For several years, private equity funds have invested in Major League Baseball, the NBA and soccer franchises worldwide. Their investments have often helped bump up returns, as successful seasons can generate massive profits.

Now there’s a similar opportunity for private equity investment in collegiate sports. Although both professional and collegiate sports involve games, the playing field for investors in college sports will be far different.

Private equity investment in college sports isn’t about “profits”

On the surface, Division 1 athletics would appear to be in little need of outside investment. The Power Five sports conferences hold $25 billion in long-term media contracts for football alone,1 helping contribute to $3.3 billion in revenues for 2022 across the Power Five conferences.2

But colleges must abide with a host of rules and regulations that professional franchises do not, and rarely operate in the black. Only 25 U.S. universities have surpluses from sports operations,3 and any profits are usually allocated to subsidize sports other than football and men’s basketball.

The COVID-19 pandemic made things much worse even for traditional sports powerhouses. As games played out before empty football stadiums and basketball courts, some athletic departments suffered losses in the tens of millions of dollars, leading administrators to seek additional sources of revenue.

New opportunities will define private equity investment in college sports

For PE firms, the opportunities lie largely in infrastructure and licensing. In general, some universities are considering capital investments from private sources — and this aligns well with PE firms that want to make long-term investments in college sports.

Some possible opportunities include the following:

  • Naming rights for stadiums or infrastructure investments in return for stadium revenues
  • Sponsoring events in facilities other than football or basketball games
  • Joint ventures like branded restaurants, bars and apparel stores
  • Investment in media rights for individual schools
  • Universities selling intellectual property rights

The limits of D1 sports investing

There are only a handful of universities that would qualify as candidates for private equity investments, and many are public institutions that could face backlash from students, alumni and politicians over such investments.

In addition, compliance with government regulations like Title IX and NCAA rules can be complex and difficult for even the most experienced PE managers. Even if a single institution wishes to enter into a transaction, their conference and the NCAA might have to sanction a deal that includes any portion of media rights that are collectively owned.

Issues also include a bureaucratic decision-making process that include high-ranking university administration, faculty and a board of trustees, not just athletic directors. PE firms accustomed to agile business partners will have to readjust their expectations when dealing with institutions of higher learning.

Other keys to success are having relationships with athletic departments and university administrators, and knowing how rules and regulations work within a stratified, highly matrixed environment.

HUB International’s private equity experts and entertainment and sports specialists can help you identify and navigate the emerging opportunities between PE and collegiate sports.

1 Business of College Sports, “Current College Sports Television Contracts,” August 28, 2023.

2 USA Today, “NCAA's Power Five conferences are cash cows. Here's how much schools made in fiscal 2022.” May 19, 2023.

3 Inside Higher Ed, “Should Institutions Support Sports Programs That Don’t Make Money?” December 14, 2021.