Utah reportedly enters landmark private equity agreement raising half a billion dollars

Utah reportedly enters landmark private equity agreement raising half a billion dollars originally appeared on The Sporting News. Add The Sporting News as a Preferred Source by clicking here.

The University of Utah is finalizing a private equity partnership that would be the first of its kind in college athletics.

Advertisement

The Utes administration is set to enter into an agreement with New York-based firm Otro Capital that will help generate an estimated $500 million for the school, per an announcement Tuesday. The deal is expected to be finalized early next year. This was cleared by the NCAA, according to Yahoo Sports’ Ross Dellenger.

Utah President Taylor Randall and Athletic Director Mark Harlan must reportedly retain majority decision-making control to remain compliant in the deal, at least in this case, per NCAA rules.

With the groundbreaking deal comes the creation of a for-profit entity, Utah Brands & Entertainment LLC, which will exist as an independent entity from Utah’s athletic department. It will be a co-owned venture by the university and Otro Capital.

UB&E will oversee the revenue-sharing efforts with Utes athletes. Harlan will be acting chair of its board. There will be a president added from outside the university in the coming weeks. Between the investments from donors and a nine-figure deal with Otro Capital, Utah could raise more than $500 million, showing a model of sustained success in the revenue-sharing era of college athletics.

Advertisement

Utah becomes the first school to embrace private equity. The university is also the first to ink a partnership with a capital firm. However, expect this trend to continue in college athletics. The rapidly changing landscape will allow more creative ways to boost revenue. This is an essential change and will be watched closely for proof of concept.

Entire conferences brought proposals to the table. According to CBS Sports, the Big 12 considered an option that could have raised up to $1 billion for the league in exchange for 20% ownership but decided against it. The Big Ten is in the middle of similar discussions, but not all of its schools are on board with what could be a $2 billion deal.

The more revenue a school’s athletic department generates, the more it can allocate to its athletes. That is the new reality in the wake of the House settlement.

If Utah’s model proves successful, private equity investments will almost certainly be used often by many universities.

Advertisement

More college football news: