There is a mad rush for cash in college sports.
between billions of dollars TV dealsthe agency transfer portal and the escalation of the situation zero — Name, image and likeness — The trade of athletes, college sports, and especially football has never looked more lucrative.
Now private equity and venture capital firms such as Tomorrow’s college games, crush capital and College Sports Solutions Purchases are being sought, and schools with the most valuable athletic programs are in the best position to take advantage.
At the top of the list are schools that excel on the field. At a typical Power 4 school, which includes the ACC, Big Ten, Big 12 and SEC conferences, football accounts for about 75 percent of athletic program revenue, according to people familiar with economics.
This year’s expanded 12-team College Football Playoff will kick off on December 20. The deals are worth an average of $1.3 billion a year, more than double that of previous deals, according to media reports.
Whereas the U.S. Securities and Exchange Commission (SEC) dominant Experts interviewed by CNBC believe the league will surpass the Big Ten with the richest television deal when the current deal expires in 2033-34.
“The SEC is pretty much a super conference and has the most in college sports because of its football team,” said Irwin Kishner, a partner in Herrick Feinstein’s corporate department and co-chair of its sports law group. Valuable content.
Of course, private equity is not a new concept to the world of 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 take limited partnership stakes for years. The National Football League voted in August to allow certain private equity investors to take minority stakes.
Attention now turns to college courses.
“As a business, college sports, and football in particular, is doing well and continuing to grow, which is why investors are paying attention to this asset class,” he said. Greg CareyGlobal Co-Head of Sports Franchise at Goldman Sachs Investment Bank.
Institutional investors such as College Athletic Solutions, a proposal from RedBird Capital Partners and Weatherford Capital, will provide capital to help increase the school’s athletic revenue. In return, the private equity firm will receive a cut.
It is also believed that the business acumen of outside investors can drive profits even higher.
“College sports have a great opportunity to improve EBITDA[earnings before interest, taxes, depreciation, and amortization]because there are easy ways to reduce expenses while maintaining quality,” Kirchner said.
Schools have incentives to attract outside investors.
One of them, $2.8 billion precipitation An agreement between the NCAA and the five largest conferences will provide compensation to 14,000 students who were previously denied endorsement money. A hearing to ultimately approve the deal is scheduled for April, but the school has already Plan ahead.
Even among the largest conferences, disparities in television revenue can lead to huge competitive and economic disparities.
“Schools in the ACC and Big 12, as well as schools in the SEC and Big Ten that generate less local business revenue, have no choice but to employ private capital and operational expertise, or they will almost certainly be excluded from the top tier of future competition. outside the echelon. Athletic DirectorUwho has advised universities on NIL transactions and now does the same for athletic departments seeking private equity.
To be sure, the move to private equity is complex and could take months. Florida has It is said Been working with JPMorgan for about a year trying to raise institutional capital.
However, bankers and lawyers who spoke to CNBC believe private equity will eventually invest in college sports.
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