A slogan for the State of Michigan presents, “Say Yes to Michigan.” Well saying yes is easier than it appears. Plans for a massive new Oracle data center in the US State of Michigan have been left in limbo after funding talks with its key financial partner broke down. As reported by the Financial Times, Blue Owl Capital, which has backed some of Oracle's largest data center projects, will not support the proposed $10 billion facility in Saline Township, near Ann Arbor MI.[1]
The project is intended to deliver up to one gigawatt of computing power for ChatGPT maker OpenAI, as part of Oracle's sweeping push to become a major supplier of AI infrastructure. The two companies announced a partnership worth more than $300 billion over five years in September.
Blue Owl has previously played a central role in Oracle's US data center strategy, typically setting up special-purpose vehicles that own the facilities and lease them back to Oracle under long-term agreements. It has helped finance multi-billion-dollar campuses in Texas and New Mexico. However, people close to the Michigan talks say lenders sought tougher leasing and debt terms as market sentiment around the enormous sums being poured into AI infrastructure has cooled. That, combined with concerns about potential construction delays at the farmland site, made the deal less attractive for Blue Owl.
Blackstone has held preliminary talks about stepping in as a financial partner, sources said, but no agreement has been signed. Oracle said its development partner Related Digital had chosen "the best equity partner" from a competitive group of options, adding that final negotiations were progressing as planned. Related Digital declined to name the investor but said it was in the final stages of due diligence.
Latest wobble in Oracle’s AI plans - The funding uncertainty comes at a delicate moment for Oracle. Founded nearly five decades ago, the company built its success on database software but is now spending heavily to scale up its cloud and AI capabilities. Investors and credit analysts have grown increasingly uneasy about the cost of that ambition.
Recently, the company's share price dropped 13% in a single day after it warned that AI-related spending would rise by a further $15 billion beyond earlier estimates. The company reported quarterly revenue of $16.06 billion, missing analysts' expectations of $16.21 billion, according to LSEG data.
Oracle has raised billions in the bond market and is in talks with US banks about further debt financing, while its disclosed lease commitments have jumped dramatically in recent months. Those pressures have been felt in credit markets. The cost of insuring Oracle's debt against default has climbed to its highest level in at least five years, a sign of growing concern about the risks tied to its expansion.
The Michigan site has already faced obstacles. Local authorities initially rejected a rezoning request, prompting a lawsuit that was later settled. Despite the turbulence, Oracle insists its partnership with OpenAI remains on track. It denied reports of delays to data centers needed to meet contractual commitments, saying timelines were agreed jointly with OpenAI.
The company was responding to a report by Bloomberg that suggested Oracle would not complete key data centers for OpenAI until 2028, a year later than previously expected.
The report said the delay was due to shortages of labor and construction materials. "There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track," a spokesperson said. However, Oracle did not provide a specific date for when it would be able to switch on the computing infrastructure it is building for OpenAI.
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[1] https://www.computing.co.uk/news/2025/ai/oracle-datacentre-plans-uncertain-funding-talks-collapse
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