Michigan, USC Opposition Halts $2.4B Big Ten Agreement

A proposed capital investment plan intended to enhance Big Ten athletic departments has hit a roadblock due to resistance from two key members. The $2.4 billion agreement was put on hold following objections from the University of Michigan and the University of Southern California (USC).

Key Contributors and Concerns

UC Investments, affiliated with the University of California’s pension fund, announced that it would suspend its efforts until there is “unity” among conference members. In a public statement, UC Investments emphasized the need for consensus across the 18 universities in the Big Ten for the deal’s success.

UC Investments highlighted the firm’s commitment to conducting thorough due diligence. They acknowledged that some institutions require additional time to understand the benefits of participation.

Details of the Investment Plan

• The initiative involves creating a new entity named Big Ten Enterprises.
• Every school would receive a minimum payment of approximately $100 million.
• Larger programs would benefit from increased funding.
• The deal would extend the league’s grant of rights until 2046.

Despite a lucrative ongoing media rights contract worth $7 billion, many Big Ten schools struggle with rising operational costs. These pressures include debt from stadium renovations and revenue-sharing obligations with athletes.

Opposition from Michigan and USC

While most schools supported the investment plan, Michigan and USC remained steadfast in their opposition. Each institution’s Board of Regents expressed concerns about the financial prudence of the plan. They viewed the potential sale of a league asset as misaligned with their fiscal responsibilities. Michigan Regent Mark J. Bernstein criticized the proposal as a ‘payday loan,’ which merely addresses broader issues facing college athletics.

Michigan Regent Jordan Acker reiterated the institution’s reluctance to commit to an extensive 21-year grant of rights extension, indicating uncertainty about the future landscape of college football.

The Future of Michigan and USC

Acker indicated that the Wolverines are considering all available options, including the possibility of becoming independent in football if negotiations continue to stall. This prospect has raised concerns about the impact of losing one of the Big Ten’s most iconic brands.

Michigan, a founding member of the Big Ten since 1896, is weighing its future while the conference continues to expand and pursue new revenue streams.

Financial Implications for Big Ten Schools

The proposed funding is seen as critical for numerous schools facing significant financial hurdles. For example, Illinois spent approximately $20 million on debt service in 2023-24, making up 11.8% of its expenditures. Likewise, Ohio State allocated $33.7 million, or 11.5%, of its budget for similar expenses.

The decision regarding the capital investment plan rests primarily with university presidents and athletic directors. However, with both Michigan and USC currently lacking presidents, their Boards of Regents play a pivotal role in regional governance and oversight.

Despite the current impasse, UC Investments has not abandoned the proposal. The company stated its commitment to collaborating with Big Ten leadership to facilitate a comprehensive evaluation of the investment’s potential advantages for all members.