketball players who have forced the issue to get a cut of the money, aren't going to stop now. As we've seen before this got out of control, cutting sports has been the way to get AD budgets under control. As has always been the case, the non-revenue sports have always been reliant on football basketball (and in our case, Hockey as well) to pay their way.

This may be the beginning of the end of college sports, but in true academic tradition, they'll burn the furniture to keep the house warm on the way out the door.

Ridiculous Hot Take:
Maybe it's time for the U to spin off the Basketball and Football teams into professional entities that license the Univesity for identity and fanbase and bring revenue to the school for facilities, etc, but leave the business of "college" football out of the universities budget - that makes more sense than what is going on here.

 

[Swaggerson]

Color me surprised…

Of course, Congress is out of session for the foreseeable future.


On Monday, Rep. Michael Baumgartner (R., Wash.) introduced a bill aimed at blocking private-equity deals with athletic departments or conferences, according to a draft of the bill obtained by Front Office Sports. It also attempts to block deals with hedge funds or foreign sovereign funds.

The seven-page “Protect College Sports from Private Equity and Foreign Influence Act” (the PROTECT Act), would amend the Higher Education Act of 1965 to say that no school or conference could sell an ownership stake or transfer “profit, net-revenue, or gross revenue” to a sovereign wealth fund, private equity fund, or hedge fund. (That includes outside entities created to spin off assets like media rights or real estate.)

…Agreements that convey ownership, revenue-sharing, control rights, or security interests in intercollegiate athletics to private equity, hedge funds, or similar vehicles are inherently conflicted, create pressure to maximize short-term cash flows at the expense of educational and Title IX obligations, and risk extracting wealth from publicly supported institutions and their students—undermining transparency, accountability, and the public purposes for which those institutions exist,” the bill reads.

New Bill Aims to Prohibit Athletic Department, Conference PE Deals

The legislation was introduced just days after reports came out that the Big Ten was considering a $2 billion private-capital deal.

frontofficesports.com

Thanks for sharing this … not surprised that politicians got involved. Hoping for a more creative solution than an engaging in this relationship. Does the BIG have smart enough people in the room? Unlike the investors they do not have experience in these type of transactions.