UC Investments Halts $2.4 Billion Big Ten Deal After Michigan, USC Pushback
UC Investments has paused its consideration of a $2.4 billion deal for a 10% stake in the Big Ten’s media and sponsorship rights. This decision comes after significant pushback from Michigan and USC, two key institutions within the conference.
Key Facts About the Deal
The proposed partnership would see UC Investments acquire a stake in a new holding company, Big Ten Enterprises. This venture was contingent upon Michigan and USC extending their Grant of Rights until 2046. UC Investments, which oversees over $200 billion in assets, expressed the need for additional time to reassess, citing “recent developments.”
Concerns from Michigan and USC
Resistance from both Michigan and USC has created complications for the deal. Michigan Board of Regents chair Mark Bernstein has called the proposal equivalent to “a payday loan.” Additionally, board member Jordan Acker suggested that Michigan might consider going independent once the current Grant of Rights concludes in 2036.
USC Athletic Director Jen Cohen noted that the school continues to evaluate the proposal. In an open letter to fans, she emphasized the importance of USC’s brand and its commitment to making choices that are best for the university.
Financial Implications
The deal, if executed, would not place the Big Ten in a financially precarious position, as it does not involve repayable funds. Each of the 18 member institutions would receive approximately $130 million as part of the arrangement.
Future Considerations for the Big Ten
Despite the delays, Big Ten officials are exploring options to proceed with the investment without Michigan and USC. An internal source indicated that the conference hopes to finalize decisions by Thanksgiving.
Legislative Attention
The proposal has caught the attention of lawmakers, particularly Senator Maria Cantwell (D-Wash.), who has raised questions regarding the tax-exempt status of certain financial activities in college sports. In her correspondence to the Joint Taxation Committee, she highlighted the changing financial landscape of college athletics, which has become a multibillion-dollar industry attracting private equity interest.
- Deal Value: $2.4 billion
- Stake Offered: 10% in Big Ten Enterprises
- Payout per School: Approximately $130 million
- Grant of Rights Extension: Proposed until 2046
As UC Investments pauses to reassess, the future of this significant deal remains uncertain. The unity among Big Ten schools will be crucial for the success of any potential investment.
