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Sen. Maria Cantwell, D-Wash., sent a letter to Big Ten presidents on Friday warning that the move into private equity could have negative consequences, including impacting schools’ tax-exempt status.
“The primary goal of these companies is to make money for the firm, which is unlikely to be consistent with your university’s academic goals or its obligations as a nonprofit organization,” Cantwell said.
The Big Ten is exploring partnerships with private equity firms, with reports saying it could consider a $2 billion investment that would include the sale of its media rights and other assets under a new entity partially owned by equity investors.
Big Ten commissioner Tony Petti didn’t have specifics at the conference’s basketball media days this week.
“We will decide whether we need strategic investment to help us or not,” he said. “This will be done by all 18 leaders. I think it’s no different than looking at other buckets that we have to maximize resources. Just another path that may or may not be available to us.”
Cantwell, the ranking member of the Senate Commerce Committee, whose state has a Big Ten school, said in her letter that she was told that all regents and trustees at the conference were not fully briefed on the deal.
“It is not clear from my conversations with these Regents and Trustees whether this athletic-focused conference has fully considered the potential impact of the deal on your university and its overall academic mission,” he wrote.
His letter comes a day after the senator spoke at a Knight Commission seminar that looked at changes taking place in college sports following the settlement of a long-running lawsuit that now allows schools to pay players for their name, image and likeness.
Cantwell spoke in favor of the recently introduced SAFE Act, which proposes to rewrite a 1961 law that would make it legal for conventions to pool their TV rights. Following him at the event was Texas Tech Regents Chair Cody Campbell, who is a supporter of the law change and who has criticized the Big Ten idea of considering private equity.
“The fact that we’re bringing private equity into something that I think is owned American “The publicity in college sports is strange,” Campbell said.
Campbell estimates that pooling TV rights could bring an additional $7 billion to schools – a figure for which he provided no data and with which conference commissioners disagree.
“I have never said publicly or privately that aggregating media rights will increase revenues, nor do I believe it will.” Southeastern ConferenceGreg Sankey said.
One of the issues involved in aggregating TV rights is that each convention has an assortment of deals with different expiration dates, which will make it difficult to sync the deals and bring them under one umbrella.
Pettit acknowledged that a private equity move to the Big Ten could create similar challenges.
“If we’re going to do something different, we’ll respect everything that’s been established in our current deals,” Pettiti said. “Nothing is being contemplated that will change anything in our current media relations.”
One michigan The regent, Jordan Acker, recently posted on social media that “selling Michigan’s precious public university properties would be a betrayal of our responsibility to students and taxpayers.”
In his letter, Cantwell clearly outlined the risks of private-equity investing.
“Your university’s media revenues are not currently taxed because they are considered ‘substantially related’ to your tax-exempt purpose,” he wrote. “However, when a private, for-profit investor holds a stake in that revenue the question arises whether the revenue loses its connection to the educational purpose of your institution.”
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