The Big Ten and private equity: Why college sports’ richest conference is doing its homework

Irwin Kishner, co-chair of Herrick's Sports Law Group and co-chair of Herrick's Corporate Department, spoke to The Athletic about the potential for private equity investment in Big Ten sports.

According to the article, with the "dawn of the revenue sharing era," permitting schools to disperse funds to their athletes, the Big Ten commissioner is searching for ways to grow revenue, which includes exploring partnerships with private equity firms. While the decision on whether to partner with an outside firm has not been settled, the article reports that the stakes are simple: "Don’t let the new budget item of athlete revenue sharing send the athletics programs’ other financial goals to the back burner."

The article notes that "[s]ome professional sports leagues and franchises have engaged with private equity, but there are significant differences and limitations in how a public institution or a non-profit conference like the Big Ten can interact with a global investment firm." The article further states that public universities are state agencies, "which makes any attempt by an athletic department to secure funding from a private equity firm tricky."

The Big Ten's "financial growth and unprecedented exposure on three linear broadcast networks for football (plus cable channels and multiple streaming options) make it a highly valued property." According to its most recent tax return, the Big Ten reported $942 million in earnings, and its revenue trajectory should make it the first league to cross $1 billion. That makes it an attractive candidate for any investment firm, according to Irwin.

“The revenue size of the Big Ten is enormous,” Irwin said. “There are several other sides to it, including merchandising and streaming, potentially, or probably, the in-game experience, potential rights to ultimately restructure. There’s some definite opportunities in that space that could produce significant returns.”

“College sports is ripe for private equity in the sense that it fits the investment profile that private equity wants to invest in,” Irwin said. “Once you open up the floodgate, I think you’ll start seeing more deals happen. And, frankly, I’m confident if it’s not this deal, it’s just a matter of time until a deal gets done, or several deals get done.”

Read the full article in The Athletic here. Access may require a subscription.