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Collegiate Sports’ ‘March’ to Profitability Will Go Through Private Equity and It Won’t Be ‘Madness’

Jon Schwartz  Follow

As the NCAA Women’s and Men’s Basketball Tournaments tip-off this week, there’s madness in college athletics. But it’s not just limited to March. The industry finds itself in a period of seismic change and is showing no signs of stabilizing.

From coast-to-coast, university chancellors, presidents, and athletics directors are grappling with a complex set of issues, such as student-athlete mental health and wellness, the impact of nefarious gambling activity, and unpredictability of the transfer portal. And it’s all coming to a head against the backdrop of massive television contracts, the cascading effects of conference realignment, the waning power of the NCAA, and the insatiable desire for live sports content in this country.

To stay competitive, colleges and universities have been turning to boosters and alumni to raise the capital needed to attract and retain student-athletes. Funding name, image, and likeness (NIL) programs and building the best and newest athletics facilities and infrastructure (ones that often outperform their professional counterparts) is an expensive endeavor, and the money is not infinite. Moreover, as schools make plans to extricate themselves from their existing conferences and prepare for the potential of student-athletes being paid, boosters and alumni can no longer be relied on to bear the full brunt of those costs. 

College sports needs help. That help is not coming from the government. It’s not coming from the NCAA or the networks. Instead, it is going to come from private equity.

This may sound surprising... 

After all, the colorful columns practically write themselves—corporate raiders taking stock of blue-chip programs, replacing athletic directors with their lackeys, paying student-athletes in the non-revenue-generating sports minimum wage, and selling off lacrosse and hockey equipment for quick and easy returns. But this stereotype doesn’t paint an accurate portrait of what private equity (PE) can achieve in the world of college sports. 

These investors can assist universities in developing policies and programs that promote fairness, transparency, and compliance. PE investment represents a potentially transformative force in collegiate athletics—one that offers a strategic and sustainable approach to addressing longstanding questions and embracing emerging opportunities.

Amid the myriad challenges, PE investors have the capital and fundraising ability to make a tangible difference. By helping the colleges and universities that choose to leave their respective conferences cover those associated costs (as well as funding student-athlete salaries should this become inevitable), these businesses can add a certain steadying professionalism to these efforts, lessening the unintended consequences of NIL and the transfer portal. In doing so, PE firms can help level the playing field in collegiate athletics while fostering a culture of innovation, collaboration, and excellence.

PE is not a panacea… 

But many investors have learned over the years how to enhance companies that are looking to emerge into a new era of financial growth. The resulting partnership stabilizes these companies and turns them around on an upward trajectory. Moreover, these firms are in it for a longer haul than most investors; fund vintages typically last seven to 10 years, and the emergence of continuation vehicles has extended the run even further.

Now, PE isn’t getting into this world for charitable purposes. There’s real money to be made in this business. The numbers surrounding TV contracts for conference rights are immense, and the potential returns that can be generated from long-term media rights agreements, ticket sales, licensing, and sponsorships are promising. 

Embracing PE involvement in college sports may feel antithetical to the spirit of the student-athlete. But the current state of play is unsustainable. With money a persistent force in this world, perhaps PE’s proven strategic vision can move the college sports enterprise in a more coherent and stable direction—one that delivers true competitive balance by de-weaponizing NIL and the transfer portal.

If that’s the case, perhaps this era of collegiate athletics will prove transformative—where the only madness was a bracket-busting upset. That would be good news for the academic institutions, the athletes, and the fans.


Jon Schwartz is Head of Sports at Prosek Partners. Prior to joining Prosek, he held senior marketing communications positions at NASCAR, National Football League, and the Big Ten Conference. Earlier in his career, he led strategic communications for brand and sponsorships at MasterCard and Bank of America. You can learn more about Jon’s role at Prosek here.

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