Sources: University of Utah nearing landmark private equity deal expected to generate $500 million
Ross Dellenger article on yahoo sports
Utah private equity $500 mill
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Ross Dellenger article on yahoo sports
Utah approves groundbreaking private equity deal raising $500 million for athletics
Landmark deal includes the creation of a new company that will work as an offshoot of the athletic departmentCole Forsman|1 hour ago
Private equity in college athletics had only been a concept explored by a few schools and major conferences.
On Tuesday, the University of Utah helped pave the way for more institutions to look into the idea as its board of trustees approved a first-of-its-kind partnership with a private equity firm.
The new venture will see the creation of a for-profit entity called Utah Brands & Entertainment LLC. Otro Capital, a New York-based sports private equity firm, along with prominent donors, is projected to infuse more than $500 million in capital into Utah's athletic department.
The groundbreaking deal was first reported by Ross Dellenger and confirmed by KSL's Josh Furlong after the partnership was unanimously approved during the board of trustees meeting.
According to Dellenger, Utah Brands & Entertainment is the centerpiece of the project as a private offshoot of the athletic department. The schools will retain majority ownership and decision-making authority over Utah Brands & Entertainment, while Otro provides capital and an executive team to help the company function. A president from outside the university will preside over the company and report to a board, chaired by Utah athletic director Mark Harlan.
The new company's goal is to generate more revenue through ticketing, concessions, corporate sales and sponsorships. Utah Brands & Entertainment will also be charged with overseeing the revenue-share pay system for Utah student-athletes, according to Dellenger, while Otro executives have access to the school’s trademark and licensing rights, facilities, sponsorships and sports teams.
Decisions regarding coaching and player personnel remain with the university so that the school can still be eligible under NCAA rules. Per Dellenger, Utah cleared the private equity deal with the NCAA before its final approval.
Additionally, a group of donors will have the ability to purchase a stake in Utah Brands & Entertainment, per Dellenger. It'll still be on the school to raise money, though the company will house several departments that traditionally fall under the university's athletic department, such as athletic personnel and divisions.
The university will split its funds with Otro, which is expected to earn a large percentage of the annual revenues generated by Utah Brands & Entertainment. According to Furlong, the university will have the right to buy shares back if Otro decides to move on or if certain parameters are not met.
Otro Capital is an operator-led private equity firm with experience in sports, entertainment and media. According to its website, the firm seeks to invest in strategic businesses within the sports ecosystem with intellectual property and opportunity to scale through a hands-on, operational approach. One of its founders, Alec Scheiner, previously spent time as president of the Cleveland Browns and senior vice president of the Dallas Cowboys.
Private equity's debut in college athletics had been on the horizon for some time, dating back as far as two years ago, when Big 12 commissioner Brett Yormark's pursuit of a capital deal inspired Harlan and Utah administrators to seek their own.
The Big 12 considered a private equity investment that included a possible cash infusion of $800 million to $1 billion from Luxembourg-based CVC Capital Partners back in June 2024. The potential move was put on pause as Yormark told Front Office Sports this past May that the league wasn't "ready to go in that direction."
The Big Ten almost got a $2.4 billion capital deal across the finish line before at least two schools foiled the project.
This will be the end of college athletics, and for anyone that is on board with that private equity deal for the BIG, it was uneven distribution of finances, and leads to the loss of university autonomy. I don't fully understand why anyone would want this type of financial structure in college athletics. This would have been a 15 year deal, and it doesn't solve the actual problem with BIG universities outspending their profits.
Wow. Just wow.
These amateur sports are doing pretty well for themselves.
These amateur sports are doing pretty well for themselves.
I have to wonder what sort of power was given to the Private Equity Group (PEG). PEG's don't generally make deals without a lot of power if things don't go well.
They won't have a say over staff and personnel, yeah right.
This is a 7 year deal at max, and they are expecting to make back more than 500 million. I don't possibly see how that math can possibly work out. it is vague as to what revenue Otro will be collecting, but you can bet they will not be losing money.
How do you possibly make that back in 7 years? Maybe the mafia could
They say that Ortho could get over half sports revenue.
At Iowa half would be 75 million times 7 is 525 million
Sounds like some of that 500 million will be gifts from donors so who knows how much the equity group actually puts in of that 500.
Like it or not, this is happening around the country
I still think having Calipers is the lessor of evils when it comes to private equity.
I want the BIG to still exist thru 2046 as this deal would make a reality.
Paying OSU extra to keep them in the fold is better than having OSU,mich, Oregon,USC and PSU leave the BIG and we are relegated to minor league status.
At Iowa half would be 75 million times 7 is 525 million
Sounds like some of that 500 million will be gifts from donors so who knows how much the equity group actually puts in of that 500.
Like it or not, this is happening around the country
I still think having Calipers is the lessor of evils when it comes to private equity.
I want the BIG to still exist thru 2046 as this deal would make a reality.
Paying OSU extra to keep them in the fold is better than having OSU,mich, Oregon,USC and PSU leave the BIG and we are relegated to minor league status.
Funny that Michigan and USC say this is nothing more than a payday cash loan. Those programs are going no where.
Wonder why Beth Goetz is on record as supporting it.
Do we think the athletic directors in BIG and petiti are stupid?
Lot of business firepower in these institutions have analyzed this deal...stupid?
I think that Goetz has over 200 million in athletic department debt and this is a band aid. I think 5 institutions are hemmoraging money, although MSU is going to do much better with the $401 million donation. UCLA, Rutgers, Maryland, and even OSU have negative revenue. Other schools like Oregon see an uptick in financial distributions. It is a short term fix to a long term problem. The biggest concern would be what the media deals will be worth in 2030.
Did not realize Iowa debt was that large
Outside of covid year Iowa has been in black or just below break even.
I know 2020 was a disaster but I thought it was 50 million in red, not 200.
Historically Iowa was one of handful of programs in black. I have tracked it for at least 25 years . Now, capital project debt has to be a big chunk of that.
The issue on media is: are we in a bubble where sports programming is valuable to a number of suitors?
On the horizon could be massive consolidation in media( warner Bros to Netflix or sky dance).
That reduces bidders with price- fixing very possible.
This creates risk to futures revenues.
You reduce exposure to risk by getting partners that share risk .
Petiti is a media guy. He should see future trends early.
Delaney beat all other leagues to punch with BTN.
Maybe petiti knows something.
Outside of covid year Iowa has been in black or just below break even.
I know 2020 was a disaster but I thought it was 50 million in red, not 200.
Historically Iowa was one of handful of programs in black. I have tracked it for at least 25 years . Now, capital project debt has to be a big chunk of that.
The issue on media is: are we in a bubble where sports programming is valuable to a number of suitors?
On the horizon could be massive consolidation in media( warner Bros to Netflix or sky dance).
That reduces bidders with price- fixing very possible.
This creates risk to futures revenues.
You reduce exposure to risk by getting partners that share risk .
Petiti is a media guy. He should see future trends early.
Delaney beat all other leagues to punch with BTN.
Maybe petiti knows something.
That money that Iowa was was the covid year plus loans taken from the endowment for infrastructure . I haven’t seen any of the tv deals that you are discussing effecting the bidders for those deals. In fact Netflix could now become a bidder, as prime is as well. I will always be in favor of equal distribution, and maintaining autonomy.
Perfect world I agree with you.
But, I have to think all those athletic directors also agree with you yet are considering the alternatives.
Maybe getting bad advice?
Shifting landscape requires nimble business plan?
They are taking 100 million of that to start their own. Iowa doesn’t need 400 million. I mean it would be nice, but it’s a different situation
If we had that kind of money my wife would want to build a high rise hotel for rescue dogs.
