By James Sutherland on SwimSwam
The University of Utah announced Tuesday the restructuring of its athletics business model with the creation of a new university-owned company and a first-of-its-kind private equity deal.
The school revealed the formation of Utah Brands & Entertainment LLC, a new for-profit business to help fund Utes Athletics, which will be owned by the university’s foundation. The company will “enable Utah Athletics to transition to a modernized business model that can more strategically build our brand and strengthen our athletics programs.”
Utah says it will move “select core revenue-generating operations” from its athletics department and auxiliary service to the new company.
The school has also approved a plan to partner with Otro Capital, a New York-based sports private equity firm, which will have a stake in Utah Brands & Entertainment LLC. Otro Capital will do some of the things athletic departments usually do, “but try to do them even better to make more money for the school and the investment firm,” according to The Athletic.
Utah will still maintain control of things like hiring and firing coaches and scheduling, and though the company will distribute NIL payments to players, the Utes will determine who gets how much.
“Utah Brands & Entertainment will build the University of Utah brand as well as manage and grow key revenue streams across the Athletics Department and the university,” Utah President Taylor Randall and Director of Athletics Mark Harlan wrote in an address to the Utes community. “This includes overseeing, optimizing and enhancing the fan experience, corporate sponsorships, ticketing, event-related revenues and campus-wide university trademarks and licensing.
“Importantly, the university is not selling parts of our Athletics Department, ceding operational control to a third party or relinquishing control of any facilities. Decisions regarding sports, coaches, scheduling, operations, student-athlete care and other athletics matters will remain solely with the Athletics Department under the leadership of Athletics Director Mark Harlan. The university’s Foundation will appoint a majority of the board of directors of Utah Brands & Entertainment, and the board will be chaired by the Athletics Director.”
Utah says the partnership with Otro Capital “will allow more of the university’s internal resources to remain focused on education (scholarships, access and student success), cutting-edge research and exceptional patient care.”
“By modernizing our athletics model, we are protecting and strengthening our ability to advance our academic mission and deliver societal impact over the long term.”
Utah Athletics cleared the proposal with the NCAA, according to Yahoo Sports. NCAA President Charlie Baker called the deal “really well thought out and really well designed” because the school still controls athletics’ decision-making processes, according to The Athletic.
Yahoo Sports also reported that the new venture is expected to generate “as much or more than $500 million in capital.” Utah did not specify a dollar figure during its presentations, but President Randall said the platform “will allow the Utes to raise hundreds of millions of dollars over time.”
Earlier this year, the University of Kentucky announced the privatization of its athletic department, turning it into an LLC, but Utah’s move is unique as it involves bringing in a private-equity firm.
Read the full story on SwimSwam: Utah Creates New Athletics Business Arm To Navigate Revenue-Sharing Era
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