Private Equity Coming To College Athletics

[pokercuse08]

There's a reason the NCAA is suddenly interested in letting schools directly pay players. Part is the chaotic nature of the current NIL landscape. The other is probably related to private equity. My first instinct is that they're trying to keep it out, but it could be the opposite.

But I could see a scenario where athletic departments invest through PE, which turns around and pays players through NIL, operating as a slush fund and taking a cut. Then they go out and line up brands and maximize the return on the NIL payments they're making.

So for example, Football U invests $10M in a PE firm's football fund, which pays out $9M of it to players and keeps $1M. The PE firm then signs the players full and exclusive NIL rights, and negotiates with Nike or Buffalo Wild Wings, or whatever. Then they split that with the school. It improves efficiency cause BWW can pay to have a player at 50 different locations nationwide on whatever night, and the PE firm already has the players.

Or PE invests, say, to help an angry state school in Florida buy it's way out of its conference. In return they get X% of their conference revenue in perpetuity. Or a cut of their gate, or something similar.

They'll probably get involved in conferences and TV deals, too.

I don't know if it'll get to a point where PE is just running minor league teams and licensing the school name, logo, and mascot, but maybe...

 

[Hoo's That]

If it’s attached to colleges and scholarships, Title IX would apply, I would think

I'm sure there will be lawsuits trying to make the connection, but I don't know if they'll be successful. What the schools may do is license the use of the name and logos to the firms, charge rent for the use of the facilities, and claim they don't have any control over what the firm does. I have less than zero idea whether that argument will hold up in court.

 

[atlanticuse]

I’m not sure people understand what private equity is. The term is now being misused.
It’s technically about buying assets with a ton of debt, and only servicing the senior debt, to slim and resell for more within 2-3 years.
How does that fit college - or pro - sports, which are bloated and overpay talent who often flame out?
We don’t need to split hairs over PIPE (like I did with Blackstone) and VC-fund PE (Blackstone Tactical).