The Financial Transformation of College Sports: Is Private Equity the Future?

As college sports continue to evolve, the balance between tradition and transformation is tipping toward commercialization. Now, private equity is looking for a way in. Having already secured footholds in professional leagues like the MLB, NBA and NFL, investment groups are turning their attention to universities, where mounting financial pressures are making outside funding increasingly appealing.

The National Collegiate Athletic Association (“NCAA”) has undergone significant shifts in recent years. Name, image and likeness (“NIL”) payments, the transfer portal and relaxed eligibility rules have increased player mobility and driven up costs for colleges competing to attract top talent. Adding to these financial pressures, the recent landmark settlement in the House v. NCAA lawsuit commits nearly US$2.8 billion in back damages to former athletes and establishes a framework for schools to share revenue with current players – intensifying the NCAA’s and universities’ search for new funding streams.

Private equity firms see an opportunity, but ownership stakes in university athletic departments remain a legal and logistical challenge. Some schools are finding alternative ways to integrate private-sector strategies. For example, Clemson University has launched Clemson Ventures, a separate entity managing sponsorships, licensing, media rights and NIL deals. This model allows the university in South Carolina to more aggressively monetize its assets while creating a structure that could potentially open pathways for external investment.

Yet skepticism remains. The Big 12 Conference, a prominent NCAA Division I group, explored private equity deals but ultimately decided against moving forward. Commissioner Brett Yormark emphasized that while the conference seeks to expand commercial operations, it is not ready to give up equity. Concerns persist about losing institutional control and further blurring the line between amateur and professional competition. NCAA president Charlie Baker acknowledged that while private equity investment is tempting, universities – fundamentally non-profit institutions – must remain mindful.

Canadian universities are not insulated from the financial pressures and commercialization trends reshaping the NCAA. As student-athlete compensation models evolve and cross-border recruitment intensifies, questions arise about how Canadian institutions will respond – particularly regarding NIL rights, player mobility and revenue sharing.

With financial pressures mounting, private equity’s role in college sports remains uncertain. Some schools may embrace outside investment, while others proceed cautiously, reluctant to be industry trailblazers. But with private equity’s focus on maximizing returns, universities must consider whether short-term financial relief aligns with the long-term stability and integrity of college athletics.

The Sports, Media & Entertainment Group at Aird & Berlis LLP assists clients in navigating contracts, transactions, regulations, disputes and more. Please contact the authors or a member of the group if you have questions or require assistance.