Private capital’s three entry points into US college sports

In late April the Big 12 became the first major Division I conference to sign a private-capital deal – with RedBird Capital Partners and Weatherford Capital, through their joint vehicle Collegiate Athletic Solutions. The deal sidestepped the legal obstacles to private capital at public universities, transferring no equity, conferring no ownership stake. It consisted of a direct investment of $12.5 million in conference-level businesses, a commercial development partnership that has generated roughly $100 million in new sponsorship revenue (PayPal’s on-field branding, a Venmo system for NIL payments) and an opt-in credit line of up to $30 million per school. This last component has fallen apart.

Within days of its approval most of the Big 12 schools – Texas Tech, Iowa State, Colorado, TCU, Cincinnati, Baylor, West Virginia, UCF, Houston and Kansas State – passed on the offer, as CBS Sports has reported.

But the thesis holds good. The commercial development and the conference-level capital injection remain current. What the credit-line rejection suggests, though, is that the schools most in need of outside capital are schools least able to accept its terms.

A business that was never a business

Numbers belie the public perception of American college athletics as a revenue engine for universities. According to the NCAA’s own report on fiscal year 2024, only 21 of 130 or so Football Bowl Subdivision (FBS) schools generated more commercial revenue than they spent. The median FBS school ran a generated-revenue deficit of $25 million.

Among the 69 so-called autonomy schools – the Power Four conferences, including the Big 12 – the median deficit was $15 million. Thirty-seven percent of total Division I athletics revenue, $7.4 billion out of $20.5 billion, came not from ticket sales or broadcast rights but from student fees, government transfers and institutional subsidies.

The 16 Big 12 schools specifically, per NCAA reporting cited by CBS Sports, averaged $131.7 million in operating expenses in 2025 and $57.4 million in net operating losses – up nearly $9 million from the prior year. Those losses (per NIL-NCAA) were covered by booster contributions ($35m per school on average) and combined institutional support and student fees ($23m).

And all of this predates the settlement in House v. NCAA, approved by a federal judge in June 2025. This settlement (see Loeb & Loeb’s analysis) requires schools opting in to share up to an annual $20.5 million in revenue directly with athletes – a figure projected to reach $33 million by 2035. Back pay of $2.8 billion, spread over ten years, is owed to some 14,000 current and former athletes. The financial gap is structural, not cyclical, and it is widening.

The legal dismantling

The House settlement resolves an immediate dispute, not the deep one: whether college athletes are employees of their universities, with the attendant rights to collective bargaining, payroll taxes and workers’ compensation. This remains an open question before the courts and the National Labor Relations Board.

Should things go in athletes’ favor the financial consequences would dwarf those of the House settlement. Permanent revenue sharing is one thing, but student athletes as staff?

So far universities have been cutting costs, in large part by eliminating non-revenue sports. But they are obliged to make their cuts in abidance with Title IX, a federal law requiring institutions that receive federal funds to maintain sex equity in athletics. Cutting a sport for one sex means cutting it for the other as well, regardless of revenue disparity.

But these eliminations are having yet another effect, because they relate to the sports most associated with the Olympics.

More than 415 such collegiate programs were cut or reclassified from May 2024 to mid-2025. Swimming, track and field, wrestling and gymnastics, long subsidized by the revenue of televised football, are disappearing ever faster from campus schedules.

More than 84 percent of America’s Olympic medalists in 2024 had ties to collegiate sport, per the USOPC, and that pipeline is now corroding.

The university under pressure

Athletics sits inside an institutional crisis. Higher Ed Dive’s live counter for closed or merged public or private non-profit school since 2016 stood at 118 in June 2024. (No ready figure exists for the net change in the number of postsecondary institutions.) Undergraduate enrollment peaked in the US in 2010 at 18.1 million and has declined for more than a decade, per the National Center for Education Statistics. The post-lockdown rebound was brief and immaterial. The reason is in part demographic.

The US birth rate fell 23 percent from 2007 to 2022, according to College Transitions (citing CDC data). Why those years? 2007 was the year before the 2008 financial crisis, and 2022 was the most recent year with data when College Transitions made its case. The year with the lowest fertility rate on record is later still: 2024 (per NBC News, citing the CDC).

Crashing in on top of this is a sea change in the American view of university education. To be blunt, the universities are losing their prestige. Their ROI, for one thing, has come to seem dubious. Student loans, which many graduates spend decades paying off, are among the most difficult liabilities to discharge under bankruptcy proceedings. Taking on tens or hundreds of thousands of dollars in all but unforgivable debt before you earn a penny is starting to look foolish even to ambitious parents.

In short, the pool of potential university students at the traditional age is going to shrink. By 2039 there will be about 650,000 fewer 18-year-olds per year than today, with the Northeast and Midwest bearing the steepest losses, as Ruffalo Noel Levitz reports. And if things continue the way they’re going there will be fewer of these few candidates to pay tuition.

And as these revenues drop administrative costs will perhaps continue to rise, with no parallel rise in instruction. The causes for administrative bloat – federal mandates, expansion of student services, reduction in state funding, etc. – are up for debate, but the effect is not: ever more of a shrinking revenue base is consumed by overhead before a dollar goes to teaching, research or, indeed, athletics.

Three ways to close the gap

These financial troubles have drawn interest from private capital. As we mentioned at the start, RedBird has approached an athletic conference, the Big 12, to offer commercial expertise and capital in exchange for a share of revenue rather than equity.

Otro Capital, as we reported in February, has instead sought genuine equity exposure by offering to set up a separate for-profit vehicle to hold a portion of a university’s revenue-generating athletic operations. The firm’s deal with the University of Utah, closed in December 2024, is the first equity-style private-capital arrangement with a school in major college sports.

Meanwhile, as we reported in April, TPG has acquired Learfield, the commercial platform handling sponsorships, ticketing and licensing for some 1,200 colleges. The idea here is less to rescue athletic departments than to own the commercial infrastructure around them. Whereas the first two approaches require universities to accept outside partners, Learfield’s approach derives value whether a school closes its deficit or not.

Europe and a ‘dirty’ offer

None of this has a European equivalent. University sports on the continent are amateur, club-based and financially negligible. The American model – a commercial athletic department embedded in a non-profit educational institution, funded by football television revenue and student subsidies, legally required to underwrite sex-equitable sports in dozens of disciplines – has evolved over time in its unique environment, and is now watching its legal and financial ecosystem collapse. How sports life will adapt remains to be seen, but one recent development suggests a possible evolutionary path.

With backing from Peter Thiel and others, the Enhanced Games are holding their first tournament this month, in Las Vegas, and paying out $25 million in compensation to swimmers, track athletes and weightlifters – some of the very sports the NCAA has developed and of late been cutting the funding for. As swimmer Ben Proud has publicly said, there is a reputational cost to taking part in this experiment – but, then, it was once a breach of etiquette to speak on a cell phone in public, use an app to find a date or put one’s whole life online. Things change.

Whether or not the games themselves catch on, the argument embodied in the Enhanced Games must be dealt with. Are non-revenue Olympic-discipline athletes undervalued and undercompensated? To judge by the college balance sheet, yes.

The university as distressed asset

Perhaps private equity is not so much rescuing American collegiate athletics as identifying mishandled assets and failures to monetize IP – and offering better management in exchange for a cut of the upside.

This is not a bailout. It’s an offer to open a new market for investors. And for postsecondary schools plagued by the revenue gap it might be the only offer on the table.