The University of Utah is turning to a private equity firm to help manage its college sports future.
The move, announced by University President Taylor Randall and Athletics Director Mark Harlan, was driven by rising costs of the athletics program and a future with revenue sharing with student athletes. The result was the creation of Utah Brands & Entertainment LLC. The university, as it put it, will “transfer select core revenue-generating operations from athletics and auxiliary services” to the new LLC.
The company will be owned by the university’s foundation, which will also appoint most of the company’s board of directors.
They’re also partnering with Otro Capital, a New York-based private equity firm. It will help with the commercial side, including event revenues, corporate sponsorships, trademarks and licensing.
Before the announcement, Yahoo Sports cited anonymous sources, saying the deal could generate some $500 million in capital. The university did not disclose a number.
Utah isn’t the first school to consider this kind of funding model according to Matt Brown, publisher of Extra Points, a newsletter about the business of college athletics. They are the first to get it done, however, which he thinks could “give permission” to other institutions that want to try the same thing.
He thinks it could also be a good financial opportunity. The University of Utah doesn’t generate the kind of revenue that powerhouses like Ohio State, Texas and Alabama have. The money could go toward paying athletes or getting better coaches and equipment.
“I would look at this as the best case scenario of not just raising a bunch of money, but bringing in strategic advice that Utah would struggle to get from other sources in college athletics,” he said.
This could especially benefit a school like Utah, which doesn’t have as many opportunities to grow. Brown said Rice-Eccles Stadium isn’t very big (only 51,444 capacity) and already sells out most games.
But there are downsides.
College athletics provide opportunities that for-profit teams do not. That includes access to events for working families and supporting Title IX and smaller sports programs.
“Once the private equity firm or Deloitte, or any major consulting company looks at the books, they're going to start wondering things like, ‘Why do we have a tennis team? … Why do we have our tickets priced at a level so, you know, a minivan family of six can go these games?’”
Eventually, Brown said, one of those missions has to take precedence.
The university expects the deal to be finalized next year.
Editor’s note: KUER is a licensee of the University of Utah but operates as an editorially independent news organization.
