Whoa Penn State & UCLA Are Taking Private Equity Money

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Penn State, UCLA Have Decided To Take Money From Private Equity Funding. Schools Looking For Help

It will be interesting to see how many more athletic departments join Penn State and UCLA in taking money from private equity firms moving forward, in the aftermath of House settlement
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According to an announcement, the College Sports Fund has the backing of the Velocity Capital Management firm, along with the Texas Permanent School fund, which will infuse schools with the capital needed to keep up with the new monetary details of the House settlement. Schools will now have the ability to divide $20.5 million between different sports programs on campus, with football and basketball set to receive the highest percentage of the revenue-sharing.


I would not be happy about this if I were fans of those schools because that money is going to have strings. I don't see this ending well.
 
I've seen reports that said they haven't, at least not yet. Not sure what to believe.
 
trailer boys GIF
 
I asked ChatGPT how this would work and my summary of the analysis is that this can't work. Public institutions would be limited in the control they give away, and I have never seen anyone explain how the short term benefit works compared to the long term cost.

how would private equity or private capital work in college sports

ChatGPT said:​

Private equity or private capital involvement in college sports would be a major shift from the traditional model, but it's becoming increasingly realistic as the line between amateur and professional sports blurs. Here's how it might work, what it could look like, and the implications:

✅​

1.​

Private equity firms could invest directly in the revenue-generating parts of athletic departments (e.g., football or basketball programs), either through:

  • Revenue-sharing agreements (a % of ticket sales, media rights, merchandising).
  • Ownership stakes in commercialized athletic operations (if schools spin off sports into semi-independent entities).
⚠️ Note: Public universities would likely need to restructure their athletic programs into separate legal entities (like non-profits or for-profits) for this to happen legally and practically.
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2.​

A school or conference could create a for-profit subsidiary for its athletics (similar to how IMG Academy is structured), which then receives capital from investors in exchange for equity or profit-sharing.

3.​

Private equity could buy future media rights or co-own networks and streaming deals (e.g., similar to the Big Ten Network structure).

  • Firms like Silver Lake have already invested in sports media (e.g., Endeavor, UFC).
  • PE could fund conference media platforms, production capabilities, or digital distribution channels.

4.​

Capital could flow into:

  • NIL collectives, helping them professionalize operations.
  • Platforms that connect athletes to endorsements.
  • Management agencies or brand-building tools aimed at athletes.
Private equity might buy or build NIL infrastructure to consolidate and scale it like a traditional sports agency business.

5.​

If college football splits from the NCAA and creates a super-conference or league, it could be structured more like the Premier League or NFL, where investors own teams or shares in the league itself.

  • Think: 30-40 top programs with private ownership models or hybrid ownership structures (university + PE firm + media company).

⚖️ Potential Benefits​

  • 💵 New Revenue Streams: Unlocking new capital for facilities, athlete compensation, tech upgrades.
  • 📈 Professionalization: Better financial management, marketing, and operational efficiency.
  • 🎯 Strategic Growth: More aggressive national and international branding and monetization.

🚫 Potential Risks and Controversies​

  • 🏫 Loss of Institutional Control: Schools could lose autonomy over athletic culture and decision-making.
  • 🧑‍🎓 Conflict with Educational Mission: More corporate interests could further dilute the academic role of universities.
  • 🏛️ Legal/Tax Issues: Public institutions accepting private capital could face governance and tax exemption complications.
  • 💣 Athlete Labor Implications: More pressure for athletes to become employees, with collective bargaining or unionization.

🔮 Real-World Precedents / Signals​

  • RedBird Capital invested in a college sports marketing firm (On Location).
  • Silver Lake's backing of sports and entertainment (Endeavor).
  • NCAA’s settlement in House v. NCAA and the move toward revenue sharing with athletes opens the door to business-style capital management.
  • The Big Ten and SEC expanding and consolidating resemble pro leagues, making them more viable for future investment structures.
 
