Private Equity Enters College Sports

As the 2025 college football season begins in the US, private equity’s role in the collegiate sports sector remains measured, with firms favouring private credit structures over direct equity stakes.

The hesitation highlights the structural and governance challenges that differentiate college sports from their professional counterparts, where PE involvement has become more conventional.

Rising Financial Pressures Due to Hasty Investment

Recent developments, including the House v. NCAA settlement that permits schools to share revenue with athletes, have increased the financial demands on college athletic departments. However, despite the sector’s expanding commercial footprint, driven by broadcast rights, sponsorships, and naming deals.

Legal experts point to governance hurdles as a key barrier. WilmerHale partner David Gringer noted that the economics don’t make the same kind of sense as in pro leagues, where franchise ownership is a viable path. In contrast, acquiring an ownership stake in a public institution like the University of Alabama is neither structurally nor politically feasible.

As a result, private equity has largely engaged through lending. Credit arms of major PE firms are providing funding via debt instruments rather than seeking control. These arrangements offer institutions needed capital while avoiding governance entanglements, though they deliver lower returns for investors compared to equity deals.

One of the clearest examples of this strategy is Elevate’s USD500 million initiative announced in June. Backed by Velocity Capital Management and the Texas Permanent School Fund, the program aims to inject institutional capital into college athletics via private credit.

Elevate has already secured deals with two unnamed Power 4 schools and intends to fund upgrades to stadiums and fan facilities, targeting enhanced commercial outcomes through premium offerings.

Institutional Revenue Remains the Core Investment Strategy

For investors, college sports’ appeal lies in long-term, contract-based revenue—media rights, naming rights, and sponsorships, that underpin predictable cash flows.

However, experts such as Sheppard Mullin’s Brian Anderson have highlighted the risk of misalignment between PE’s profit-oriented models and the educational missions of universities.

Although some institutions have spun off athletic operations into corporate entities, offering a potential gateway for PE equity investment.

Whether this conservative approach will evolve depends on how institutions adapt to new financial pressures and whether private equity can demonstrate value beyond capital, particularly in areas like fan engagement and facility commercialisation.

Ultimately, while interest in the sector is growing, private equity’s future in college sports will depend on its ability to align with the sector’s distinct governance and values.

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