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The Big Ten is seeking unanimous approval from member schools to move forward with a $2.4 billion private capital proposal involving a California pension fund. But opposition from university officials at Michigan and USC might tank the deal.
A group of board members from the two schools met virtually on Tuesday to discuss their concerns with the deal, a source familiar with the matter told Front Office Sports. The source said it appears, at this point, the members of both university boards have close to unanimous feelings of opposition.
The university presidents in the Big Ten will ultimately be the ones to vote—and could potentially do so without the approval of their boards of regents or trustees. But the source emphasized that both USC and Michigan boards wield major power within their universities.
In the plan, the Big Ten would spin off its assets, including its media rights, into a separate entity called “Big Ten Enterprises,” two sources confirmed to FOS. Then, a California pension fund would pay $2.4 billion, offering at least $100 million to each Big Ten program in a payout, in exchange for an equity stake in Big Ten Enterprises, they said.
The deal would also include a grant of rights extension until 2046 to keep the league together. The source confirmed that UC Investments is the pension fund that would offer the deal.
On the call, officials from both universities shared concerns about the concept of selling an equity stake to any private capital entity, the source said, adding that board members were concerned the deal was providing a temporary but inadequate fix to existential issues in college football.
In addition, USC officials were also unhappy about the existence of a tiered structure for the initial one-time payments, multiple sources told FOS: Michigan, Ohio State, and Penn State would be in the top tier, each receiving about $190 million; USC and Oregon would be in a second tier and would receive less.
The proposal has been fraught since ESPN broke the news that the Big Ten was considering taking a private capital investment two weeks ago—and forced the Big Ten to brief university officials at multiple schools, sources said.
Many details of the proposal have been shrouded in secrecy throughout the past week, with briefings for university officials lacking key details like which pension fund was offering the deal. Sources told FOS last week they first believed the deal would be with CalPERS, then CalSTRS. On Friday, Yahoo Sports reported the firm was UC Investments—though one of the sources told FOS that even as late as Monday, officials from one university still had not received confirmation of the name of the pension fund.
Despite the lack of transparency, the conference and commissioner Tony Petitti have been pushing the proposal hard among university officials—potentially to fast-track the deal and hold a vote as early as this week, multiple sources said. The first source noted that USC and Michigan aren’t against considering these types of deals in general, but that this one—at least at this point—is not something they can rubber stamp.
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