• Loading stock data...
Tuesday, June 25, 2024

Private Equity Set to Enter College Sports for First Time in NCAA History

  • Collegiate Athletic Solutions could facilitate the first PE deal into a collegiate athletic department.
  • RedBird Capital Partners, Weatherford Capital announce an investment arm into college sports.
College World Series TCU vs Virginia 2023
Dylan Widger-USA TODAY Sports

This week, power conferences (including the former Pac-12) and the NCAA are voting to authorize a settlement in House v. NCAA, which argues that athletes deserve back pay for not being able to participate in name, image, and likeness deals before 2021, and that they should receive a cut of broadcast revenue. So far, two conferences have agreed to the settlement terms: $2.7 billion in damages split between the NCAA and power conferences, as well as a framework for Power 4 schools to revenue-share with athletes up to $20 million per school per year, a source confirmed to Front Office Sports. 

While some of the richest athletic departments may not have a problem covering the extra cost, others will go in search of extra revenue streams. At perhaps just the right time, private equity, rumored to have an interest in college sports for at least a year, appears to be entering the athletic department space for the first time in NCAA history.

On Wednesday, RedBird Capital Partners and Weatherford Capital (of which former FSU quarterback Drew Weatherford is a partner) announced the launch of an investment arm intended to infuse capital into athletic departments. Collegiate Athletic Solutions plans to offer $50 million to $200 million in each department, according to The Wall Street Journal. 

“The paradigm shift we are seeing in the collegiate athletics ecosystem is similar to the ones we’ve seen with media distribution models, collective bargaining rights, and premium hospitality,” RedBird founder and managing partner Gerry Cardinale said. “CAS addresses athletic departments’ need for near-term capital with additional operational expertise across strategies that can improve competitive positioning.”

The firms aren’t investing in exchange for an ownership stake, however. CAS will provide capital to athletic departments and only expect a return based on how much revenue or profit the schools can generate from those investments. RedBird and Weatherford will advise athletic departments and schools, they said, but also will not require any sort of official in-house position.

College sports administrators appear to have mixed feelings on the subject. While outgoing AAC commissioner Mike Aresco has expressed concern about the idea, incoming commissioner Tim Pernetti has already signaled interest.  

There are positives: The immediate cash flow is a plus for athletic departments wondering how they’ll cough up an extra $20 million per year. Schools will also get access to counsel from successful firms well versed in the greater sports landscape.

A Bad Reputation?

But there is a concern about the general nefarious reputation of the private equity industry. “Go look at Red Lobster,” said one industry source, referring to the once-popular restaurant chain that filed for bankruptcy this week, a decade after being purchased by a PE firm. (The Red Lobster deal was, however, structured differently than the proposed deals between RedBird/Weatherford and athletic departments.) 

While the RedBird/Weatherford investment arm might be private equity’s inaugural foray into actual athletic departments, the greater college sports industry has already become entangled. Third-party companies participating in college sports, such as Legends and OneTeam Partners, have accepted investments. 

As for where the House settlement stands: The Big 12 and ACC voted to authorize the agreement Tuesday. The Big Ten will likely vote sometime Wednesday, with the rest of the votes concluding by the end of the day Thursday, sources said. But the agreement will still face scrutiny from other parties, including a judge, plaintiffs lawyers, and athletes, before it is officially ratified.

Editors’ note: RedBird IMI, of which RedBird Capital Partners is a joint venture partner, is an investor in Front Office Sports.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Panthers Cap Banner Season By Staving Off Cup Collapse

The Panthers didn’t want to win this way—but they got it done. 

Scheffler’s Season Earnings Could Surpass Top NFL, NBA, MLB Stars

The golfer has already won more than $27 million this season.

Stanley Cup Final: An Unlikely Game 7 Is Set to Cap the NHL’s Best Season

The Oilers are attempting to complete a comeback done just once in a Stanley Cup Final.
podcast thumbnail mobile
Front Office Sports Today

How the American Soccer Fan is Unlike Any Other Sports Fans

0:00

Featured Today

Jan 3, 2022; Pittsburgh, Pennsylvania, USA; General view of the NFL shield logo signage before the Pittsburgh Steelers host the Cleveland Browns at Heinz Field.

Odds Stacked Against NFL in Multibillion-Dollar Sunday Ticket Trial

Why the class action trial does not look promising for the league.
Jan 7, 2024; San Francisco, California, USA; Toronto Raptors forward Jontay Porter (11) takes a three-point shot against the Golden State Warriors during the second half at Chase Center.
June 9, 2024

‘Bound to Happen’: The Age of the Sports Betting Scandal Has Arrived

A banishment, betting scheme, and guilty plea all in one scandal-filled span.
June 8, 2024

‘Experimental in Nature’: The Rapid, Confounding Rise of Streaming Bundles

Here’s why confusion continues to outweigh solutions in the streaming package boom.
June 2, 2024

The Nostalgia Market: Michael Jordan’s Memorabilia Remains Coveted, With Caveats

Due to scarcity, and sometimes, items’ undisclosed whereabouts, this world has limitations.

Sports Betting Money Won’t Bail Out Cash-Hungry College Athletic Departments

Schools are desperate for money, but they won’t be partnering with gambling operators.
June 21, 2024

NCAA Backs Dartmouth Against Unionizing Men’s Basketball Players

The NCAA’s quest to save its business model continues.
June 21, 2024

The House v. NCAA Settlement Has Its First Formal Objection

The school argues the terms of the settlement adversely impact it financially.
Sponsored

How HOKA is Reimagining the NIL Relationship

HOKA, the renowned athletic footwear and apparel brand, is betting on a new reality with NIL.
June 20, 2024

SMU Raises Whopping $159 Million for Sports Ahead of ACC Move

SMU boosters cover the gap between the Mustangs and current ACC schools.
June 16, 2024

College Bowl Games Using NIL Contracts ‘Right Around the Corner’

The top executive of Bowl Season envisions a complicated future.
General view of the stadium during the game between the LSU Tigers and the Wake Forest Demon Deacons at Charles Schwab Field Omaha. Mandatory Credit: Steven Branscombe-USA TODAY Sports
June 14, 2024

College World Series: Record Crowds and TV Viewership Anticipated

The eight-team bracket has four schools each from the ACC and SEC.
Jan 13, 2021; Washington, DC, USA; The U.S. Capitol Building is seen on Jan. 13, 2021, one week after it was stormed by a pro-Trump mob while a joint session of Congress was certifying the 2020 election victory of President Elect Joe Biden.
June 13, 2024

House Committee Sends Bill Banning College Athlete Employment to House Floor

The bill has gone further than any other athlete compensation legislation.