Private Equity Comes To College Sports: Inside Utah’s Groundbreaking Deal
As athletic departments face historic deficits from NIL and revenue sharing, Utah’s partnership with Otro Capital offers a new financial model that could spread across college sports.
The University of Utah announced a groundbreaking agreement this week, becoming the first college athletic department in history to accept private equity funding.
Here is what you need to know:
Utah is creating a new for-profit entity called Utah Brands & Entertainment.
Utah will transfer revenue-generating assets from its athletic department to the new for-profit entity, giving Utah Brands & Entertainment operational control of ticketing, sponsorships, licensing, merchandise, hospitality, and trademarks.
Utah is partnering with New York-based private equity firm Otro Capital on the deal. Major donors will also be allowed to participate, with Yahoo reporting the new entity is “expected to generate as much or more than $500 million in capital.”
As you can imagine, not everyone thinks this is a good idea. Private equity is the boogeyman. All they do is raise prices, saddle businesses with debt, and then exit as soon as they can make a dollar. Workers get fired, and consumers get screwed. I know college sports are not really college sports anymore, but is this really what we want?
Well, here’s the thing. After watching the entire 2-hour investment presentation at the most recent University of Utah board of trustees meeting and talking to people with direct knowledge of the deal, I actually don’t hate the proposal. In fact, I think it’s a smart bet by Utah and something many other schools will eventually try to emulate.