Countless stadiums, arenas, golf tournaments and bowl games have sponsors in their titles. The world’s most prestigious soccer league was called the Barclays Premier League until 2016. Private equity firms currently hold ownership interests in more than 60 sports franchises in North America. According to PitchBook:as well as many of Europe’s top football clubs.
But when news broke Thursday that the Big 12 Conference was considering both a title sponsorship deal and a $1 billion private equity partnership with insurance giant Allstate, there was almost an audible collective reaction of, “How dare you do that!”
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Baylor University marketing professor Kirk Wakefield had an entirely different reaction to the possibility of a title sponsor.
“It’s a mystery to me why no one has done this before,” said Wakefield, whose research firm studies the impact of sponsorships on sports leagues and brands. “It’s a clear opportunity.”
David Carter, a USC sports business professor, looks at the Big 12’s predicament. The Big 12 is hundreds of millions of dollars behind the Big 10 and SEC in annual revenue, and he sees private equity as a Darwinian survival strategy. To win national championships, Big 12 schools need to be able to spend as much as their rivals on coaching salaries, player acquisitions, facilities and maybe soon player salaries. That could mean changing funding sources and the university-investor relationship.
“We have to raise the money somehow or risk becoming really irrelevant,” Carter said. “Some presidents and chancellors might say, ‘This is crazy.’ So what other options are there? If we don’t like this, are we OK with universities and conferences being essentially downgraded?”
Big 12 commissioner Brett Yormark, who was hired by Roc Nation in 2022, is known for taking unconventional approaches to elevating the conference’s brand after Oklahoma and Texas (both schools will play in the SEC this season). Renaming the league to the “All-State 12” and selling 20% of the conference to a Belgian private equity firm certainly fit that approach.
Either or both proposals would surely unnerve traditionalists in college sports. Indeed, at this point, it’s unclear whether his own university presidents would approve either or both proposals.
But from a purely financial standpoint, there’s plenty of logic to either scenario. Put simply, Big 12 athletics need more money, and fast.
The conference’s new contract with ESPN and Fox, which begins in 2025-2026, will pay members an average of $31.7 million per year through 2031. That’s a big win for the league considering the losses of Oklahoma and Texas, but it’s still far less than what Big Ten schools (averaging about $65 million per year) and SEC schools (more than $50 million) will make in the coming years.
Meanwhile, the Big Ten and SEC recently hammered out a new College Football Playoff deal that will see them receive nearly double the amount per year ($21 million per school) than the Big 12 ($12 million).
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And perhaps most urgently, the House v. NCAA antitrust settlement will allow universities to distribute about $22 million a year to their athletes. For Ohio State and Texas State, that’s just a rounding error. For Kansas State, it’s nearly a quarter of its annual revenue. The university may have to consider subsidizing athletics through direct aid, student tuition or both, much like new AAC members Cincinnati, UCF and Houston have done for years.
“All universities are looking at private equity,” one Big 12 athletic director said. “They should at least consider it.”
The sponsorship deal, while awkward, doesn’t seem all that controversial considering college football teams already play in the Pop-Tart Bowl and Duke’s Mayo Bowl, and Allstate itself is already ubiquitous in the sport, from the Allstate Sugar Bowl to branded nets behind the goal posts.
The corporatization of an entire conference will no doubt be a shock at first, but NBA jersey patches also caused controversy when they were introduced in 2017. Now, the Rakuten logo on Golden State Warriors jerseys has become the norm.
While the Big Ten and SEC brands date back to 1917 and 1932, respectively, the Big 12 name is still relatively new, originating in 1996 when the Big 8 added four schools from the Southwest Conference.
“We don’t want the Coca-Cola SEC or any of those organizations, it just goes against how we feel about tradition,” Wakefield said. “It’s not like that in the Big 12. We’re less tied to tradition in the Big 12.”
