The Big 12 has signed a five-year private capital agreement with Collegiate Athletic Solutions, Yahoo Sports reported last week.
The long-anticipated deal, two years in the making, will give the conference a $12.5 million boost in commercial revenue. Additionally, each school in the conference will have access to an optional $30 million line of credit, adding to the $20.5 million NIL portfolio already allotted to universities.
In today’s age of college sports, less money means fewer recruits. Athletes want to be paid and, in some cases, negotiate million-dollar contracts. More and more schools are forced to fall in line when it comes to recruiting, hoping they can buy big and get a return on their investment.
Even BYU has significantly increased its athletics budget to pull in top-notch recruits. Athletes like AJ Dybantsa and Rob Wright III have reportedly been paid millions in NIL.
“In the past, BYU might’ve had a reputation for being cheap … and not paying to be the top of the top,” said Deseret News sports writer Jackson Payne. “But things have changed and I think that BYU has shown a stronger and more dynamic commitment to athletic excellence.”
It is easy to assume that BYU would readily take advantage of an increased budget, especially one as astronomical as $30 million. However, the BYU athletic department has made its stance clear.
“I think we can reasonably say private equity will never be a part of the sports program at BYU. That's affirmative. That's something that everybody knows," said BYU athletic director Brian Santiago on "The Divot Podcast."
On the other hand, various universities in the conference are accepting the new flow of cash. And as they gain bigger NIL portfolios, they become more competitive in recruiting. This means that if BYU wants a big-time recruit, it is going to have to cough up even more money.
This begs the question — is BYU going to be left in the dust?
The increasing cash payouts for athletes to attend a university have bordered on unbelievable. As prices go up, more schools are having to cut programs to compensate for building financial debt.
BYU, on the other hand, operates on a debt-free model and does not borrow money, on par with its owner, The Church of Jesus Christ of Latter-day Saints. In fact, the BYU athletic department is self-sustaining and not funded by the Church.
Because of this, the BYU relies on corporate sponsorships for the majority of its revenue. Additionally, BYU is a private university, so the athletics program does not benefit from local taxpayers.
Now that more schools have access to immense amounts of money, BYU might be at a financial disadvantage. Unless the BYU athletic department can scrounge up more corporate sponsorships and alumni donations, it could be left out to dry.
Additionally, schools that already have massive out-of-network NIL portfolios, like Texas Tech, could skyrocket financially. Outside financial aid would help schools cover the 10% interest rate placed on the private equity loan. If these programs accept the additional $30 million, the competitive disparity within the conference would do more harm than good.
Despite all of this, Payne said BYU will be fine.
“BYU isn’t going to be at a disadvantage,” he said. “I think private equity is something schools will have to figure out. But in the long run, a little competition never hurt anybody.”
His reasoning: the increased competition could boost the entire conference as a whole to “level up” on the national stage.
The “Power 2” conferences, meaning the Big Ten and SEC, have dominated the college football world for years. Both conferences have been the beneficiaries of lucrative media contracts, putting the other two power conferences, the Big 12 and ACC, at a financial disadvantage.
One of the Big 12 investment companies, RedBird, is a majority shareholder in Paramount, owner of CBS. This connection could spell future media rights agreements for the Big 12 Conference, further closing the gap with the “Power 2.”
If the Big 12 does “level up” as Payne suggests, it could help BYU rise to the top and be taken seriously at the national level. However, if the price isn’t right, BYU could fall back into being a middle-of-the-road Big 12 team.
As the world of college sports moves forward into increasingly murky waters, Santiago is undeterred in his commitment to stand firm on how BYU will fund its athletic programs.
“[It’s] a strength for us. Our governing board is for us, very, very important, and we’re going to live within the principles that we’ve been taught, and we’re having great success doing it that way,” Santiago said.