With private equity, conference naming rights, Big 12 explores innovative revenue infusions

As athletic departments gird for an enormous financial stress test on the heels of approval of the House settlement, Big 12 Conference Commissioner Brett Yormark is exploring potential revenue streams never before accessed in college athletics. 

On3 confirmed that Big 12 campus leaders are weighing a potential landmark private equity investment intended to narrow the revenue gap between the league and the industry’s two super conferences – the SEC and Big Ten.

In news first reported by CBS Sports, the deal would entail the Big 12 receiving a cash infusion of as much as $1 billion from Luxembourg-based CVC Capital Partners in exchange for as much as a 20% stake in the league. The 16 conference members would receive a portion of the cash investment, and the league would receive access to CVC’s investment services and clients.

Sources familiar with the league’s internal talks told On3 that while some campus leaders are bullish on the potential deal, pushback exists from at least a few school presidents.

Yormark’s two-year stint as commissioner has been defined by aggressive innovation and nimble acumen in the face of unprecedented industry upheaval. But sources caution that achieving a supermajority among school presidents to approve this deal could be a steep climb.

If CVC secured a 20% stake in the league, sources say it would likely have very little operating control. What it could have, they note, is control – the right of first refusal – related to other sources of capital at both the conference and school levels.

Big 12 also exploring naming rights deal

What’s more, Yormark’s plunge into potential new revenue streams extends far beyond PE: The league is also exploring selling the naming rights to its league, thus incorporating the sponsor’s name into the title, a possibility first reported by Yahoo Sports. 

On3’s Pete Nakos confirmed a report from the Action Network, that the Big 12 discussing with Allstate on a naming rights deal that would change the league’s name at a reported cost of $30-50 million annually to the insurance giant. However, much like the private equity news, sources tell On3 there is some skepticism the deal will get off the ground.

In a post-House settlement world, the pressing need to tap into new revenue streams will be felt throughout the top tiers of college athletics, especially throughout the Big 12. Member schools receive $31.7 million per year because of their media rights deal, which is less than half of what Big Ten member schools receive because of their rights deal.

The House settlement – if approved in the coming months by U.S. District Judge Claudia Wilken – entails the NCAA and all 32 Division I conferences paying a $2.8 billion damages bill over a 10-year period, and that schools, at their discretion, can share up to $22 million annually with athletes.

The NCAA recently approved schools placing corporate logos on football fields, and there remains the possibility of exploring corporate jersey patches in the future. And, of course, industry discussions in recent months have intensified around private equity providing a much-needed infusion of capital at the conference or university level. 

In late May, RedBird Capital and Weatherford Capital announced the creation of Collegiate Athletic Solutions, which is planning to lend money and offer guidance to athletic departments in exchange for a share of future revenue.