College sports' rapid transformation from amateur endeavor to professional industry has taken another leap forward in the wake of Tuesday's news: private equity has officially arrived on campus.
A landmark deal: The University of Utah is finalizing a first-of-its-kind agreement with PE firm Otro Capital to create a for-profit entity that will operate the university's athletics business and is expected to generate upwards of $500 million in capital.
The venture is centered around the creation of Utah Brands & Entertainment LLC — a private, independent offshoot of the athletic department whose primary goal is to generate more revenue across areas including ticketing, concessions, corporate sales and sponsorships.
In a fascinating wrinkle, the university — which retains majority ownership of the new entity — is allowing prominent donors to purchase a stake, essentially formalizing their status as boosters. Indeed, the $500 million figure includes both Otro's nine-figure cash infusion and commitments from donors.
The big picture: The early NIL era was heralded as the culmination of a decades-long fight against the myth of amateurism. Turns out it was just the beginning, with schools now set to share revenue directly with athletes and enlist outside capital partners — like Utah is doing — to help navigate this brave new world.
Looking ahead: There are only so many more ways to continue closing the gap between college and pro sports, and one of the biggest — collective bargaining — may be on its way. Athletes.Org released a detailed framework on Monday for what a college sports CBA could look like, and dozens of athletic directors are meeting this week at an annual conference in Las Vegas where collective bargaining will be a main topic of conversation.
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