The Big Ten and private equity: Why college sports’ richest conference is doing its homework

With revenues likely to soar past $1 billion this fiscal year, the Big Ten’s deep pockets give its membership advantages well beyond its competition. But even for college athletics’ richest conference, the cash never seems enough in today’s ever-changing sports landscape.

Most Big Ten members will receive a projected payout of $82.7 million from league coffers this fiscal year, a 45% increase from just three years ago. But the dawn of the revenue-sharing era, which permits schools to disburse up to $20.5 million with their athletes this year, has Big Ten commissioner Tony Petitti searching for ways to grow revenue beyond traditional means. That includes exploring partnerships with private equity firms.

As first reported by Sportico earlier this year, the Big Ten, through market adviser Evercore, has sought offers from private equity firms to secure up-front cash for its membership. Months later, whether or not the Big Ten chooses to partner with an outside firm remains under discussion. The stakes of the league’s exploration are simple: Don’t let the new budget item of athlete revenue sharing send the athletics programs’ other financial goals to the back burner.

“Our membership has made clear that modernizing how conference offices work and function on behalf of their members needs to change as we get into this next world,” Petitti told The Athletic in July. “We started this process more than a year ago to just evaluate the way we do everything. What things can we do that we see that the NBA does really well in the central office or MLB or the NFL? Some of the things they do we’ll never do because they don’t apply to college sports. That’s totally fine. But what can we do?

“Is there a strategic partner, a capital partner, that would help you get there faster, more efficiently, better, stronger? I’m not sure the answer to that yet, but the process of doing it is ongoing.”

Some professional sports leagues and franchises have engaged with private equity, but there are significant differences and limitations in how a public institution or a nonprofit conference like the Big Ten can interact with a global investment firm. Two of the industry’s most powerful firms that could have interest in the Big Ten are Sixth Street and RedBird Capital. Sixth Street has partnerships with the San Francisco Giants, Real Madrid, FC Barcelona and the San Antonio Spurs. RedBird Capital’s client list includes AC Milan, the Boston Red Sox, Liverpool FC and the PGA Tour. Neither Petitti nor school officials would discuss specifics on negotiations.

The Big Ten’s membership includes 16 public universities and two private institutions, located in 14 states. Most of its athletic departments are self-supporting and receive little or no funding from their state or university. But public universities are state agencies, which makes any attempt by an athletic department to secure funding from a private equity firm tricky.

“It may be impossible because you’re truly a public entity,” Ohio State athletic director Ross Bjork said. “We’re owned by the state of Ohio. So there are lots of complications in terms of the infusion of this money. But I do think we have an obligation to look at creative ways (to generate revenue).

“At this point there would be more questions than answers, and I think that’s why you probably have seen nobody do it yet at the institutional level.”

Indiana athletic director Scott Dolson said his institution was also unlikely to take on private capital.

“There’s ways internally where we can figure things out, particularly on campus, as things change and evolve financially,” Dolson said. “But at the same time, that’s where Commissioner Petitti is really cutting-edge on what we can do to leverage our 18 schools, our 18 brands together to maximize that value and to grow as college athletics grows.”

Private equity is designed to create wins for both businesses and investors: PE firms provide capital up front in exchange for an equity stake in a business, its product or perhaps a subsidiary. For conferences dealing with realignment departures or other revenue challenges, a private capital arrangement could keep the league financially afloat and solidify the membership in return for equity stakes in the conference or naming rights.

Traditionally, universities have chosen to borrow from banks at low-interest rates to fund projects rather than involving private equity. But with athletes receiving direct payments and other new benefits from their schools, conferences and institutions are pondering nontraditional tactics.

“There are pros and cons,” said Adam Breneman, who played tight end at Penn State and UMass and is now a media personality and co-founder of The College Sports Company, a venture-backed organization. “The pros, you get a lot of capital up front. You get money to invest and give to your schools and to build the student-athlete experience even better and to really run it like a true business.

“Anytime you bring in outside money, you’re giving up a little bit of control. You’re giving someone else who now is at the table, helping make decisions. In exchange, private equity doesn’t just give money and walk away. They’re going to give the money and invest, and they’re going to be part of the decision making in the future.”

Among the options the Big Ten has discussed in general conversations with private equity firms: creating a separate subsidiary company for its media rights, taking on more sponsorships or accepting a large lump sum in exchange for a percentage of future revenue.

