Wetzel: Beware, college sports, private equity has arrived

"The University of Utah approved a private equity deal Tuesday that promised hundreds of millions of dollars for the school's athletic department, which like nearly every athletic department in the country is running an annual deficit. The Utes need money. Otro Capital of New York, a firm that seeks investments in sports, sees an opportunity. The company is offering more than $400 million to the school, a source told ESPN, plus Otro's operational expertise, to generate new revenue streams for the department."

"The core problem though, which the smart folks in private equity have certainly realized, is this: College athletics doesn't have a revenue problem. It has a spending problem. Even as revenue goes up and up from richer media deals, expanded playoffs and modernized operations, costs continue to soar because of revenue sharing with athletes, coaching salaries, increased travel and debt on ever-more opulent stadiums and locker rooms."

The University of Utah approved a private equity agreement with Otro Capital promising over $400 million and operational support to expand athletic revenue streams. Athletic departments across colleges commonly run annual deficits despite rising revenues. Cost drivers include revenue sharing with athletes, escalating coaching salaries, increased travel, and debt from upgraded stadiums and facilities. Growing media rights and expanded playoffs have increased income but have not restrained spending growth. Private equity firms focus on cost cutting, consolidation and resale, which could reshape athletic operations and governance while introducing financial and strategic risks. The deal is not expected to close until 2026.

Read at ESPN.com