There is a mad dash for cash in college sports.
Between multi-billion dollar television deals, the creation of transfer portals, and the expansion of the NIL (name, image, likeness), contracts for athletes, college athletic programs, and especially football have never looked so lucrative. There is no.
Now, with private equity and venture capital firms like College Sports Tomorrow, Smash Capital, and College Athletics Solutions seeking buy-in, schools with the most valuable athletic programs will be able to leverage the funding. is in the perfect position to
At the top are the schools that excel on the playing field. Football generates about 75% of athletic program revenue for a typical Power 4 school, which includes the ACC, Big Ten, Big 12 and SEC conferences, according to people familiar with the economics.
This year’s expanded 12-team College Football Playoff begins on December 20th. Disney, ESPN’s parent company, signed a deal in March to extend the rights to the games for six years, through 2031. The average contract value is $1.3 billion per year, more than double that amount. According to media reports, the previous contract.
Experts interviewed by CNBC predict that given the fact that the SEC dominates college football viewership, the conference will be the most expensive television division when its current contract expires in 2033-34. I believe they will overtake the Big 10 with this new contract.
“The SEC is almost a superconference, and because of its football team, it has the most valuable content in college sports,” said Erwin Kishner, a partner in Herrick Feinstein’s corporate practice and co-chair of its sports law group. I own it.”
Of course, private equity is not a new concept to sports. In North America, Major League Baseball, the National Basketball Association, the National Hockey League and Major League Soccer have allowed private equity firms to hold limited partner shares for several years. In August, the National Football League passed a resolution allowing some private equity investors to take a minority stake.
University programs are currently attracting attention.
“As a business, college sports, especially football, are doing well and continuing to grow, which is why investors are paying attention to this asset class,” said Greg Carey, global co-head of sports franchising in investment banking at Goldman Sachs. “There is,” he said.
Institutional investors such as Collegiate Athletic Solutions, proposed by RedBird Capital Partners and Weatherford Capital, would provide capital to help schools grow their sports revenue. In return, the private equity firm would receive a cut.
There’s also the idea that the business acumen of outside investors could further boost profits.
“There is a huge opportunity to drive EBITDA.” [earnings before interest, taxes, depreciation and amortization] “College sports have a higher reputation because there are easy ways to maintain quality while cutting expenses,” Kishner said.
And schools have an incentive to attract outside investors.
For example, a $2.8 billion settlement between the NCAA and the five major conferences would provide compensation to 14,000 students who were previously unable to receive recommendations. A public hearing to give final approval on the agreement is expected to be held in April, but schools are already planning ahead.
And even among the largest conferences, differences in television revenue can create significant competitive and economic disparities.
“Schools in the ACC and Big 12, and lower-tier schools in the SEC and Big 10 with less local commercial revenue, have little choice but to accept private capital and operational expertise, or they are almost certain to “In the future, they will be left behind at the top of the competition,” said Jason Belzer, Publisher of AthleticDirectorU. He has advised universities on deals with NIL and is now doing the same for athletic departments seeking private equity.
To be sure, the transition to private equity is complex and may still take several months. The state of Florida has reportedly been working with JPMorgan Chase & Co. on institutional investor financing for about a year.
But bankers and lawyers interviewed by CNBC believe private equity will eventually invest in college athletic programs.