On top of the money they’re directing to athletes, most Big Ten programs are saddled with significant debt as a result of past, current and future facility projects. The Big Ten’s 16 public athletic departments list a combined $2.324 billion in athletic debt, according to their latest NCAA financial statements, which were obtained by The Athletic through state open-records requests. Twelve of those schools owe at least $90 million, and eight owe more than $160 million. None of those figures include Northwestern, a private university which is building a $850 million football stadium. (USC is the Big Ten’s other private institution.)

No Big Ten school reports more athletic debt than Illinois at $312.5 million, although its 2024 fiscal year payment was a manageable $26.46 million. But with the revenue-sharing expenditure in mind, Illinois athletic director Josh Whitman will consider every option, including private equity.

“I do think that evaluating opportunities for outside capital, whether it’s at the institutional level or the conference level, everybody’s having those conversations,” Whitman said. “I don’t know if any of them will ultimately come to fruition, come across the finish line, but we’re at a point now where the business of college athletics is growing.”

A short-term cash influx at the league level could help Illinois, Ohio State ($286.66 million debt service), Michigan ($252.8 million) or any other member. The Big Ten did just that during the 2020 pandemic, selling 10% of Big Ten Network to Fox, which allowed it to boost its school payouts to within $10 million of the original budget.

While other leagues fear falling behind financially, the Big Ten is looking for ways to stay ahead. The league’s financial growth and unprecedented exposure on three linear broadcast networks for football (plus cable channels and multiple streaming options) make it a highly valued property. Ten of last season’s 15 highest-rated college football games involved a Big Ten team, and despite not winning an NCAA title in men’s basketball since 2000, the league has led the nation in average attendance every year since 1977.

According to its most recent tax return, the Big Ten reported $942 million in earnings, and its revenue trajectory should make it the first league to cross $1 billion. That makes it an attractive candidate for any investment firm, according to Irwin Kishner, co-chair of the Sports Law Group with the Herrick Feinstein law firm.

“The revenue size of the Big Ten is enormous,” Kishner said. “There are several other sides to it, including merchandising and streaming, potentially, or probably, the in-game experience, potential rights to ultimately restructure. There’s some definite opportunities in that space that could produce significant returns.”

Kishner represents several professional and college sports teams and leagues in transactional matters, specifically deals related to private equity, stadium development, media rights, and sponsorship and advertising.

“College sports is ripe for private equity in the sense that it fits the investment profile that private equity wants to invest in,” Kishner said. “Once you open up the floodgate, I think you’ll start seeing more deals happen. And, frankly, I’m confident if it’s not this deal, it’s just a matter of time until a deal gets done, or several deals get done.”

Meanwhile, other leagues and institutions that once were bullish on private equity have backed off. Big 12 commissioner Brett Yormark was a strong advocate for picking up as much as $1 billion in private capital in exchange for a 15%-20% stake in the conference. But one Big 12 athletic director, granted anonymity to discuss internal league matters, told The Athletic that as many as six Big 12 schools immediately balked at the prospect. The interest rate was too high, they felt, and the league could provide many of the nonfinancial services as the private firm. The ACC and SEC also have passed on opportunities, and Florida State, which looked heavily into private equity in 2023, has cooled on the option since its legal battle with the ACC was settled.

The Big Ten, however, is in a different position. The conference was formed in 1896, and nine schools have been members for more than a century. Its footprint includes the world’s richest corridor from Washington D.C. to New York, along with major markets Los Angeles, Chicago, Philadelphia, Seattle and Detroit. Of the Big Ten’s 18 institutions, 14 earn full shares. Oregon and Washington receive half-shares until 2030, while Maryland and Rutgers have slight reductions as they continue to pay back money borrowed before they became vested Big Ten members.

As collegiate athletics’ richest conference, the Big Ten and its members will remain patient, perhaps even risk-averse, when investigating whether private capital is the right fit. Should they choose to take that step, they want consensus. Otherwise, the league will seek other opportunities.

“It’s a conference matter, not only for our athletic directors, but our presidents,” said Rod Lehnertz, senior vice president for finance and operations at the University of Iowa. “There’s no definition at this point that would tell us we have to go right, left or indifferent. We’re still seeing a lot of this unfold.”

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