Trustees at member institutions across the Big Ten are pushing back on a proposed $2.4 billion private equity deal that some argue has been too rushed, lacking transparency and proper vetting.
Now, with trustee criticism mounting, the conference appears to be prolonging talks amid a push to finalize a plan to establish a for-profit arm of the Big Ten, which would control its media and sponsorship rights and sell a 10 percent stake of that entity to the investor. The deal would give members an immediate cash infusion, with a minimum $100 million disbursement across the league, while more prominent athletic programs would receive an even higher revenue share. That money is needed, even at wealthy institutions, as universities adjust to a changing world of college athletics, which includes direct payments for players that began earlier this year.
The proposal would also maintain the current 18 universities as Big Ten members through 2046.
Dissent among the Big Ten ranks seems to have prompted the potential investor—the University of California pension fund, or UC Investments—to slow down the deal.
While UC Investments indicated in a Monday statement that it “remains very excited” about the offer, officials wrote they will work with members in the “coming months” to solidify the deal. (Prior reports indicated the conference hoped to put the deal to a league vote by mid-November.)
“As we have continued to evaluate this opportunity over the past five months, we remain convinced that the unity of the 18 Big Ten university members is key to the success of Big Ten Enterprises,” Chief Investment Officer Jagdeep Singh Bachher wrote in the statement. “We also recognize that some member universities need more time to assess the benefits of their participation. UC Investments likewise requires some additional time to complete our due diligence as recent developments unfold and we continue to engage with the conference.”
The CIO also lauded Big Ten commissioner Tony Petitti and his team.
“The process they have led has been rigorous, honest and fair—among the best we’ve seen. Recent misinformation has distorted some aspects of its effort,” Bachher wrote in the statement.
But several trustees at Big Ten member institutions have raised concerns about a lack of transparency into the deal, saying they have received little information about the arrangement and yet been asked to rubber-stamp it on a compressed timeline.
Trustee Dissent
UC Investments announced a commitment to a unified process for making a deal just a few days after the American Council of Trustees and Alumni held an online meeting with individual board members representing five Big Ten institutions. The meeting, held Friday, included trustees from the University of Michigan, the University of Minnesota, the University System of Maryland, Pennsylvania State University and the University of Southern California, all of whom had concerns about the deal.
Tom McMillen, a Maryland regent, said in the recorded meeting that “no trustee has been given a balanced view” of the pros and cons of the proposal, according to his conversations with other governing board members across the conference. He also called for third-party evaluations of the arrangement.
“It’s shocking to me that a decision of this magnitude, there are no opposing views presented,” McMillen said.
Michigan regent Sarah Hubbard echoed similar concerns on the ACTA call, arguing that there was a need for more oversight and for trustees to have a formal role in discussing the proposal. She also questioned the need to expedite the process with such limited information available.
“This lack of transparency and information for the fiduciaries at our universities is unacceptable,” Hubbard said.
Penn State trustee Jay Paterno questioned the need for secrecy around the potential investment. Given that the Big Ten is about to create “a for-profit company using what are essentially public dollars,” he argued, boards need to know more in order to be able to advise their institutions accordingly. Ultimately, Paterno said, he wanted to see the Big Ten put its cards on the table.
“If it’s such a great deal, show us the deal and let’s go,” Paterno said.
Outstanding Concerns
UC Investments signaled it would work on the deal over the “coming months”—likely signaling a slowdown in the process—but it has offered no information about where things stand.
A UC Investments spokesperson referred questions about trustee concerns to the Big Ten, which did not respond to a request for comment from Inside Higher Ed.
But outside analysts echo many of the concerns raised by trustees. Armand Alacbay, chief of staff and senior vice president of strategy at ACTA, said the organization has no position on the proposal itself but got involved because of concerns about trustees being shut out of the deal.
“Anyone we’ve heard from on this has said it’s not enough time, not enough information, not enough of anything to make this decision. Some have been told that it’s a nonvoting decision for them, that they don’t even have a right to make a decision because it’s the conference,” Alacbay said. “Well, I would say that the intellectual property and media rights of your athletic department are a significantly large asset of the institution and justify a level of board oversight.”
Karen Weaver, an adjunct assistant professor at the University of Pennsylvania Graduate School of Education, told Inside Higher Ed that while private equity has seeped into numerous areas of college athletics in recent years, the investment in a conference is a new approach. And what happens with the Big Ten will likely set the stage for other conferences.
She said if the Big Ten can successfully navigate a maze of thorny legal and political concerns, then other athletic conferences will be more likely to follow in their footsteps. “But if they constantly get land mines and roadblocks thrown in the way,” others will be more hesitant, she said.
Weaver also pointed to concerns lawmakers raised that could upend or complicate the deal.
Last week U.S. Senator Maria Cantwell, a Washington Democrat, issued warnings about the proposal in a statement and individual letters to both university and conference leadership. She argued that such a deal “may be counter to your university’s academic goals, may require the sale of university assets to a private investor, and may affect the tax-exempt purpose of those assets.”
Cantwell also emphasized the different priorities of universities and private equity investors.
“The primary goal of these companies is to make money for the firm, which is unlikely to align with the academic goals of your university or its obligations as a not-for-profit organization,” Cantwell wrote. “These investors will be focused on maximizing their investment, not on preserving and growing athletic and academic opportunities for student athletes.”
