There are two things happening with the biggest Big 12 news: 1) Naming rights; and 2) private equity. It felt like these two ideas were being conflated and they are separate. There are times where I consider what I do here, which is aggregate links for you all, but in this case, I think it is definitely beneficial and I’ll let you choose. Here are links:
Yahoo’s Ross Dellenger: Sources: Big 12 exploring naming-rights deal for conference worth hundreds of millions
ESPN’s Pete Thamel: Sources: Big 12 explores selling naming rights to title sponsor
Action Network’s Brett McMurphy: Sources: Big 12 Conference, Allstate In Discussions for Naming Rights Deal
CBS Sports’ Dennis Dodd: Big 12 considering private equity investment of up to $1 billion for as much as 20% of conference
So the naming rights thing is pretty simple, giving up naming rights to Allstate insurance for about $30 to $50 million a year, which would be split between the 16 teams. Meh, this seems like a small deal and the conference name would be the Big Allstate Conference or something like that. Sure. Fine. Whatever.
The private equity thing is a much bigger thing to me and I’ll let Dennis Dodd explain:
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.
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.
The idea of a private equity firm owning a part of the Big 12 makes me nervous, if the long term play would be for the equity firm to sell at some point, who buys that interest in 5 or 10 years? It will be some other entity looking to profit and make money. Say what you will about capitalism and private companies, but the shareholders expect to make money and how that money is generated is the most important thing and if the Big 12 doesn’t, then there are problems. Or maybe the private equity share goes back to the conference? I don’t know how that would work, but it’s sort of a scary proposition for an entity to own the conference and have an expectation of profit and to have a vote on the board of the Big 12.