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Big 12 members are considering a first-of-its kind private equity investment to ensure the league’s long-term financial and competitive security, multiple sources tell CBS Sports.
On the table is a possible cash infusion of $800 million to $1 billion from Luxembourg-based CVC Capital Partners in exchange for a 15% to 20% stake in the league, those sources said. A portion of the money would go directly to the 16 conference members, and the partnership would give the conference access to CVC’s investment services and clients.
CVC is a global private equity giant that manages over $200 billion in investments worldwide, according to its website. The firm made a presentation to the league at the recent Big 12 spring meetings in Dallas.
While one source described the talks as “pretty serious,” many league presidents need further convincing. Persons who spoke with CBS Sports preferred to remain anonymous due to the sensitive nature of the discussions.
No league has ever been this close to a private equity investment of this kind.
Big 12 teams are currently earning $31.7 million each with Fox and ESPN in a media rights deal that ends in 2031. Add in the cash infusion from private equity, and the two revenue streams would combine to move the Big 12 “much closer” to the Big Ten media rights deal, according to a person with intimate knowledge of the proposal.
The Big Ten leads all conferences with its schools set to earn approximately $75 million per year after it signed a new media rights agreement with Fox, CBS and NBC. (Oregon and Washington are not receiving full shares initially as they enter the league July 1.)
Should the Big 12 and CVC come to an agreement, it is not clear how soon a deal could be completed or when that money would start rolling into the conference.
The CVC investment would likely require the Big 12 to stay together long term. That might require some sort of assurance for CVC that a new grant of rights would be signed in 2031. The investment would certainly be a significant motivating factor to stay together, but with realignment, anything can always change quickly.
The discussion is to the point that three sources told CBS Sports a small working group of three Big 12 presidents have started digging down on the proposal. Sources said commissioner Brett Yormark had a prior relationship with CVC. Yormark would not comment when reached by CBS Sports.
One of the motivating factors for CVC is the considerable upside in the Big 12’s value and media rights, according to sources who saw the presentation. The Big 12’s current rights deal is worth $2.3 billion total. The league is currently fourth in average annual value for its schools among the Power Four behind the Big Ten, SEC and ACC.
A doubling of the Big 12 media rights would put the total value of the league at approximately $5 billion in its next negotiation. A 100% increase in value was deemed as reasonable by a media industry source contacted by CBS Sports. Media rights revenues for all FBS conferences have increased steadily in each of their recent negotiations.
All Division I schools are searching for additional revenue streams after last month’s House v. NCAA settlement that is in the process of being presented to a district court judge for final approval. Revenue sharing with players is now a reality for the first time.
If the settlement is approved, Power Four conference schools would be allowed to share up to $22 million annually with athletes. As part of that settlement, schools will also consider adding scholarships to fully fund some sports. That’s another added expense that could total $300 million over the next decade for each of those Power Four schools.
Typically, private equity firms such as CVC invest for the long term in companies with a growth profile. They make their money when their investment grows and they sell their stake. The industry term is called “exiting the investment.”
“If we do well, they do well,” said a person within the Big 12 who is familiar with the talks.
Florida State athletic director Mike Alford said he wasn’t surprised a private equity firm was getting involved with a conference.
“The future is — we’re looking at it — private equity,” Alford told CBS Sports. “I think it will start at the conference level first if it doesn’t start with us first.”
It’s no secret Florida State has partnered with private equity firm Sixth Street, another leading global equity firm, to maximize its value as it continues an attempt to exit the ACC.
For one month, beginning July 1, the Big 12 will operate as a 12-team league with the loss of Texas and Oklahoma to SEC. It will formally debut as a 16-team league on Aug. 1. That new Big 12 includes only two teams that have won national championships (Colorado, BYU). Half of the teams in the new Big Ten (nine of 18) have won championships. The ACC has four national champions. In the new SEC, seven of the 16 teams have won a national title.
Those inside the Big 12 continue to be impressed by Yormark’s aggressive approach. His move to get the latest media rights deal done in October 2022 — ahead of the Pac-12 — eventually led to the collapse of the latter conference.
“He’s throwing punches,” one Big 12 source said. “The dude is bold. He’s all about it. He’s bullish.”
Among CVC’s sports portfolio is the Women’s Tennis Association, the Gurajat Titans (cricket franchise in the Indian Premier League), LaLiga (Spain-based soccer giant), Ligue de Football Professionel (governing body that runs soccer leagues in France), Premiership Rugby (England’s top league) and Six Nations Rugby United Rugby Championship (top league in Ireland, Scotland and Wales). Its U.S. investments include Petco.
CVC was founded in 1981. Rob Lucas is the company’s CEO and managing partner who has been with the company since 1996.
Private equity is being considered an inevitability for college sports as schools seek additional revenue streams. RedBird Capital founder Gerry Cardinale raised eyebrows in December when he said college football was vastly undervalued. RedBird has a stake in soccer giant AC Milan as well as the Pittsburgh Penguins and Boston Red Sox.
A new in-season basketball tournament — the details of which were first reported by CBS Sports — is backed by an offshoot of RedBird Capital, RedBird International Media Investments. RedBird IMI is majority funded by the United Arab Emirates and is headed by former CNN CEO Jeff Zucker.
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