Institutional investors are looking for opportunities to capitalize on a potential that looks extremely like big-money pro leagues as college sports are in revolution.
One of those groups, Collegiate Athletic Solutions ( CAS ), announced last month that it was hoping to become a” trusted advisor to university presidents, CFOs and athletic directors”. RedBird Capital and Weatherford Capital both founded the business, and they intend to invest between$ 50 million and$ 200 million in five to ten public or private athletic departments in college sports of the highest caliber. It would be able to recover its losses by recouping its losses through a portion of upcoming athletics income.
But what is the fund’s organized payment structure? How soon does it see getting the money back? And how might its income promote change over time?

A potential buyer received a CAS board late last year that answered these and other questions. Sportico recently reviewed it. It is not intended to be a strict account of how CAS had structure all of its offers, but it is an instructive look at how the party, led by RedBird managing companion Gerry Cardinale and Weatherford Capital’s Drew Weatherford, conceived its strategy in early discussions with prospective investors. Seven things jumped out of the board, and here are seven of them:
The” two and twenty” management fee arrangement for private companies is standard, with companies levying a 2 % annual fee on collected capital and a 20 % performance fee on returns over a specified benchmark. According to the deck, CAS plans to acquire a somewhat smaller cut for both numbers.
That’s comparable to those in a Ares Management loan account that lends to professional sports teams. The Ares fund has a management fee of 2 % for investors that contribute up to$ 5 million, 1.75 % for investors in the$ 5-$ 10 million range and 1.5 % for those putting in more than$ 10 million. The Ares firm’s performance payment is 20 % of earnings above a 7 % obstacle.
It’s unclear how much money CAS has now raised. CAS members declined to comment on the deck’s specifics or that method.
CAS ‘ pitch, as laid out in the deck, is very straightforward—college sports is going through remarkable change, it’s getting extremely cheap to stay competitive, and schools will probably need more capital. There are plenty of ways an athletic department can do that, be it municipal bonds, increased donations, traditional debt, student fees or transfers from the institution. CAS presents itself as a less complex version, citing less restrictions on how to use its capital and greater breadth of sports operations knowledge. Additionally, it points out that the company is a part of upcoming revenue because its lending structure does not reside on a university balance sheet.
The intended structure is to create a university-controlled special purpose vehicle, a” NewCo,” to serve as the destination for all athletic department revenue. That includes money from CAS, support from the academic side of the institution, plus revenue generated from department donations, ticket sales, media rights, etc. The school and CAS would then split the funds. The deck specifically states that the NewCo would not be under the control of CAS.

An unnamed, large, public university with an athletic department that generates about$ 150 million in annual revenue and offers roughly 20 sports is an example of a” case study” provided by the deck. According to Sportico’s college database, the schools that generated the closest to$ 150 million in athletic revenue in fiscal 2023 were Minnesota ($ 148.7 million ), Oregon ($ 150.6 million ) and Washington ($ 151.6 million ). These are all well-known Power Five programs, but they are not the richest, giving an idea of the types of schools that might be most interested in working with CAS.
The case study provides a hypothetical scenario in which the athletic department would receive$ 150 million with the ability to share the proceeds over the course of 15 years. In that scenario, according to the deck’s projections, CAS estimates it would see$ 26 million returned in the first year, eventually recouping its total original investment by the end of Year 5. By Year 15, its final year sharing in revenue, the projections have CAS more than doubling its money, recouping 201 %. ( Interestingly, it also includes a” sale case”, where its right to future revenue is possibly sold to a third party before the 15- year term is over. )
In reality, investment specifics are likely to vary depending on the school; because each athletic department is in a slightly different position, so the amount they need or their structural preferences will likely vary. Nothing in the deck suggests that CAS will be rigid with its approach to schools.
The investor deck claims that its proposed investments will be a” senior-like solution” for schools, making reference to senior notes, which typically take precedence over other debt within a cap table. In that regard, CAS’s right to revenue would be of paramount importance in the years following its initial investment. That’s described in the case study, which includes what the deck refers to as a sample term sheet. Again, this is a$ 150 million investment.
Under the sample terms, the deal would have multiple waterfalls, steps during which CAS’s revenue share begins to tail off as it sees more of its money returned. Once CAS sees its full$ 150 million returned, for example, its split of net cash flows drops from 55 % to 30 %. Once it reaches a 13 % internal rate of return on the initial$ 150 million, the share drops to 5 %. In plainer terms, CAS would experience its biggest payments within its first few years of providing capital.
A school may request an additional$ 75 million within the first two years after closing, according to the sample term sheet. Additionally, it gives the school the option to end the arrangement in Years 5, 6, or 7 respectively. In that scenario, the school would pay a fixed fee to the company that made the initial investment.
In case colleges need to facilitate payment for athletes at some point, the sample term sheet also includes provisions for reworking terms.
The deck places heavy emphasis on the experience of the CAS investment team, which is led by Cardinale and Weatherford, the co- CIOs. Former Florida State quarterback Weatherford, who was the founding partner of Weatherford Capital, currently serves on the boards of FSU and IMG Academy.
Cardinale and his RedBird Capital Partners have extensive experience with sports-related businesses. RedBird is an investor in Fenway Sports, AC Milan, the Alpine F1 team and the UFL. Cardinale helped build Legends, the YES Network, On Location Experiences, One Team and Everpass, a resume that spans traditional media, digital distribution, ticketing, hospitality, gaming, live events and content creation.
This aspect of the private capitalization of college sports might be significant. Schools and conferences will have a variety of ways to access funding; businesses will need to explain why their money is more valuable. Financial terms will obviously be critical, but so too will operational expertise.
CAS has been speaking with some schools for almost a year. The deck includes a slide that lists 10 schools, identified only by their conferences, with which CAS has discussed a possible financial arrangement. Sportico is aware that the current figure is significantly higher. The earliest, an unidentified SEC school, held talks in June 2023. A Big 12 school and an ACC school both discussed” circumventing state policy debt limits” and “university-level debt financing restrictions” were also on the list.
The LTV, or loan- to- value ratio, is another metric CAS uses in its deck to highlight the opportunity. Pro sports teams are typically valued as a function of their revenue—it’s 11x in the NBA, as opposed to 8.8x in the NFL, 6.7x in MLB, and 6.2x in the NHL, according to Sportico’s calculations. The CAS deck makes the case that big-time college athletic departments will generate a 4x revenue multiple.
Using that multiple, a$ 150 million investment into an athletic program making$ 150 million per year gives the investment a 25 % LTV. A$ 150 million investment in any of the larger leagues listed above would result in a much smaller LTV.
A 4x multiple means Ohio State athletics, which reported$ 279.95 million in generated revenue in fiscal 2023, would be “valued” at about$ 1.1 billion. That contrasts with an interview Cardinale gave for a January article for which he claimed the Michigan football team could be worth more than a billion. Troy athletics, whose$ 8.7 million was the lowest generated revenue among public FBS schools, would be worth$ 34.6 million.
With assistance from Brendan Coffey.