The Big 12 just heard from U.S. Rep. Michael Baumgartner of Washington in a social media post warning the league’s schools against engaging with the newly reported private capital deal on Wednesday.
The Republican congressman and Harvard graduate isn’t a fan of the league’s interest in private equity, which is slated to provide its members with an “optional capital credit line of $30 million,” and another $12.5 million going to the front office, according to multiple reports.
It’s somewhat humorous for a sitting member of Congress to weigh in on a Power Four conference’s enlistment of private equity after years of inaction in D.C. Things have gotten out of hand money-wise, I think we can all agree, the time for federal action, including the nonsensical ‘Saving College Sports’ roundtable, has passed, and the leagues themselves are beginning to act.
Look – I’m not a fan of private equity personally, and I think the last thing these athletic departments need is more money, more credit, and more reasons to sweat over whether they have the bells and whistles needed to “stay competitive” in the modern era. When Utah established its $500 million private equity partnership with a New York partner, it was the first move on an unpredictable chessboard.
But schools are paying athletes now – that’s not likely to change without a catastrophic shift in what we consider entertainment, and even then, who wants to live in a world without college football? Moreover, these are student-athletes on the payroll, and that makes these athletic programs enterprises. It’s about profitability now more than ever, and we’re already seeing SEC programs scrapped entirely to save cash.
With that comes the struggle of control. Ross Dellenger is reporting the assurances of Brett Yormark that “the capital partners will hold no ownership in the league and the deal will not change the operation or governance of the conference.” But these private equity companies have more than a say at the negotiating table when millions of dollars are on the table, and higher education isn’t exactly rebounding at substantial rates following pandemic declines.
The doors are open, and Yormark must feel confident enough to take on this new part of the college sports economy, and, in the short term, the Big 12 could find itself with plenty of green. Whether folks like Baumgartner will actually play a role in heavily taxing these schools remains to be seen, but it’s not like this is much of a shock to those who’ve been watching.
