By Ralph Russo, Austin Meek and Stewart Mandel
For the second time in the last three years, Michigan and the Big Ten are at odds with each other.
In 2023, the school that has won more Big Ten football championships than any other banged heads with the conference over the handling of an NCAA investigation into the Connor Stalions sign-stealing scandal. To this day, there are Michigan supporters who resent that the Big Ten suspended former coach Jim Harbaugh for three games and allowed the cloud of scandal to hang over the program’s national championship season.
Now, the dispute is over a multi-billion-dollar investment deal that could help ensure the Big Ten’s place as one of the richest and most powerful conferences in college sports for the next 20 years. Big Ten commissioner Tony Petitti has lined up an equity partner willing to infuse more than $2 billion into the league for a cut of its lucrative media rights.
The potential windfall could help schools keep up with the rising cost of big-time college athletics, where the athletes are now paid directly, coaching salaries have skyrocketed and many schools have accrued significant debt services from capital improvement projects, including six Big Ten members owing at least $225 million.
Perhaps most significantly, the deal would bind the schools together through 2046 — bringing a modicum of stability to a murky future where anything is possible in realignment and consolidation.
The Big Ten’s official comment is that nothing has been finalized, no votes have been called and this complex deal is still being vetted by its membership. Still, most Big Ten schools appear to be ready to sign on. Just not Michigan.
While new Big Ten member USC has also expressed its opposition, those who represent the interests of Michigan have been most vocal in their criticism of Petitti and his plan, which they say gives the investor similar status to a member school and mortgages future revenues for a short-term payout.
The situation has some at Michigan questioning the future of the school’s 129-year relationship with the Big Ten.
“We are the golden goose, and Ohio State. Why would you cook the golden goose?” said a Michigan source briefed on the deal. “This isn’t an aggressive move (by Michigan) to break anything up. If anything, it’s an aggressive move on Tony’s part to break up the Big Ten. It’s headed towards blowing things up.”
With the blessing of the Big Ten’s university leaders seeking new revenue streams, Petitti began exploring private equity opportunities for the conference more than a year ago.
After the league spoke to huge investment firms such as RedBird Capital, Blackstone and Apollo, a nontraditional investor emerged this summer: UC Investments. It is not a private equity firm but essentially the University of California system’s portfolio manager, charged with growing the more than $200 billion in assets that fund the schools’ endowment and retirement plans.
Mark Bernstein, chairman of the Michigan board of regents, has compared the UC investment deal to a “payday loan.” Eight different Big Ten schools, including Ohio State, reported athletic department deficits in their 2024 fiscal year financial report.
Michigan athletics balanced its books last year — with the help of $15 million from university funds. The school is also facing a fine that could surpass $30 million as punishment for the Stalions scandal.
“There is a very real financial problem that many athletic departments face. We acknowledge that and are eager to address that in a collective way through the conference,” said Bernstein. “At the same time, it is astonishing to us and irresponsible to not consider many other alternatives that are not as burdensome or expensive as the one that has been proposed involving private capital.”
Former Michigan president Santa Ono was chairman of the initial working group of presidents that was looking at investor options, but Michigan currently has an interim president, empowering its board to drive the school’s decision on this deal. At most Big Ten schools, the president and athletic director have guided the decision. Through a spokesman, Michigan athletic director Warde Manuel declined to comment for this story.
Bernstein and other Michigan board members had indicated they would be willing to work with the conference and fellow members on alternative ways to provide an influx of cash that don’t include potentially giving up even the smallest amount of control of assets such as media and marketing rights to an investor.
“The University of Michigan is not desperate,” Bernstein said.
The $2.4 billion payment is not a loan that the conference has to pay back. Instead, UC Investments gets a share of a new standalone company, Big Ten Enterprises, that would hold the league’s media and sponsorship rights. When it comes time every year to distribute revenue to Big Ten athletic departments — last year, schools received around $50 million each from media rights deals alone — UC Investments would receive a 10 percent cut off the top for at least 15 years, at which point it has the right to sell its stake. The 18 schools and the conference office would split the remaining pot.
UC Investments sees potential for a considerable return on its investment. The Big Ten’s media rights increased in value by 127 percent in the span of just six years, from a $440 million annual average to more than $1 billion per year under the Big Ten’s current deals with Fox, CBS and NBC. And the CBS and NBC packages come up for renewal again in 2030. UC Investments would receive 10 percent of the conference’s sponsorship revenue as well.
The Big Ten believes it does not need unanimous approval to accept an investment. Even if USC and Michigan don’t sign the grant of rights extension, UC Investments is still willing to make a deal, but at a lower valuation than $2.4 billion, according to two people briefed on the discussions. Michigan’s media rights are considered the conference’s second-most valuable asset behind Ohio State’s. The deal calls for a tiered distribution based on a school’s market value, with Michigan, Ohio State, and Penn State in the top tier; those schools would receive well above the average $133 million payout. (USC is in the tier below.)
One school source stressed that if the Big Ten did approve the deal without Michigan and USC, it would not close the door to the two schools jumping back in at some point. But in the meantime, Michigan and USC would not get a cut of the upfront money, and while the rest of the conference would be locked up through 2046, those two would be free to shop around for a new deal after 2036.
It would be a highly unusual move for a conference to take such a big step without unanimity. Alignment and unity are signs of strength, and that strength has helped the Big Ten become the wealthiest conference in college sports.
“Michigan is still evaluating the deal,” one of the people briefed on the deal said.
All over the country, schools are looking toward the not-so-distant future and wondering how they would fit in if the most valuable schools signed on to more extreme realignment and consolidation plans. Petitti’s pitch to members has been that in these uncertain times, the Big Ten is better off together.
“I think being tethered to a group that you feel like is going to bring you value is important,” a Big Ten athletic director told The Athletic, speaking on condition of anonymity because the conference has not been making internal discussions about the deal public. “But if the landscape has changed enough, there’s only so many people to dance with, and you figure out who your best partners are.”
For Michigan, with projected athletics revenues of $266 million, a massive alumni base and a brand with global reach, the future does not look so worrisome.
“I’m not losing a minute of sleep about what the next steps would look like for the University of Michigan,” Bernstein said.
If Big Ten schools take the deal and lock arms for the next 20 years, it could also undercut or at least complicate any so-called “super league” models for major college football. As recently as 2024, two separate groups were pitching to schools and conferences the idea of a new structure, completely outside of the NCAA, in which conferences and schools would pool their media rights to unlock billions in untapped value.
The Big Ten and SEC, which house the most valuable schools, did not engage in those discussions.
A person briefed extensively on the deal said that a vote of the Big Ten’s Council of Presidents and Chancellors could be called before Thanksgiving, but nothing has been set. The person characterized what’s going on as more akin to an active negotiation.
Still, this all paints the picture of growing animosity between Big Ten and Michigan, a conference it helped found in 1895.
“I don’t think anyone at Michigan is saying we want to leave the Big Ten,” the first Michigan source said. “That’s why it’s so puzzling to hear that others want to go ahead without us, essentially pushing us out.”
But the mere idea of Michigan and the Big Ten disagreeing enough about the future to part ways at some point is monumental. Michigan to the SEC? Michigan as an independent, like Notre Dame? Speculate away.
“I appreciate that many people say we’re stronger together as a conference to navigate the storm we’re in. I’m not sure that’s true,” Bernstein said. “The extension of rights, which is a critically important part of this deal, in this environment feels reckless.”
The Athletic‘s Scott Dochterman contributed reporting.
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