Athletic Departments (and Private Equity) Prepare for a Fast-Changing College Athletics Market

Last week marked the third anniversary of the NCAA’s removal of its ban on players earning money from their name, image, or likeliness, or NIL. The new market birthed from that decision, along with an easing of restrictions on player transfers, has sent stakeholders into a high-stakes rush to come out on top of the new-look college athletics landscape.

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Athletes, particularly in football and men’s basketball, now participate in what has essentially become a free agent transfer marketplace not much different than that of their professional counterparts. Players agreeing to matriculate at a new school can receive “collective” deals in which they pocket an upfront cash payment from donors affiliated with the school. Those donors, who have begun organizing into groups known as collectives—hence the name—pool resources to finance the purchase of top talent for their team.

Opendorse, a group which tracks NIL payments, says the market is rapidly expanding: projected NIL transaction volume of nearly $1.7 billion in 2024/2025 is expected to grow more than 40 percent year-over-year as teams compete to build the best rosters.

This upheaval has opened a rare “greenfield” opportunity for private equity involvement in an area that had previously been off-limits.

One of the first efforts underway is Collegiate Athletic Solutions (CAS), a new university sports investment platform with backing from Redbird Capital Partners and Weatherford Capital (founded by former Florida State quarterback Drew Weatherford).

CAS plans to provide between $50 - $200 million of capital to various college athletic departments, along with companion advisory services focused on providing “additional operational expertise across strategies that can improve competitive positioning.” According to CAS, much of that expertise is focused on optimizing approaches to ticketing, hospitality, premium events, media rights, and IP monetization.

In its launch announcement, the firm has said its primary offer will take the form of a debt-like capital structure with a revenue-share arrangement and no fixed payment schedule. CAS also notes a willingness to negotiate unique agreements that can accommodate various university legal and governance needs across both public and private institutions.

"The costs of competing are going up," said Redbird founder Gerry Cardinale, speaking earlier this year at the Sports Business Journal Collegiate Athletic Forum. "You gotta spend if you want to win … They're not going to be able to do it with just donors. Bringing in third-party capital, it's not crazy. It's a very rational thing."

The stakes couldn’t be higher for universities. With a reshuffling status quo and influx of outside money, programs that are slow to adapt risk getting caught on the wrong side of a self-perpetuating talent consolidation within the top teams (who secure the most lucrative rights deals and an ongoing ability to pay for the best recruits).

"Roster management and actually taking that [money] and investing it wisely into athletes and managing your rosters in a professional manner is going to be extremely important," Weatherford told the Wall Street Journal. "I think a lot is going to change, and nobody wants to be on the outside looking in when the carousel stops."

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.