Trustees from the University of Michigan and the University of Southern California raised significant questions about the Big Ten Conference’s proposed $2 billion-plus private capital deal during a joint conference call on Tuesday. Their skepticism centers on whether the infusion of cash adequately addresses the underlying issue of soaring operational costs in college athletics.
The call involved trustees from both schools discussing shared concerns about the deal, which aims to provide a massive financial injection to Big Ten members. Sources indicated that the unified opposition could influence the conference’s decision-making process, especially given the stature of Michigan and USC within the league. The schools believe there are alternative funding options that might offer better terms, and they advocate for slowing the process to explore those possibilities. This joint stance highlights the growing unease among some of the conference’s most influential members.
One major sticking point is that the deal offers short-term liquidity but fails to tackle the root cause of financial strain—escalating expenses for scholarships, facilities, and athlete compensation. Additionally, pending federal legislation on college sports adds uncertainty, making long-term commitments risky. Both schools are apprehensive about selling equity in conference media rights, viewing it as a potential loss of control over a key university asset. They emphasized that simply providing money without structural changes does not solve the core problem of unsustainable cost growth.
Under the proposed framework, the Big Ten would create a new entity called Big Ten Enterprises to hold all league-wide television rights and sponsorship contracts through 2046. In exchange for an upfront payment ranging from $100 million to over $150 million per school, depending on their tier, the conference would extend its grant of rights, ensuring stability but potentially limiting future flexibility. Individual schools would retain local deals, such as radio broadcasts, while the new entity manages broader media assets. This setup is intended to centralize revenue streams and provide immediate financial relief.
Shares in Big Ten Enterprises would be allocated among the 18 member schools, the conference office, and a capital group linked to the University of California pension system, which would receive a 10% stake. This structure is designed to provide funds without ceding direct control, but the exact equity percentages are still under negotiation, with minor variations expected between schools, favoring larger athletic brands by less than a percentage point. The UC pension fund’s involvement, as a non-private equity entity, was attractive due to its higher valuation compared to other bids.
The need for such a deal stems from mounting pressures on athletic departments, including debt from new constructions and mandatory revenue sharing with athletes. For instance, Penn State’s recent termination of football coach James Franklin, with a potential $49 million buyout, highlights the financial volatility. The Big Ten argues that the capital infusion would help middle- and lower-tier schools compete with powerhouses like those in the SEC, addressing competitive imbalances. However, critics worry that it merely postpones deeper financial reforms needed in college sports.
Despite the opposition, the deal remains fluid, with a conference-wide call tentatively planned for Thursday to discuss it further. No official vote has been scheduled, and it’s uncertain if Michigan and USC can sway the outcome, but their involvement underscores the complexity of balancing immediate financial needs with long-term strategic interests. If the deal proceeds, it could set a precedent for other conferences exploring private capital, but if blocked, the Big Ten may need to seek alternative funding models that better align with member concerns over equity and cost management.