Private equity firms campaigning to infuse millions into cash-strapped athletic departments

Help could be on the way for athletic departments who are cash strapped and it’s in the form of private equity.

There are private equity firms campaigning to infuse millions of dollars to those who could be struggling, especially once the pending House vs. NCAA settlement is resolved. According to Yahoo Sports’ Ross Dellenger, Drew Weatherford and his equity firm have met with around 50 FBS programs, with the intention to help infuse instant cash into their programs.

Weatherford, a former Florida State quarterback turned into a private capital investor, has a project with co-partner Gerry Cardinale of RedBird Capital Partners launched last year called Collegiate Athletic Solutions.

“The CAS flexible capital solution can be deployed at the athletic department’s discretion and in conjunction with universities’ existing capital resources,” a press release read. “CAS is purpose built to assist individual universities today while planning for future structural collegiate outcomes. Anticipating a revenue-sharing model, the CAS platform and capital can help offset incremental, athletic-related expenses and, when needed, right-size operating structures.

“Understanding that every state has nuanced governance, financial, and legal structures, CAS has developed bespoke programs to meet the needs of both public and private universities nationwide.”

Weatherford expressed concern for the future of college athletics with an expected new revenue sharing model, which is on the brink of being approved across college athletics.

“We are in the late stages of the competitive divide between athletic departments and programs,” Weatherford said in a release. “The impact of conference re-alignment, diverging media rights deals, and the advent of NIL and revenue sharing is creating a greater financial divide at both the university and conference level. History has proven that the universities that adeptly invest in their athletic departments consistently win and outpace peer institutions.

“Our mission at CAS is to offer athletic departments a unique capital solution to invest when and where they need it to compete at the highest level during this tenuous paradigm shift.”

How does that look exactly and where does Weatherford fit in? Dellenger explained.

“While the NCAA and schools will pay $2.8 billion in back damages, they have also agreed to a future player revenue-sharing model with a quasi-salary cap of as much as $22 million annually per school,” Dellenger wrote. “Most power conference leaders are expecting to spend as much as $30 million in new revenue annually when considering the revenue-sharing cap, plus a reduction in NCAA distribution for the back damages and the addition of new scholarships in a model that, to some degree, removes financial aid limitations.”

Athletic departments could see major cash from private firms

In short, that’s $300 million over the duration of the 10-year settlement term. Now, Weatherford is preparing to send money to athletic departments who are ready to invest.

“As part of the Collegiate Athletics Solutions platform, Weatherford and Cardinale are seeking five to 10 programs to invest in as little as $50 million and as much as $200 million,” Dellenger wrote in his report. “They are in ‘deep conversations’ with a ‘handful’ of programs, though Weatherford declined to identify or discuss specific schools.

“At least three power conference school athletic directors confirmed to Yahoo Sports that they have spoken deeply with Weatherford and Cardinale about a partnership. They declined to reveal their identity as the deals have not been finalized.”

Before you get left in the dust, athletic departments are going to have to make this type of move, according to an unnamed AD.

“If you want to compete at this level, private equity and capital is really important,” one athletic director told Yahoo Sports. “I’ve been talking to these people for 10-12 months. I haven’t pulled the trigger. But is this what you are going to need to be successful and survive? Yes, it is.”

Weather described Collegiate Athletic Solutions as “private capital” and not equity. With no exact ownership, athletic departments would have the freedom to be flexible with a $50 to $200 million lump sum.

“It is meant to be spent with existing other capitals — think traditional debt, booster donations and bonds — to offset expenses such as athlete revenue sharing, coaching salaries and facilities improvements,” Dellenger wrote. “But the freedom is theirs.”

As far as financial growth within the athletic department, the school is not required to pay Weatherford and crew back if they don’t see growth.

“CAS can provide a debt-like cost of capital structure – without any fixed payments – with its returns tied to new revenue generation, incentivizing CAS to leverage its extensive experience in ticketing, hospitality, premium events, media rights, and IP monetization to drive sustainable long-term growth,” the release said. “This structure aligns CAS with athletic departments without burdening the overall university.”

Athletic departments ready for huge shift in collegiate sports?

It’s all about being competitive and CAS can provide that solution to athletic departments, for those willing to invest.

“The paradigm shift we are seeing in the collegiate athletics ecosystem is similar to the ones we’ve seen with media distribution models, collective bargaining rights, and premium hospitality – they’re all centered around the need to create long-term growth by bridging the gap between premium IP and optimizing revenue streams,” Cardinale said in a release. “CAS addresses athletic departments’ need for near-term capital with additional operational expertise across strategies that can improve competitive positioning.”

Weatherford said he simply wants the playing field to be leveled, at least a little more.

“I deeply personally believe in college athletics,” Weatherford said to Yahoo. “As an ex-athlete, I owe a lot to it and so does my family. We believe in college athletics. I don’t like the fact that 10 to 15 teams have a chance to win a national title every year. I’d like that to be 40-50. It’s not a level playing field. Not everyone has the resources to compete.”

The biggest concern for athletic departments is using football to subsidize the rest of the sports, which keeps money-losing Olympic sports afloat. With the addition of multi-billion dollar television contracts, athletic departments received quite the share.

However, that money wasn’t funneled directly to the student athletes, so athletic departments pivoted to big-time facility projects, coaching salaries and administration roles to compete with the biggest rivals.

That leads to significant debt as the arms race continues across the biggest schools.

“Every school that I talk to says they have to max out on revenue sharing or they are no longer going to be competitive and run the risk of being relegated out of their conference,” Weatherford said. “They need to generate more revenue. And the truth is, a lot of their access to capital is strained. They’ve raised a lot of their debt for facilities. 

“They’ve taken on debt, raised gobs of money from donors to build the facilities and I’m not going to say that there is no more room left, but they’re getting to the brink of being exhausted.”

While people like AAC commissioner Mike Aresco quesino the need for private equity, and SEC’s Greg Sankey brushing it aside, Dellenger revealed the reality of searching for cash.

“However, the impending revenue-sharing model has administrators searching for cash,” Dellenger wrote for Yahoo Sports. “The new model is expected to take effect starting next academic year, in the fall of 2025. Fourteen months to come up with upwards of $30 million isn’t easy.

“For those in the Big Ten and SEC, the task isn’t as difficult. Over the next few years, more than $25 million in new television and College Football Playoff monies are on the way for each of those members. In the ACC and Big 12, things are more tricky.”

Weatherford, a former FSU quarterback, is on the school’s board of trustees but isn’t involved in the private equity venture at the university. But, Collegiate Athletic Solutions, or some other entity, can certainly cut a giant check in the near future.