As NCAA Settlement Looms, So Does College Sports’ Private Capital Era

The NCAA and its biggest conferences are currently negotiating a legal settlement that could usher in a new era in big-time college sports, one where athletes see more of the billions in revenue they help generate.

An agreement might also be the catalyst for another major shift: the start of institutional capital in college sports.

For the past few years, schools and private equity funds have quietly discussed a raft of possible investment scenarios to finance (and profit off) the increased professionalization of top-tier NCAA athletics. The most public has been the ongoing talks between Florida State and Sixth Street, on which Sportico was the first to report. The two sides have been in talks for well over a year, and nothing’s been signed. Part of the delay, according to people familiar with the talks, is the uncertainty of the antitrust lawsuits. (Representatives for both sides declined to comment.)

In the past few weeks, I’ve spoken with a number of people in athletic departments, conference offices, university boards and private equity firms. Many expressed versions of the same sentiment: There’s a hold on dealmaking right now as stakeholders await a few dominos that are yet to fall. And a potential House vs. NCAA settlement is likely the biggest one.

The allure of college sports as an investment is clear. Outside of the NFL, NCAA football is the biggest commercial sport in the U.S., and its most valuable athletic departments possess many of the business hallmarks driving PE’s push into pro teams—contractually obligated revenue, scarcity value and revenue uncorrelated to other popular assets. Perhaps most importantly, amid all the upcoming changes within the NCAA, there’s belief that the Alabamas, Notre Dames and Michigans of the world are about to make a lot more money.

That also means more spending—on athletes, on coaches, on facilities. Schools and leagues seeking institutional money are doing so because they know they’ll need it. But how much do they need? That’s a much harder question to answer. And one that likely requires more clarity before contracts are signed.

There’s a misunderstanding in much of college sports regarding the nature of the talks between universities and private equity funds. Yes, schools are looking for infusions of capital, but I expect to see those talks yield significantly more private credit deals than private equity deals. Private credit is structured more like a loan—instead of receiving equity in a company, the fund receives a guaranteed annual return. That’s the set-up Sportico gleaned from an early look at the conversations between Sixth Street and FSU. Private credit is likely an easier sell in public academia, and it would be backstopped via contracted media rights and football ticket sales, two fairly stable income streams for top college sports programs.

Private credit is typically more expensive than a more traditional loan from a bank, but there are often fewer restrictions, and they’re faster and easier to negotiate. Some of these funds may also pitch operational expertise in addition to the capital, a possibly welcome proposition for athletic departments that are understaffed for this new era of paid athletes and commercialization. Sixth Street’s portfolio, as an example, includes Real Madrid, Barcelona, the San Antonio Spurs and Legends.

That’s where a potential legal settlement factors in. If private credit is indeed the future, it helps to know how much you need to borrow. Overestimating could leave a school with an excess of expensive up-front cash, with needlessly onerous terms on the back end.

There’s trepidation on the other side as well. Fund operators understand that the rapid change afoot in college sports is possibly a huge opportunity, but the current level of uncertainty has also muddled things on their end.  

Consider Florida State. The school is currently suing to get out of the ACC, claiming the league’s exit rules are unenforceable. If the school wins, it can leave the ACC for free; if it loses, it would have to pay a fee that an FSU lawyer estimated in December could be as much as $572 million. So what conference will the Seminoles be in in 2026? Will it cost them $0 to move, or half a billion dollars? And what will they have to share with their athletes? Structuring a private credit deal without answers to those basic questions is a challenge.

Answers could still be on the way soon. According to a document shared last week around the ACC, the House vs. NCAA settlement talks have focused on a $2.77 billion deal, paid out over 10 years. Some of that cost would be paid by the NCAA itself, with the rest shouldered by the schools via reduced NCAA distributions. Under the proposal, teams would be given the ability to share revenue with student athletes in the $20-$30 million per year range, with the plaintiffs backing the NCAA’s lobbying effort to secure an antitrust exemption from Congress.

Take all of that with a huge grain of salt. As my Sportico colleague Michael McCann explained earlier this week, legal settlements typically happen privately, and the number of people speaking openly about this process is reason for pause. There’s also deep division within college sports about whether the finances in this deal work for everyone, and it wouldn’t settle other big financial issues facing college sports, such as whether athletes are employees.

If reached, however, a settlement would give schools financial clarity on revenue shortfalls in the coming years, plus at least a framework for what they might need to give athletes in the near future. And it would at least temporarily remove the litigation that’s hung over the entire industry.

For better or worse, that’s likely enough to get the ball rolling on a new era of financing in college sports. The barbarians are at the gate, they’re just waiting for it to unlock.