They are spot on.
# Michigan Regents blast private equity deal for Big Ten as ‘bailout’
full article at link.
===
The Big Ten is in negotiations regarding a 20-year partnership with the University of California pension system’s investment fund, UC Investments. The private equity fund would pay the conference $2.4 billion up front with payments to the 18 league members that would average $100 million or more, depending on the school. Three schools — Michigan, Ohio State and Penn State — would receive a larger portion, potentially upwards of $190 million.
A significant part of this transaction would also include the Big Ten extending its grant-of-rights agreement by another 10 years (2036-46), which would keep the 18 teams in place and unable to branch out into a potential super conference.
Regent Jordan Acker raised the issue of the Big Ten’s pursuit of the private equity deal at Thursday’s board meeting and made clear the university should not go along with it.
“There’s no way I would vote yes,” Acker told The Detroit News. He added that after multiple conversations with USC trustees last weekend, USC is unified with Michigan on this stance.
In his comments to the Board, Acker stressed that there are other options to pursue but not this one presented by the Big Ten commissioner.
“The Big Ten does not need to be sold to save college sports,” Acker said. “It needs to lead to save college sports. … We cannot sell our legacy to private investors pretending that it’s progress.”
==
Who would have thought that the Big Ten conference would need a bailout like this?” Bernstein said. “Make no mistake, that’s exactly what this is. It’s characterized to us as a payday loan, a very big payday loan, but that’s pretty much exactly what this is. And I just think it’s important that we appreciate that there are alternatives, valuable alternatives to this approach that should be considered.
“And the conference’s failure to do so is both, in my view, reckless and short sighted. And the contrived urgency of this matter is, frankly, mysterious to me and to my colleagues on this board. The conference needs to slow down and consider better ways to address the very real problems facing some Big Ten universities and their athletic departments. But it is the job of the board, and certainly the position of this board, to protect the future from the present.”
This potential deal would create Big Ten Enterprises, a commercial entity that would centralize and manage things such as media rights and sponsorships, the league’s revenue-generating assets. UC Investments would receive in return for the $2.4 billion distribution a 10% stake in Big Ten Enterprises and a cut of the league’s annual distribution.
==
Ultimately, it is the decision of the Big Ten member institutions’ presidents and chancellors to decide if it’s the right opportunity and those conversations are ongoing."
The majority of conference members that need an immediate infusion of money reportedly are in support of the private equity partnership. A decision on the deal must be unanimous, and Michigan and USC reportedly have been the two universities pushing back on Big Ten commissioner Tony Petitti’s plan. USC is not considered among the top tier that would receive the biggest financial distribution and is digging in its heels because of that.
“I obviously had lots of conversations with USC, and we found that we were pretty much aligned on this, that this is a deal that didn’t work for either one of us, and it was not the smart money,” Acker told The News. “And you know what we heard, having had conversations with USC board members and their chair, who was involved in this? That they had those same exact concerns. And the concern was, why are we selling our equity? This is such a valuable thing we should own, nobody else.”
===
“One of the big problems here, and I think this is important to understand, the deal currently presented to us, they could resell it after 15 years,” Acker said. “And look, this is one of the most valuable assets that we have. Who knows what’s going to happen 21 years from now? The point is, we can’t bind ourselves to something that we can’t get out of.”
Acker said there have been some reports the Big Ten could do the private equity deal regardless.
“But good luck selling an equity deal without Michigan and USC,” he said.