Wakefield estimated that this type of deal would be worth “several times” the $15 million to $30 million NFL stadiums make annually for naming rights. “The Big 12 is 16 teams, multiple sports played throughout the year. If you price it at the level of exposure, it’s a very large number.”
The private equity argument is much more complicated.
The Big 12’s future partner is CVC Capital, a firm that has invested billions of dollars in Spain’s top soccer league, La Liga, France’s Ligue 1, the Women’s Tennis Association and several rugby venues. It also owned Formula 1 until it sold it in 2016.
European sports leagues have embraced private equity well before their North American counterparts, but since 2019, when Major League Baseball first allowed institutional investors to invest, equity firms have invested in a number of franchises, including the Chicago Cubs, Houston Astros, San Antonio Spurs and Tampa Bay Lightning.
The reason is clear: From 2004 to 2022, U.S. professional sports teams generated significantly higher revenues than the S&P 500. According to Wealth Managementcalculated that the NBA’s valuation had increased by 1,079%, compared with 317% for the stock index.
One private equity firm values Michigan football at $1.5 billion. (Photo: Detroit Free Press)
College football teams don’t have individual valuations, but conference television contracts serve as an unofficial proxy. The Big Ten’s value more than doubled from 2017 to 2023. The ACC’s contract with ESPN is valued at $240 million per year, a 330 percent increase from what the league was making 12 years ago. Jerry Cardinale, who recently launched RedBird Capital, said: New Fund The head of the college sports-focused organization told The New York Times in January that the University of Michigan’s football team alone is worth $1.5 billion.
But unlike professional sports, which is a for-profit industry, college sports has long been treated as a non-profit extension of large academic institutions, even as rising television revenues have transformed it into a multi-billion-dollar industry.
That’s changing, with direct revenue sharing with athletes on the horizon, but it’s still new territory.
“Athletic departments have always been about how to spend the money they make,” said an administrator at a leading conference familiar with the department’s finances, “not about making a profit.”
CVC expects to at least double its six-year, $2.28 billion contract when the Big 12 re-signs in 2031, which, combined with sponsorship and other conference revenues, could net the company a lot of money. But in doing so, it would essentially become the 17th member with $1 billion worth of influence over the other 16 teams.
“It makes you wonder what the pitfalls are,” said the powerful conference administrator, “how could these companies be investing hundreds of millions of dollars in schools and not want some influence in return?”
SEC Chairman Greg Sankey expressed similar concerns last month. He cited Red Lobster, which declared bankruptcy 10 years after being bought by Golden Gate Capital, as a “lesson learned.” But Sankey’s conference is not facing the same financial woes as the Big 12.
In 2019, former Pac-12 commissioner Larry Scott presented a similar private equity opportunity to his board, with the league lagging far behind the Big Ten and SEC financially. University presidents were skeptical and turned it down. Four years later, the conference folded and the Big 12 became a major recruiting ground for colleges.
An experienced negotiator like Yormark, whose experience includes stints with NASCAR and the Brooklyn Nets, is better equipped to navigate that territory than a president or athletic director. The CVC would not have control over the conference and would be barred from involvement in any sports decisions, according to a person briefed on the discussions.
Asked about private equity’s interest in college sports at a recent Big 12 spring meeting, Yormark welcomed it.
“In some ways, interest from private equity is a validation of the direction and growth trajectory of the industry,” he said. “So I don’t see it as a bad thing.”
Ultimately, Big 12 presidents will have to acknowledge the unwelcome but inevitable reality that their “academic” enterprise is no different than professional sports at this point.
“Before, (college sports) was about returns. objective“College sports had a social component, and questions about graduation rates and things like that,” Carter said. “Now it’s the same as professional sports: how do you create value for sponsors, how do you satisfy investors? It’s anything goes in terms of generating revenue.”
Yormark appears to have found two potential sources of additional revenue that his conference may not be able to turn down.
(Photo by Ron Jenkins/Getty Images)
