The Big Ten is getting closer to voting on an equity deal that will inject the league's schools with more than $2 billion, industry sources told ESPN.
In recent days there has been momentum for the deal to move forward and the structure of the complicated deal is coming together. A vote is expected in the near future, according to sources.
The framework calls for the formation of a new entity, Big Ten Enterprises, that would own all media rights and sponsorship contracts for the entire league.
Ownership shares in Big Ten Enterprises would go to the league's 18 schools, the conference office and the equity group, an investment fund tied to the University of California pension system. Yahoo Sports was the first to report the UC investment fund's involvement.
The pension fund is not a private equity company and the UC fund's valuation turned out to be higher than other competing offerings. This has proven attractive to the Big Ten and its schools, according to sources.
A source familiar with the deal said there has been momentum in recent days, but the league is still working with leaders to make a final decision.
Exact equity amounts per school across the Big Ten are still being negotiated. There is expected to be a small gap in equity percentage between the largest brands and others, although it is likely to be less than one percentage point.
ESPN reported last week that a tiered structure is expected in the initial allocation of the more than $2 billion in capital, with larger brands receiving more money. However, each school would receive a payment of at least nine figures, sources said.
The agreement would require an extension of the league's Grant of Rights until 2046, providing long-term stability and making further expansion and any possibility of the league's schools abandoning the formation of the so-called “Super League” unlikely.
Traditional conference functions are expected to remain at the conference. Any decision-making within the Big Ten Companies would be controlled by the conference. The UC pension fund would receive a 10% stake in Big Ten Enterprises and would have the rights typical of minority investors, but no direct control.
The infusion of money is badly needed at several Big Ten schools that are struggling with debt service on new construction, increasing operating expenses and providing additional scholarships and direct revenue ($20.5 million this year and expected to increase annually) to athletes.
The Big Ten has argued the deal would ease financial strain and help mid- and lower-tier Big Ten schools compete in football against the SEC.
ESPN first reported last week that the league was in detailed talks about the deal.
Big Ten Enterprises would be tasked with not only handling the league's valuable media rights (the current seven-year, $7 billion package extends through 2030), but also trying to maximize league-wide advertising and sponsorship deals, such as jersey patches or on-field logos.
“Think of it this way: The conference is not selling a piece of the conference,” a league source told ESPN last week. “Traditional conference functions would remain 100 percent in the conference office: scheduling, officiating and championships. The new entity being created would focus on business development and include an outside investor with a small financial stake.”
The deal has not been without its detractors, with both Michigan and Ohio State, the league's two richest sports programs, initially expressing skepticism, according to sources. Each school has come under significant pressure not only from the league office but also from other members of the conference to reach an agreement.
Politicians in several states have also expressed opposition, including U.S. Sen. Maria Cantwell (D-WA), who stated Thursday: “Are you going to allow someone to take and monetize what is really a public resource?…That's a real problem.”
Cantwell followed up Friday by sending a letter to every Big Ten president warning that any deal involving private equity could invite a review, including the impact on the schools' tax-exempt status.
