The Big 12 conference is on the verge of finalizing a deal with RedBird and Weatherford Capital, anticipating a substantial financial boost totaling millions of dollars.
Recently, the presidents and chancellors of the Big 12 granted Commissioner Brett Yormark permission to advance negotiations on a lending arrangement which, should every institution opt in, could provide $500 million to the conference’s constituents and forge a key commercial alliance with the investment entities.
Several individuals familiar with the pending accord shared details with Yahoo Sports, requesting their identities remain undisclosed. The Big 12 will not be relinquishing any ownership shares or equity to these companies. A definitive resolution regarding this initiative is anticipated in the forthcoming weeks, contingent upon the execution of comprehensive contractual documents.
Issuing a statement to Yahoo Sports, the Big 12 verified that it is engaged in discussions with the pair of firms to establish “a diverse strategic commercial collaboration” aimed at expanding the league’s business activities, simultaneously “offering an optional capital provision for our member schools to access as much as $500 million in funds.”
“RedBird intends to collaborate with the Conference to pinpoint synergistic investment prospects both within and beyond the collegiate sports environment, thereby generating novel income sources and fostering enduring asset growth,” the communication stated.
This understanding would conclude the conference’s extensive three-year investigation into private investment and funding options, marking it as the inaugural publicly announced league-wide financial pact within prominent college athletics. The Big 12’s impending arrangement with RedBird and Weatherford comes shortly after one of its constituents, Utah, finalized its own equity alliance this week. This new accord would have no bearing on Utah’s existing agreement.
The collaboration between the Big 12 and RedBird/Weatherford, largely driven by Commissioner Yormark and Kansas President Doug Girod, who serves as the league’s chairman, constitutes a tripartite initiative characterized by one involved party as a “modest-risk undertaking with significant potential benefits for the conference.”
RedBird, an investment management entity situated in New York, overseeing $12 billion in assets, has committed to injecting millions into the Big 12 administrative operations as an initial measure to stimulate commercial activities, potentially fostering new enterprises and guiding the league’s financial commitments into profitable corporations.
Furthermore, the organization is presenting approximately $30 million to each participating institution in the form of a capital credit facility with a favorable interest rate. Accessing this funding is entirely optional for the schools.
The third fundamental component of this comprehensive proposal centers on a strategic commercial rapport between these companies and the Big 12, aimed at advancing the conference’s central administration into a more streamlined and professional operational model. Moelis served as the financial advisor for the Big 12 throughout this undertaking.
“Thus far, the RedBird network has channeled more than $145 million in agreed-upon revenue to the Big 12 and its constituent universities,” the Big 12’s official statement declared. “This alliance would equip the Conference with a premier strategic and financial collaborator, concurrently safeguarding the entirety of the member institutions’ ownership interest in the Big 12.”
The collaborative venture between the Big 12 and RedBird/Weatherford is poised to conclude over a year of discussions regarding a financial agreement, marking the firm’s long-anticipated entry into the realm of collegiate athletics. For an extended period, RedBird and Weatherford have been presenting investment or funding propositions directly to various institutions.
Private investment funds or external capital have surfaced as crucial in an sector currently grappling with unprecedented financial pressures. As expenditures swell to compensate university athletes and coaching remuneration persistently escalates, academic institutions and conferences are actively seeking immediate financial injections, which they intend to reimburse over several years – with a significant portion of these funds dependent on forthcoming broadcast agreements.
Utah established a precedent as the initial institution to finalize this type of arrangement through an equity partnership with Otro Capital, though it is improbable that the Utes will be the sole adopters. Numerous prominent athletic programs nationwide are actively contemplating comparable strategies.
Among the more widely reported proposals, the Big Ten spent months negotiating an equity and capital alliance with UC Investments, only to have the initiative halted due to opposition from two constituent universities, USC and Michigan. Several months prior, the SEC engaged with investment bank Goldman Sachs to investigate prospective collaborations, despite the league’s leadership having voiced public and private reservations concerning such arrangements.
Nonetheless, the substantial sums of money at stake are undeniable.
Such financial injections present a challenge for entities that do not avail themselves of the funds. Institutions operating without these capital resources face the prospect of a fiscal handicap, which could detrimentally affect their ability to attract both student-athletes and coaching personnel.
Universities within the Big 12 and ACC already experience a monetary shortfall compared to the SEC and Big Ten, as the latter’s broadcast agreements—the primary income generator for collegiate athletic departments—disperse greater financial resources to their member institutions. This influx of capital assists the Big 12 in narrowing a financial disparity that persists in expanding between its conference and what many refer to as the “Dominant Duo” of the SEC and Big Ten.
