Amid Big 12 expansion rumors, Brett Yormark plans $1 billion equity investment to dilute 20% of overall stakes

The Big 12 expansion has recorded significant success in the last couple of years. After Texas and Oklahoma announced their exit from the conference, the Big 12 has gone on to add eight teams, taking the membership up to 16 for the upcoming 2024 academic year.

While the league has ensured some stability following the chaos brought by the exit of the Longhorns and Sooners, it wants to stay competitive in the landscape. The league is reportedly considering taking private equity investment in a bid to ensure financial security.

A potential cash infusion of $800 million to $1 billion from Luxembourg-based CVC Capital Partners is currently being discussed by the leadership, in exchange for a 15% to 20% stake in the league. This will see a portion of the fund allocated directly to the 16 members of the league, ensuring a rise in revenue.

Why will the Big 12 entertain private equity investment?

The prospective deal between the Big 12 and CVC Capital Partners is a first-of-its-kind in college sports. The disparity between the Power Five leagues in terms of revenue is one reason Brett Yormark and his team will consider taking an investment from a private equity firm.

The Big 12 has over the years fallen behind the dominant Big Ten and the Southeastern Conference, and Yormark wants to bridge the gap to ensure competitive balance. This has necessitated the conference leadership to source funds through unconventional means.

Teams in the Big 12 are currently set to earn $31.7 million annually in media revenue in the new television deal inked with ESPN and Fox, which runs till 2031. This is way behind the $75 million that Big Ten teams are set to earn in the new media deal with Fox, CBS and NBC.

Taking the investment from CVC Capital Partners will take the Big 12 closer to the Big 10 and SEC in terms of annual revenue.

Not all members are buying the idea yet

While talks have reportedly deepened between the leadership of the Big 12 and CVC Capital Partners, a host of presidents in the conference needs to be further convinced. The uncertainty comes as a result of the nature of such a deal in the landscape, which is alien.

According to CBS Sports, a small working group that consists of three presidents in the conference is actively evaluating the proposal. For CVC Capital Partners, one of the driving factors is said to be the significant potential for growth in the conference's value and media rights.