Between multi-billion dollars Television dealsInstitutions of Transfer Portal And increase NIL —Name, Image and Similarity — Deals for Players College athletic programs, especially football, have never looked more lucrative.
Now private equity and venture capital enterprises like College sports tomorrow, Smash Capital And College Athletics Solutions I am looking to buy, and with schools Most valuable athletic program Be in the best position to invest.
At the very top of the heap are the schools that excel on the gridiron. According to people familiar with the economics, football generates about 75% of athletic program revenue at typical Power 4 schools, which include the ACC, Big Ten, Big 12 and SEC conferences.
This year’s expanded, 12-team College Football Playoff begins Dec. 20. ESPN parent Disney in March signed a six-year extension for the rights to the games through 2031. The deal is worth an average of $1.3 billion a year, more than doubling. Previous agreement according to media reports.
Given the fact that the SEC Dominates In college football rankings, experts CNBC spoke with confidence that the conference will leapfrog the Big Ten with the richest television contract when its current contract expires in 2033-34.
“The SEC is almost a super conference and, because of its football teams, owns the most valuable content in college sports,” said Aaron Kushner, a partner in Herrick Feinstein’s corporate department and a partner in its sports law group. said the chairman.
Private equity, of course, is not a new concept for 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 stakes for several years. National Football League Voted in August Allowing selected private equity investors to take minority stakes.
Now the focus is on college programs.
“As a business, college sports, particularly football, are doing well and continuing to grow, which is why investors are looking at the asset class,” said. Greg CareyGlobal co-head of sports franchises in investment banking at Goldman Sachs.
Institutional investors such as Collegiate Athletic Solutions — a proposal from RedBird Capital Partners and Weatherford Capital — will provide capital to help increase the school’s athletic revenue. In return, private equity firms will get a cut.
There is also the belief that the business acumen of outside investors can further increase profitability.
“There is a big opportunity to drive EBITDA. [earnings before interest, taxes, depreciation and amortization] “There’s more in college sports because there are easier ways to maintain quality while reducing costs,” Kushner said.
And schools are encouraged to bring in outside investors.
For one, $2.8 billion Settlement Between the NCAA and the five largest conferences, 14,000 students who were previously barred from earning endorsement money will be reimbursed. A hearing to give final approval on the contract is scheduled for April, but the schools are already there. Plan ahead for this.
And even in the largest conferences, the difference in television revenue can cause a huge competitive and economic disparity.
“Schools in the ACC and Big 12, as well as schools at the bottom of the SEC and Big Ten that are generating less local commercial revenue, will have no choice but to seek private capital and operational expertise. Or they’re all guaranteed,” said publisher Jason Belzer Athletic Director Uwhich has advised universities on NIL deals and is now doing the same for sports departments seeking private equity.
Sure, moving into private equity is complicated and can still be months off. Florida State has been. Allegedly Been trying to raise institutional capital for about a year with JPMorgan Chase.
Even so, bankers and lawyers interviewed by CNBC believe that private equity will eventually invest in college athletic programs.