What’s going on in the Big 12 and beyond? I expand and explain every Sunday in Postscripts at Heartland College Sports, your home for independent Big 12 coverage.
Today Big 12 schools are turning down line of money from the private capital deal. Is that a bad thing?
Money for Nothing? Not Really
Per multiple reports and school announcements, the following schools have said no to the $30 million in private capital money the Big 12 lined up for them through its deal with RedBird Capital and Weatherford — Houston, UCF, BYU, Colorado, Kansas State, Arizona, Iowa State, Oklahoma State, Baylor, TCU, Texas Tech, West Virginia, and Cincinnati.
C’mon, Utah, Kansas and Arizona State. You’re holding up perfection. Actually, Utah has its own side deal that will likely preclude it from tapping into this. So, it’s all you Kansas and Arizona State. Hey, KU? Wanna finish that Gateway project a little sooner?
My guess? All three schools will weigh in soon and take a pass. Note that the line of credit is available for a year so these schools could change their minds. But I doubt it. If these schools don’t need the money now, is it that likely they’ll need it in a year? I mean the price of gas is going up.
If this all looks like a failure to you, well you’re not looking at the bigger picture. I’ve written about this before. This deal really isn’t about whether the schools are going to take the money or not. This is about everything else around the deal.
Big 12 commissioner Brett Yormark originally pitched this as a private equity deal a couple of years ago. It didn’t get a lot of traction. You can understand why. Schools are unlikely to give up the power to direct their institution or their conference. Remember — Yormark runs the league the league’s presidents must buy into what he’s selling. When it came to private equity, they weren’t buying because PE deals require some level of ownership in the entity the PE is investing in.
Yormark wanted to strike the deal. The schools did too. They saw value in the partnership, just not the PE portion. So, all parties found a way to make it work. An optional private capital line of credit is far more palatable. It’s a loan or a line of credit. It’s the reason the schools found the entire deal palatable and it’s the reason the schools are turning it down. I mean, this isn’t free money, after all.
How “un-free” is it? When ESPN reported on the deal it also reported that the line of credit came with a “double-digit” interest rate. Any of you have a credit card? Of course you do. Go take a look at your interest rate. Actually — don’t. It’ll just depress you.
But let’s say that a school opted for the full $30 million and that interest rate was 10%, which is low for these lines of credit. Well, that becomes a $33 million investment because not only does the school have to pay the $30 million back, the school must pay back the interest. And that’s assuming the interest doesn’t compound.
It’s not that any of these schools aren’t good for it. The Big 12 could simply take the money out of their revenue share every year. But when you have so many other levers to pull as an athletic department, do you really need to tap into this kind of money? Take Oklahoma State for example.
Earlier this week, Matt Brown at Extra Points reported on the revenue generated by every school in Division I that he could acquire through either public filings or FOIA requests. I have to admit I was a bit taken aback by how much OSU generated in fiscal year 2024-25. The Cowboys generated $150.6 million, among the Top 35 Division I programs. Nearly all of it was generated by things like TV money, sponsorships and ticket sales. OSU is a self-sustaining athletic department, like many high major athletic departments.
Yes, there is still a considerable gap between Big 12 schools and the rest of the schools in the SEC and Big Ten when he comes to revenue. But Yormark would have to cultivate a record-breaking deal that would require giving up equity in the conference to bridge that gap. That’s a non-starter. This deal proves that. Plus, these schools clearly don’t want to deal with the hassle of a creditor.
So then why did the Big 12 make this deal? It’s about all the other things wrapped around the line of credit. Remember — the Big 12 has had a relationship with both entities for a year and they’ve helped the Big 12 generate $130 million for the next five years through third-party deals with Venmo and The Players Era tournament. This deepens the relationship. The line of credit was a sweetener, think it’s clear the Big 12 membership saw it as the cost of doing business and Yormark saw it as a sweetener that few, if any teams, would use.
The member schools don’t have an issue with RedBird and Weatherford bringing revenue in, nor will they have an issue if the pair of entities can help the league land a bigger television deal in several years, as RedBird has holdings in Paramount Global, which owns CBS and is attempting to buy TNT, both of which are Big 12 TV partners through sub-licenses with ESPN.
That’s what’s happening here. Yormark wanted to deepen the relationship. Big 12 schools understood they would be under no obligation to take the private line of credit. So, if you’re measuring the deal by that, then yes, it’s a failure. But if you’re measuring by the entire deal, the grade isn’t complete and won’t be for some time.