Only about 20 schools consistently generate surpluses. And, with very few exceptions, no private equity group is going to take a flyer on someone who does not consistently generate surpluses.
  1. Texas (Big 12, moving to SEC) - Reported $239 million in revenue (2019-20) and consistently leads in ticket sales and donations, e.g., $63.3 million in ticket revenue in 2014-15. 2024 numbers were $331.0 Million in revenues vs. expenses of ~$325 Million.
  2. Ohio State (Big Ten) - Generated $233 million in revenue (2019-20) and has one of the highest athletic valuations ($1.32 billion in 2025). Known for massive ticket sales ($63.1 million in 2014-15) and media rights payouts.
  3. Alabama (SEC) - High revenue from football success, with $189 million reported in 2019-20. Benefits from strong media deals and recruiting investments ($1.3 million in 2014-15).
  4. Texas A&M (SEC) - Led Division I with $193 million in revenue in 2014-15, boosted by Kyle Field renovations. Valued at $1.26 billion in 2025.
  5. Michigan (Big Ten) - Reported $197 million in revenue (2019-20) and valued at $1.06 billion in 2025. Strong fan base and Big Ten media payouts contribute.
  6. Georgia (SEC) - High football revenue and recruiting spending ($1.3 million in 2014-15), with consistent SEC media deal benefits.
  7. LSU (SEC) - Football-driven revenue, often exceeding $150 million annually, supported by SEC distributions and fan support.
  8. Auburn (SEC) - Similar to LSU, benefits from SEC media deals and strong football revenue, typically over $140 million.
  9. Oklahoma (Big 12, moving to SEC) - Consistently high revenue, around $175 million in recent years, with strong donor support.
  10. Florida (SEC) - Football and basketball success drive revenue, often exceeding $150 million, bolstered by SEC payouts.
  11. Penn State (Big Ten) - Large alumni base and football revenue, with Big Ten distributions pushing revenues near $170 million.
  12. Wisconsin (Big Ten) - Steady revenue from football and basketball, often around $150 million, with minimal reliance on subsidies.
  13. Notre Dame (Independent, ACC affiliate) - Not strictly Power 5 but competes at that level, with a $969 million valuation and high revenue from NBC media deal.
  14. USC (Pac-12, moving to Big Ten) - Strong brand and media market, with revenues boosted by recent conference realignment.
  15. UCLA (Pac-12, moving to Big Ten) - Similar to USC, benefits from Los Angeles market and upcoming Big Ten media deals.
These schools may also generate surpluses, depending on the year, due to strong conference payouts or specific revenue streams:
  • Clemson (ACC) - Football success drives revenue, often over $130 million, though ACC payouts are lower than SEC/Big Ten.
  • Florida State (ACC) - Similar to Clemson, with football revenue and donor support pushing toward profitability.
  • Iowa (Big Ten) - Consistent football revenue and Big Ten distributions, often around $130-140 million.
  • Nebraska (Big Ten) - Large fan base and historical success, with revenues near $140 million despite recent on-field struggles.
  • Tennessee (SEC) - Recent football resurgence and SEC media deals support high revenues.
 
Don't put too much credence in the deficits. Most of those programs do that by design, knowing they can keep going back to the boosters and get more. I don't mean the Marylands and UCLAs, I mean the normal SEC and B1G teams. Now that they can't spend it all, they will have to be frugal. You will see staff salaries flatten out ... I've read admin and coach contracts entered into the past year all had House provisions with regard to pay levels if House came to be. Once they have to pay out the $20.5 million, many who ran deficits will suddenly find the money that swore they didn't have before.
 
WhosYourDawggy said:
Don't put too much credence in the deficits. Most of those programs do that by design, knowing they can keep going back to the boosters and get more. I don't mean the Marylands and UCLAs, I mean the normal SEC and B1G teams. Now that they can't spend it all, they will have to be frugal. You will see staff salaries flatten out ... I've read admin and coach contracts entered into the past year all had House provisions with regard to pay levels if House came to be. Once they have to pay out the $20.5 million, many who ran deficits will suddenly find the money that swore they didn't have before.
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Which means they don't have surpluses which means they are not candidates for big upfront private equity money. That's the topic of the thread. I've been an investor in and a user of private equity money for years. It's gnarly and full of sharks. Definitely not a place the average AD is going to do well in even though the PE boys are experts at talking people into things. And then if it comes to crunch time.............. Ugly.
 
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Goldbug said:
Which means they don't have surpluses which means they are not candidates for big upfront private equity money. That's the topic of the thread. I've been an investor in and a user of private equity money for years. It's gnarly and full of sharks. Definitely not a place the average AD is going to do well in even though the PE boys are experts at talking people into things. And then if it comes to crunch time.............. Ugly.
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I've been negatively affected by PE and VCs. I agree with you 100%. It's absurd ... they want ROI and if that means cutting the equestrian team, so be it.

Candidly, I doubt most schools can do this as they are governmental agencies, or at least quasi-governmental agencies.
 
So instead of owners like the NFL has, college football teams will be owned by PE and VC firms?
 
wait does this mean Florida St will now sale prayer rugs when their middle eastern money comes through??
 
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