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There are high-stakes lawsuits, labor relations committees, Congressional hearings and a controversial plan to overhaul the NCAA president. An angry school took the conference to court over the entitlement, and the conference preemptively attacked the school.
There has been a collapse of name, image and likeness, and complaints about virtually unlimited transfers and a multi-million dollar portal acquisition. A Hall of Fame football and men’s basketball coach is sprinting toward retirement. There is a huge gap between the SEC and the Big Ten and other leagues, and Power 2 commissioners are beginning to recognize the power of leveraging their position to rise above the fray.
Only two things are certain in college sports. Fundamental change is on the horizon, but no one knows what it will look like.
Against this backdrop, new market forces are emerging with a potential interest in the future of college sports. From email inboxes to Zoom meetings to courteous receptions at high-end events, it’s become clear that representatives of private equity and other types of outside financial institutions are showing interest in disrupting college sports.
“What do you want from private equity?” we asked industry insiders. “What you’re looking for is a business that’s poorly run but has a strong market. That’s the definition of college sports.”
Solutions are also being sought, including a “think tank” led by search firm executive Len Perna, one of the nation’s most prolific sports investors. The names include billionaire David Blitzer, former MLS president Mark Abbott and several university leaders. , including Syracuse Chancellor Kent Sivrad.
They stress they have no direct ties to any financial sector and are trying to find a solution that includes the more than 130 FBS soccer teams while keeping the Olympics and women’s sports intact.
“It’s clear that the entire college sports system has been dead for the last three years because of the legislation,” Syverud told ESPN. “It’s not clear what will happen from there. The current system is unsustainable. It’s like a dead man walking.”
Congressional forces, legal decisions, a suddenly aggressive NCAA, and multibillion-dollar television contracts are colliding to shape a kind of ambiguous future. Meanwhile, inefficiencies between far-flung conferences, the cost of non-revenue sports, and athletic department funding models remain evident.
Uncertainty is not new to college athletics, a multibillion-dollar enterprise awkwardly tied to an educational model. But it’s always useful to track your money to understand how volatile things are. Private equity players have found ways to make money in everything from professional sports to WWE.
“This is a way of doing business that college athletic organizations have never really done before,” said a Power Five athletic director familiar with the field. “In the professional world, this is common practice when it comes to facilities, projects and payments.”
So what’s going on? His Gerry Cardinale, founder of Redbird Capital, offers ideas on how to change college sports at Sports Business Journal’s Intercollegiate Athletics Forum in December. He pointed out that schools have the power to collectively negotiate television contracts, rather than having them done by leagues. And he’s been interacting with people in the college athletics world.
Former Florida State University quarterback Drew Weatherford is a partner at Weatherford Capital, where he sets up and hosts meetings with sports-related campus officials. Otro Capital, co-founded by former Redbirds partner and former NFL executive Alec Shiner, has also expressed his curiosity in this space.
Another financial firm, Sixth Street Partners, is expected to work with FSU if it needs a cash injection following its attempts to disentangle itself from the ACC entitlement.
Another industry source said, “Four or five venture capital firms are all moving around.” “These are the big players that are coming in. The fact that these companies are coming and going means you’re not maximizing your revenue.”
The most interesting group exploring the future of college sports to emerge in recent months is Perna’s, chairman and CEO of search firm TurnkeyZRG. He acknowledges that the importance of preserving similarities in the university model complicates any overall solution.
When told that the idea could include football’s departure from the NCAA, he countered that in many ways it already does. (The NCAA receives virtually no revenue from football and, unlike basketball, does not control the postseason.)
“We are studying ways to get even more value out of and for college football, which will lead to the improvement of all of us,” Perna said in a statement to ESPN. “Centralizing FBS football schedules, promotions, and commercial rights would be better for football student-athletes, so they don’t have to limit their options or become ’employees.’ They will be able to bargain collectively and receive compensation commensurate with their worth.”
Syverud continued, “There are more than 100 universities with great football teams and great histories, and the Hunger Games would severely damage the vast majority of them, as well as entire states and regions. Unless you make a decision, others will be able to participate. [improve]. ”
The group has been in conversations with sports leaders over the past few months. Although he has no formal ties to any particular financial company, one member, Mr. Blitzer, is an executive at Blackstone and has worked with some of the nation’s most prominent players, including his role as managing partner of the Philadelphia 76ers. He is one of the professional sports investors. He is the owner of the New Jersey Devils, MLS’s Real Salt Lake, and a limited partner in MLB’s Guardians and NFL’s Commanders.
This is just a potential project in its early stages, so Blitzer’s role is largely an intellectual curiosity at this point. Discussions are currently underway with other prominent figures in the sports world. (Mr. Perna declined to give all names.)
“All forms of investment capital, including private equity, can help a properly structured company grow,” Perna told ESPN. “College sports are not properly structured, legally, politically, commercially, etc. Athletics alone cannot solve the core structural problems, but once they are resolved they can play a role. The difference between our group and other groups is that we are first and foremost focused on how to fix the big and daunting systemic problems in college sports. Masu.”
Perna worked with the NCAA on the idea, but it is not sanctioned or particularly supported.
Mr. Perna also noted the geographic inefficiency of the current conference structure.
“It will also be good for our student-athletes in other sports because their conference affiliation, driven by one game of football per week, will eliminate the need to fly all over the country,” Perna said in a statement. said. “The current rubric is not academically sustainable, affordable, or even logical. What alternative model works better for student-athletes, schools, media partners, fans, etc.? It’s worth your time to consider whether to do so.”
Due to the complexities of college football, both sticking with the current structure or moving away from it, the think tank plan is just on the table. For every change that attempts to redirect the battleship of college athletics, there are still plenty of headwinds. Especially those who need Congressional assistance.
When asked specifically about private equity being a part of college sports, Syverud told ESPN: “I have no objection philosophically to just about anyone who wants or can be part of the solution, and that includes members of Congress. NIL boosters, private equity, university presidents, athletic directors. It is included.
“I don’t think private equity is perfect or evil. I think we need to look at all the different parts of the problem. There’s an important economic component to this.”
The search for answers is part of a whole environment where it’s much easier to point out problems than solutions.
“The next six months are going to be interesting to watch unfold,” Oklahoma athletic director Joe Castiglione told ESPN, summarizing the current state of college athletics. “Over the next six months of this year, a pathway will start to form. We don’t know if it will get support, if it’s possible, if it’s plausible, if it’s legal.
“Frankly, we need to start forming something. There’s so many things happening at once. There’s never been a time like this in college athletics. Never before.”
Syverud added: “Let’s try to make the best of it and see what happens. Otherwise, something strange will happen when you have a dead person walking around.”
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