Why Private Equity Will Soon Be in College Sports

The landscape of college athletics has experienced dramatic changes over the last four years, none more significant than the rise of private equity. Before diving into the new era of private equity in college athletics, it is helpful to revisit the remarkable transformation that college athletics has recently experienced.  

In the U.S. Supreme Court’s now-famous June 2021 decision in the Alston case, Justice Cavanaugh wrote, “The NCAA is not above the law.” The Alston decision opened the floodgates for student-athletes to monetize their name, image and likeness (NIL) rights, ruling that student-athletes should be allowed to receive “student benefits” similar to those available to regular students. This ruling triggered a “knee-jerk” response from the NCAA, which moved to immediately relax its rules to allow student-athletes the right to monetize their NIL rights and benefits—while maintaining its strict prohibition on “pay-for-play.”  

This conundrum between NIL monetization and the NCAA’s prohibition on “pay-for-play” by the colleges quickly created what has been called “synthetic NIL” payments through collectives. Collectives—groups of donors or boosters supporting specific college athletic programs—either secure funding for specific NIL deals for athletes or pool their resources to pay student-athletes to perform tasks or license their NIL rights, individually or as a group.

Since Alston, Grant House, the representative plaintiff in the class action antitrust lawsuit House v. NCAA, filed suit with the same lawyers, in the same court, and before the same judge—U.S. District Judge Claudia Wilken—who ruled in favor of student-athletes in a previous antitrust case against the NCAA, O’Bannon v. NCAA. On June 6, 2025, Judge Wilken approved a settlement between the parties. The settlement terms were probably one of the most publicized settlements in any court case. The House settlement established the following key components: (i) $2.8 billion in back-pay damages to student-athletes dating to 2016 for lost NIL revenues (to be paid over 10 years); (ii) a new revenue-sharing system with an initial cap of $20.5 million or 22% of media, ticket and sponsorship revenues per school that will grow over the settlement's 10-year term. 

Notably, NCAA Division I schools could have either “opted-in” or “opted-out” of the House settlement by June 30—the Ivy League schools are one example of schools that “opted out.” Schools that “opt-in” (i.e. about 85% of all D1 schools so far) will also have to comply with various “parity” terms in the settlement related to roster limits and fair market value NIL deals—all without the guarantee that they will not face further litigation in the future. 

Athletic departments at “opt-in” schools will encounter major funding gaps when trying to meet the $20.5 million yearly payment and must find creative funding solutions. Some schools have stated that, to remain competitive, they will need to continue covering certain expenses using NIL revenues generated by their collectives—potentially adding another $10 to 15 million to the annual funding gap for some top-tier Division I athletic programs. As these financial pressures mount, presidents, conference commissioners and athletic directors increasingly agree that colleges will need an infusion of affordable growth capital to boost revenue and manage rising litigation and competitive expenses within their athletic departments.  

This is where private equity comes in. Private equity firms have typically targeted businesses with strong brand value and reliable revenue history that need additional capital or strategic guidance to unlock the full value of undervalued assets. All of these target factors exist in college athletics today, making college athletic departments prime targets for private equity investment. Donors, media rights fees, sponsorships and ticket sales only go so far, and many donors and boosters are beginning to experience “donor fatigue” with the collectives. The infusion of private equity capital—along with “human capital” in the form of board guidance and deal flow from a private equity firm’s strategic market position—offers athletic departments greater revenue and profit potential. Still, a partnership with private equity can also be highly controversial and would require colleges and universities to accept involvement from investors widely known to be driven by bottom-line financial returns. 

Detailed discussions are already underway for private equity firms to invest in college athletic conferences like the Big 12 or Big Ten, or even in flagship sports programs like Alabama football. It has been widely reported that College Athletic Solutions (CAS), a college sports-focused fund launched by RedBird Capital and Weatherford Capital and run by former Florida State University football player Drew Weatherford and his brothers, is prepared to invest up to $2 billion in college athletic departments. According to reports, CAS would lend upfront capital and operational expertise to college athletic departments in return for a share of the additional revenue generated from its investment. Similarly, private equity firm Sixth Street has reportedly extended negotiations with Florida State regarding an investment in its athletic department. 

As the financial landscape of college athletic departments shifts dramatically, private equity investment presents a potential path in the coming years to generate the capital needed not only to cover operational costs but also to fund college athletic rosters—similar to building professional sports rosters—and help stabilize the business. College athletic departments are increasingly operating like professional teams, employing  “general managers” whose responsibilities include roster management, coaching contracts and other duties that closely mirror their professional sports counterparts. It has recently been reported that the employment packages for some of these GM’s can total over $1 million, so management of the roster, the payments and the corresponding revenues is becoming tantamount to an athletic programs success and survival.

Private equity investment in college athletics may be subject to similar limitations as in professional sports leagues, including caps on the amount invested in a single school or the total number of schools within a conference. These private equity deals will likely be structured in a non-traditional investment manner and target top-tier power conference programs, such as by investing in and generating returns from specific revenue sources like media rights revenues. Another possibility is that larger donor groups loyal to a school could invest directly in athletic departments or in the private equity firms backing new models. As part of any such arrangement, the parties would likely have to determine the value of an athletic department—or even a specific sports program. Determining that valuation and deal structure would depend on a number of factors, including alumni base, conference alignment, fan base, NIL spending demands, television exposure, venue sizes, brand strength of trademark assets, yearly ticket sales and even winning tradition, to name a few.  

Currently, the patchwork of state laws that govern public universities may also present challenges for private equity investment in college athletics. Conference realignment will also impact which member schools are ripe for investment. At the end of the day, for college athletic departments to remain competitive, they will need to find new and creative ways to generate new revenue streams in order to build competitive athletics programs—and it is likely they will turn to private equity firms to do just that.