Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference

The Big 12 members are considering an unprecedented private equity investment to ensure the league’s long-term financial and competitive security, multiple sources told 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, these sources said. A portion of the money would go directly to the conference’s 16 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 more than $200 billion in investments worldwide, according to its website. The company made a presentation to the league at the recent Big 12 spring meetings in Dallas.

While one source described the negotiations as “very serious,” many league presidents need more convincing. People who spoke to CBS Sports preferred to remain anonymous due to the sensitive nature of the discussions.

No league has come so close to a private equity investment of this type.

The Big 12 teams are currently earning $31.7 million each from Fox and ESPN in a media rights deal that ends in 2031. Add in the infusion of money from private equity and the two revenue streams would combine to move the Big 12 “much closer” to the Big Ten Media Rights Agreement, according to a person with in-depth knowledge of the proposal.

The Big Ten leads all conferences with its schools poised to earn approximately $75 million annually after signing a new media rights deal with Fox, CBS and NBC. (Oregon and Washington will not receive full shares initially when they enter the league on July 1.)

If the Big 12 and CVC come to an agreement, it’s unclear when the deal might be completed or when that money would start flowing into the conference.

CVC’s investment would likely require the Big 12 to stay together for the long term. This may require some sort of guarantee for the CVC that a new rights grant would be signed in 2031. The investment would certainly be a significant motivating factor to stay together, but with realignment, everything could always change quickly.

The discussion has gotten to the point that three sources told CBS Sports that a small working group of three Big 12 presidents has begun investigating the proposal. Sources said Commissioner Brett Yormark had a prior relationship with CVC. Yormark declined to comment when contacted by CBS Sports.

One of the motivating factors for CVC is the Big 12’s considerable advantage in value and media rights, according to sources who attended the presentation. The current Big 12 rights deal is worth a total of $2.3 billion. The league currently ranks fourth in average annual value for its schools among the Power Four, behind the Big Ten, SEC and ACC.

A doubling of Big 12 media rights would put the league’s total value at approximately $5 billion in its next negotiation. A 100% increase in value was considered reasonable by a media industry source contacted by CBS Sports. Media rights revenues for all FBS conferences have steadily increased in each of the recent trades.

All Division I schools are looking for additional revenue sources following last month’s crisis. House v. NCAA agreement 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 deal is approved, Power Four conference schools could share up to $22 million annually with athletes. As part of this agreement, schools will also consider adding scholarships to fully fund some sports. This is another additional expense that could total $300 million over the next decade for each of these Power Four schools.

Typically, private equity companies like CVC invest for the long term in companies with a growth profile. They make money when their investment grows and sell their stake. The industry term is called “investment exit.”

“If we do well, they do well,” said one Big 12 person familiar with the negotiations.

Florida State athletic director Mike Alford said he was not surprised by a private equity firm’s involvement in a conference.

“The future is — we’re looking at it — private equity,” Alford told CBS Sports. “I think it will all start at the conference level first, if not start with us first.”

It’s no secret that Florida State has partnered with private equity firm Sixth Street, another leading global equity firm, to maximize its value as it continues to attempt to exit the ACC.

For a month starting July 1, the Big 12 will operate as a 12-team league, with Texas and Oklahoma losing to the SEC. It will formally debut as a 16-team league on August 1. This new Big 12 includes just two teams that have won national championships (Colorado, BYU). Half of the teams in the new Big Ten (nine of 18) won championships. The ACC has four national champions. In the new SEC, seven of the 16 teams won a national title.

Those inside the Big 12 continue to be impressed with Yormark’s aggressive approach. His decision to conclude the last media rights agreement in October 2022 – before the Pac-12 – ended up leading to the collapse of this last conference.

“He’s pulling punches,” said a Big 12 source. “The guy is bold. He does it all. He’s optimistic.”

Among CVC’s sports portfolio are the Women’s Tennis Association, Gurajat Titans (Indian Premier League cricket franchise), LaLiga (Spain-based football giant), Ligue de Football Professionel (governing body that administers football leagues in France ), Premiership Rugby (main league in England) and Six Nations Rugby United Rugby Championship (main league in Ireland, Scotland and Wales). Its US investments include Petco.

CVC was founded in 1981. Rob Lucas is the company’s CEO and managing partner and has been with the company since 1996.

Private capital is being considered an inevitability for college sports as schools look for additional revenue sources. RedBird Capital founder Gerry Cardinale raised eyebrows in December when he said college football was greatly undervalued. RedBird has a stake in football giant AC Milan, as well as the Pittsburgh Penguins and Boston Red Sox.

A new in-season basketball tournament – details of which have been first reported by CBS Sports – is backed by an offshoot of RedBird Capital, RedBird International Media Investments. RedBird IMI is majority funded by the UAE and is headed by former CNN CEO Jeff Zucker.