And then the new owners will want a 14-game season, and B10 games spread over Wednesday, Thursday, Friday and Saturday, and a 24-team CFP playoff. And increased licensing and sponsorships. Something like the "welcome to the HyVee pregame interview with Wells-Fargo endowed Iowa football coach Kirk Ferentz, live with Fareway-sponsored announcer Gary Dolphin and Farm Bureau-sponsored color analyst Pat Angerer, from historic Kinnick Stadium, home of Mediacom field. Brought to you John Deere, Greenstate Credit Union and Budweiser. The Hawks black jerseys today sport Nike, Coca-cola, United Airlines, and McDonalds logos..."
So you're telling me that there all these millions of dollars in revenue through TV, tickets, merchandise, etc.... and this many universities are that much in debt.
Maybe they all need to take some of their own finance 101 courses? It's all just madness at this point.
Maybe they all need to take some of their own finance 101 courses? It's all just madness at this point.
In bigtime college sports there have been 2 " black swan" events in last 5 years
The pandemic hit the BIG hard partially due to the BIG decision to shut down FB in 2020...cost Iowa probably 50 million.
Then came the unexpected 20.5 million revenue sharing annual expense.
I would say it was hard to know these expenses were on the horizon in 2019.
Common sense says if a school doesn’t have $20.5 million to share with players, you don’t spend it.
Yeah, and then it says this "though the company will house several departments that traditionally fall under the university's athletic department, such as athletic personnel and divisions".
probably for the OT board, but is there anything Private Equity doesn't ruin?
That's a good question. Sometimes companies are run very shittily and they do come in and Febreze the **** to make it better.
Will this be like companies outsourcing janitorial services to Service Master?
Basically people get paid less.
Exactly. 2.4 billion through 2046 for 18 teams? I'm glad Michigan and USC torpedoed that proposal.
At what point do universities and athletic programs decide to quit the arms race? Or have we reached the point of no return in terms of the reliance on athletic programs to generate revenue?
Is it possible for Iowa (as an example) to band together with other like-minded institutions and form a separate league w/ separate conferences, agree to a strictly enforced salary-cap, and play by a different set of rules? Where healthy revenue can still be generated to sustain the league, make it profitable (if not lucrative) for universities, and support an even playing field where money becomes a secondary factor in the success of a particular program?
Is it possible for Iowa (as an example) to band together with other like-minded institutions and form a separate league w/ separate conferences, agree to a strictly enforced salary-cap, and play by a different set of rules? Where healthy revenue can still be generated to sustain the league, make it profitable (if not lucrative) for universities, and support an even playing field where money becomes a secondary factor in the success of a particular program?
I'm trying to figure out how any of these falls under the guise of "not-for-profit"? It's one thing to be a university and spend everything that comes in on overinflated salaries and other crazy expenses. But it's an entirely different thing to create a "for profit" offshoot that gets funds diverted from the not-for-profit in order to payback a private equity group. There's no way the feds are going to go for that and still not have the schools pay taxes.
Man, and ISU was chomping at the bit to dominate the new Big 12. Now Texas Tech, BYU, Baylor and Utah are buying their way to greatness.
You could have a cap for the schools portion. But outside NIL will always be there and you will lose in court if you try and limit what a kid makes off the field.
Everything about this screams UNSUSTAINABLE.
Sure... You have these programs getting a bunch of "NIL" cash from some rich alumni. But how long do they burn millions, especially if the get the program over the hump and they win a couple of national titles? I suppose the team like Texas Tech can keep throwing oil money all the time
Sure... You have these programs getting a bunch of "NIL" cash from some rich alumni. But how long do they burn millions, especially if the get the program over the hump and they win a couple of national titles? I suppose the team like Texas Tech can keep throwing oil money all the time
What does the NFL do to prevent a team from funneling their salary through direct NIL payments to bypass salary caps?
Somehow the NFL professional league is able to have rules, but the NCAA professional league can't have rules?