Big 12 Private Equity

Ready or not, here comes private equity. 

Yahoo!’s Ross Dellenger reports that the Big 12 reviewed bids this week from three finalists to be a capital partner of the league. 

It’s no secret that college football has been toying with inviting private equity into the sport. Florida State teased the idea as a way to help them buy their way out of the ACC in 2022, and earlier this year, Sportico reported that the Big Ten is taking preliminary bids from private equity firms. 

Eight months ago, we learned that the Big 12 was considering using private equity to keep up with the Big Ten and SEC. The numbers floated at the time were $800 million to $1 billion going to the conference in exchange for a 15 to 20% stake in the league. 

I realize how awful this sounds on the surface, and I’m not trying to convince you to love this idea. Instead, I will try to explain the reality of the Big 12's situation. 

Here was my take on the Big 12’s flirtation with private equity when the story first broke last June. 

Let’s get this out of the way first: private equity generally destroys much of what it touches. It has a reputation for stripping businesses for parts and kicking them to the curb. Letting private equity get its grubby hands on the sport we love so dearly is a massive risk. 

But desperate times call for desperate measures. 

We’re about to enter a revenue-sharing era of college athletics, which means Big 12 athletic directors have to find $20 million in their budget to pay student-athletes if they want to keep up at the sport's highest level. That’s a daunting task. 

Big Ten and SEC schools will receive $30-$50 million more from TV and the College Football Playoff than Big 12 schools, making it much easier to stash money for revenue sharing.

If Big 12 schools can’t find the money, they’ll rapidly lose players and coaches to the big boys. Full stop. 

You might have to get in bed with the devil (private equity) to make it work. 

Initial reporting on this also indicated the 15-20% that a private equity company would get from the league would be a cut of future earnings. It wouldn’t mean that they actually own a chunk of the league. Theoretically, it means they wouldn’t have the power to make decisions about how the league operates. 

There is, of course, the risk that as soon as you ink your deal, the SEC and Big Ten will follow suit to keep you just as far behind the eight ball as you were before. They don’t seem to be in the business of letting anybody gain ground on them. 

It will be interesting to see what the terms of a private equity agreement would look like. The CBS report about Big 12 private equity talks said the league might have to agree to a grant of rights beyond 2031 to seal the deal. This would assure their private equity partner that the conference will stay together long-term. 

It’s right up Big 12 Commissioner Brett Yormark’s alley to be hyper-aggressive, so this is certainly on brand. Can he convince league presidents and ADs that this dance with the devil is worth the risk? Dellenger says we’ll find out within the next few weeks. 

Is this the beginning of the end for college athletics? It’s a perfectly fair question, and it will be much longer than weeks before we know the answer.

What You Need to Know

• Speaking of keeping up with the Joneses in college athletics, Dellenger also reports that Big East Commissioner Val Ackerman expects some D1 schools to opt out of revenue sharing within the next year. That will serve as a significant separation in college athletics. Don’t expect any Big 12 schools to be included in that group, especially if private equity is involved. 

• Bill Self says he’s not getting ready to retire. After speculation swirled in the aftermath of Barry Tramel's report that Self seriously considered the Oklahoma State job last year, he told the Field of 68’s Jeff Goodman that any retirement rumors aren’t true at all. On the Field of 68 podcast earlier this week, John Fanta said he thought Self might be done. 

• Utah surprisingly fired head basketball coach Craig Smith this week. The timing seems odd, as Smith was 7-9 in the Big 12 after being picked to finish last. Former West Virginia interim head coach Josh Eilert will take over for the rest of the season. Jon Wilner from the San Jose Mercury News has a great breakdown of why the Utes pulled the trigger when they did.

• Texas Tech showed off its new $242 million football facility in this new social media clip. I highly recommend checking this out and getting a look at the Dustin R. Womble Football Center and South End Zone Building. Backed by multi-billionaire booster Cody Campbell, the Red Raiders are going all-in. 

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