Senator warns Big Ten presidents of potential private equity deals
Sen. Maria Cantwell of Washington has cautioned Big Ten presidents that a shift into private equity could lead to challenges for the universities. She urged them to proceed with caution in a letter sent Friday, Oct. 10.
Multiple reports indicate that the Big Ten may be negotiating to sell a stake in its athletic revenue stream to private investors, targeting a potential private capital investment of $2 billion. This sale could include media rights and other assets owned by equity investors.
In a letter addressed to the Big Ten Presidents, Cantwell stated this potential deal ‘May be counter to your university’s academic goals, may require the sale of university assets to a private investor, and may affect the tax-exempt purpose of those assets.”
In her letter, Cantwell mentions that she has learned the regents and trustees of Big Ten member institutions have not received a comprehensive briefing on the deal currently being considered. She raises concerns about whether the conference is being transparent regarding the long-term implications of this potential deal.
‘Your university’s media revenues currently are not taxed because they are considered ‘substantially related to’ your tax-exempt purpose,’ she wrote. ‘However, when a private, for-profit investor holds a stake in those revenues, it raises questions whether the revenue loses its connection to your institution’s educational purpose.’
The implications of these potential deals for the media rights of these institutions remain uncertain. However, Cantwell ended her letter by encouraging the universities to be transparent regarding what a potential deal and payout could involve. She reminded them that ‘the conference reports to you.’
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