Is PE Ready for College Sports?

“If someone can successfully navigate the commercial, legislative, and political hurdles to restructure this ecosystem for investment, there will be a gold rush.”

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Illustration by II

Having established a toehold in the big leagues, private equity is moving on to college sports — even if slowly.

It’s not surprising. The schools in the five big sports conferences generate more than $8 billion in annual revenue from their programs, according to private equity firm Arctos Partners. That number puts them right below the National Basketball Association and Major League Baseball.

“I expect increasing interest from private capital in college sports, particularly college football,” says Will Mao, senior vice president of media rights consulting for Octagon, a sports and entertainment agency. Investing in college sports, however, may not be a slam dunk.


PE firms have the potential to clash with nonprofit colleges and universities. Managers will have to navigate controversial issues regarding student-athletes, including whether they’ll be employees, and marketing rights. (Players on the men’s basketball team at Dartmouth College voted earlier this month to unionize.)

The reshuffling of sports conferences, including the Big Ten and Pac-12, may bring uncertainty to finances. Managers may even face issues under Title IX rules, as they go after football and men’s basketball, the two most popular college sports.

Private equity firms are eyeing everything from TV rights and athlete product endorsements to private-public partnerships and sports infrastructure. Clearlake Capital Group, Charlesbank Capital Partners, and Fortress Investment Group have invested in Learfield, and Access Holdings has bought a stake in Payfly Sports. Learfield and Payfly are two of the biggest negotiators of college sports TV rights packages.

Advantage Capital, Serra Ventures, and Flyover Capital have invested in Opendorse, a platform that facilitates college athlete endorsements.

When it comes to college sports TV rights, a lot of money is on the table. The Big Ten has an $8 billion, seven-year broadcast agreement with Fox, CBS, and NBC to televise some games. Private equity managers may ultimately want to invest directly in the revenue streams of colleges’ broadcast rights.

Private-public partnerships for investment in infrastructure and facilities might come easier than direct investment in college sports. Steve Hank, executive vice president of college sports for Affinaquest, which helps colleges manage their data, points to a 2022 deal at the University of Texas at Austin. as one successful example.

The university teamed up with Oak View Group, a sports real estate manager, and Live Nation Entertainment. Oak View developed — for free — and operates the $380 million University of Texas Moody Center in Austin. Live Nation helps bring the entertainment. “I think we will see a lot more public-private partnerships like that,” Hank says.

Infrastructure investments may be the most stable path for private equity investors in college sports.

“The critical question is how institutional capital could invest in college athletics without creating even more destabilization in an already fragile ecosystem,” asserts Ian Charles, co-founder of Arctos, which has invested in several NBA teams. “Successful structured transactions may fund specific growth initiatives like stadium renovation or modernizing local infrastructure, which are backed by contracted revenue streams such as ticketing, sponsorship, and TV rights.”

Meanwhile, a development at Florida State University last year drew the attention of sports investors. The school enlisted JPMorgan Chase to see how the school’s athletic department could raise money from institutional investors, including through private equity, according to sports business publication Sportico.

FSU, which wants to leave the Atlantic Coast Conference, could use the money to finance the $120 million exit fee. Sportico reported in January that FSU officials conferred with Sixth Street and Arctos about investing in the school’s athletic department, according to emails released by the school.

Schools will increasingly have to turn to private equity when they have big money needs like FSU’s, Hank says. In return, investors could tap into schools’ sports revenue streams, such as broadcast rights and sponsorships.

And what about the possibility of direct private equity investment in athletic departments or individual teams? Gerry Cardinale, founder of RedBird Capital Partners, raised eyebrows in January when he told The New York Times that the University of Michigan football team might be worth $1.5 billion. But investing in athletic departments and teams is highly unlikely, experts say.

It would be difficult to structure deals, given issues such as schools’ non-profit orientation. “Any investment would need to account for [the] existing capital structure and susceptibility to potential external factors like conference realignment or a ruling on student-athlete employee status,” notes Charles of Arctos.

The nonprofit status of higher education could make investments less risky than stakes in the private sector, says Steve Patterson, president of Pro Sports Consulting. But schools generally don’t try to maximize profits — and that’s a problem for investors.

In addition, colleges ultimately might not be receptive to private equity at all.

“Athletic departments are still the front porch of academic institutions,” explains Hank. “They bring together communities like nothing else. You don’t see 90,000 people at an academic lecture. The departments don’t want to cede that role.”

Still, the potential may just be too big to ignore, says Octagon’s Mao: “If someone can successfully navigate the commercial, legislative, and political hurdles to restructure this ecosystem for investment, there will be a gold rush.”