PE in college athletics

I just read that private equity seems to be coming to college athletics soon. RedBird Capital and Weatherford Capital have announced a program for athletic departments. There are scant details so far, but my guess is that these firms will work alongside a handful of athletic departments and provide a line of credit in exchange for future revenue splits.

This could make sense for some select athletic departments. For better or worse, my school the University of Washington is likely a top candidate given that we are entering the Big10 at a 50% revenue cut for the next 6 years until 2030 when we get the full cut. PE money could help level the playing field for the next 5-6 years while giving up some of the future upside when we get a larger cut from the conference.

Of course, this won’t always end happy. Some companies may be eager to get their hands on capital today which won’t result in a happy payout in the future. I can see many of these desperate ADs looking to make a splash and taking out a line of credit to pay some highly talented recruits who won’t pan out. A lot of college athletics are unfortunately not good investments. Lots of schools will learn the hard way…