The increasingly fraught financial world of college sports has a potential new source of funds — a private equity-backed venture.
Collegiate Athletic Solutions, a joint project between RedBird Capital Partners and Weatherford Capital, is looking to provide capital and advising to college athletics departments in return for a cut of the revenue.
In CAS’ launch announcement Wednesday, RedBird and Weatherford said the new company aims to be “a trusted advisor to university presidents, CFOs, and athletic directors, equipping the strategies and resources to operate efficiently while allowing their athletic program to compete at the highest level.”
CAS could provide “a debt-like cost of capital structure — without any fixed payments — with its returns tied to new revenue generation,” the private equity firms said in a statement.
A revenue-sharing model could “help offset incremental, athletic-related expenses and, when needed, right-size operating structures,” the firms noted, adding that CAS could tailor capital deals to colleges’ governance, financial and legal structures.
The firms also touted they could help college athletics operations with their combined experience in hospitality, media rights and monetizing intellectual property. Among other sports-related holdings, RedBird owns stakes in the United Football league, a soccer team, a racing team, a sports media company and On Location Experiences, which runs hospitality for NFL.
CAS did not immediately reply to questions for more details.
The field of collegiate athletics has gone through multiple disruptions over the past decade, with shifting conference makeups, a changing media rights landscape and the growing labor rights movement among college athletes. The sector could also see increased costs as the NCAA considers new rules around the compensation of student athletes for the use of their names, images and likenesses.
College sports revenue generates billions of dollars in media and ticket sales. But a majority of institutions lose money on their Division I and Division II athletics programs, according to NCAA data.
Private equity has a long history of investing in various areas of higher ed, from taking over for-profit colleges — which has been tied to negative results for students — to partnering with the struggling nonprofit that runs the ACT exam. And increasingly, private equity has been investing in professional sports.