On paper, North Carolina is the typical sport department that may need personal equity’s paper: a regional brand, with a robust tradition and demanding booster base, but stuck in a second-fiddle power conference.
UNC athletic director Bubba Cunningham, however, says he is n’t interested in this form of financing —at least not now. He recently told Sportico that the school wo n’t be stealing any money from ( or selling equity to ) any institutional groups in the near future despite conversations with a half-dozen firms dating back to last fall.
Cunningham provided a wealth of information regarding the function of private capital in school sports in a telephone interview last week. Cunningham also discussed the possibility of a future where programs like his are increasingly reliant on third parties to manage tasks like selling press right. Nothing was compelling enough for us to follow any more, according to Cunningham, who has received several inquiries about various private equity options. ” The cost of money for us is comparatively lower. They’ve got some good ideas and thoughts about some other functions of the cash, but we’re not that yet”.

The class may soon have that cheaper investment. Even its league rival Florida State ($ 172 million ), which has spent the last two years in active discussions with institutional firms about an influx of money, has a$ 139 million athletics budget that pales in comparison to that of its$ 172 million budget. The Tar Heels are also looking into a pricey plan to replace or renovate their famous basketball court, the 21-meter Dean E. Smith Center, having previously worked with Populous and a number of other architects. In a media conference last year, UNC’s just promoted president Lee Roberts expressed concern about how the Tar Heels would be able to be financially competitive in the waning days of college performer revenue sharing.
Cunningham claimed that the private equity firms he spoke to generally tried to” soft sell” the notion that they would be willing to see the profits from the deal grow over a longer period of time.
” But you know, in fact they’re going to want greater earnings more quickly,” he continued, expressing the doubt Texas athletic director Chris Del Conte had expressed in a March show of Sporticast.
The numerous businesses looking to invest directly in athletic departments will find it difficult to overcome these concerns. Discussions have been going on for more than two times, in some cases, but nothing has been made publicly. This, despite one strong saying in May that it was in “deep meetings” with a “handful” of institutions. College sports have a lot of financial anguish, but schools have historically shown themselves defense to institutional city’s charms. Cunningham says the reluctance may be a sign of a wider discussion in top-tier school sports, such as whether to continue outsourced significant portions of an athletic agency’s activities or commence the laborious process of bringing that in.

Cunningham has found the discussions with PE companies important, as he tries to quickly research up on a subject he has only a passing acquaintance with, despite not necessarily being” serious” about their presents, at least not right now.

” It’s part of the reason I take all the names”, said Cunningham, 62, who formerly served as Campaign at Tulsa and Ball State. ” If I can learn something from somebody that has an expertise in a different industry —or even in finance, which is something that we lack— I’m all ears”.
Cunningham declined to name the PE companies he had spoken to, but Sportico’s public documents revealed a few of his associates.
One of them was Newman Delany, a UNC alumnus and the son of former Big Ten commissioner Jim Delany, who is currently senior vice president of Collegiate Athletic Solutions ( CAS ), a partnership between RedBird Capital and Weatherford Capital, a college sports investment firm.
In February, three weeks before the CAS shared venture would be officially unveiled, Newman Delany sent Cunningham an email. In Delany’s email, UNC’s Mitchell Ziets, a stadium funding expert, had now “resourced out to RedBird to see how we might fit into and gain the money stack.”
Delany proposed that he and some of his CAS cohorts” come down to Chapel Hill” for a “broader conversation”. ( Ziets did not respond to a request for comment. )
A few weeks later, Cunningham received a note from Casey Schwab, CEO of Altius Sports Partners, the NIL consultancy, connecting the athletic director to Niraj Shah, co-founder of Otro Capital, which was launched out of RedBird last year.
I’m making this introduction so you can possibly find time to chat because you both are considering the future of college athletics at an extremely high level, Schwab wrote.
Following the NCAA basketball tournament, Cunningham eventually made contact with Otro Capital in April, but the discussions ended abruptly.
In May, Delany again wrote to Cunningham, saying that CAS would “engage at the appropriate time” about providing financing to the Dean Dome renovation project.
” Separately, as mentioned, one benefit of our solution is it does not need to be tethered to hard assets ( nor does it impact a university’s normal course financing )”, Delany wrote. ” We would be happy to take the time to compile an analysis that is UNC-specific.” Given the uncertainty surrounding realignment and revenue sharing, it is a useful tool for universities to research capital options.
Institutional firms pitching college administrators have historically believed that private capital, which is more like lending, is the most appealing deal structure. CAS ‘ pitch to schools, as told through an investor deck viewed by Sportico, centers around the fact that the money does n’t sit on the university balance sheet. Cunningham said he believed people in his position might ultimately find traditional private equity more appealing because returns are typically captured via asset appreciation as opposed to revenue sharing.
” Building something together where you share in the upside going out, I do believe is something that’s likely to happen in the future,” he said. ” I believe there are still a few more years to go through what it’s going to look like, and media rights will be a part of it.”
Private equity is already a significant component of college sports. Learfield and Playfly, which manage the multimedia rights for the vast majority of top-tier college athletic departments, both have private equity backers. Their partnerships with partner schools are structurally very similar to what groups like CAS offer, and they frequently offer upfront guarantees for the right to share in the profits made.
Athletic departments have a choice in front of them with the private capital offers: Continue to outsource business expertise and operations, or push to do more internally, a process that would present financial and personnel challenges, at least at the outset. Cunningham said he believes the industry’s leaders are headed for an internalization of operations, similar to what is done in major professional leagues.
Asked if this dynamic has made him rethink his school’s MMR approach, rights currently held by Learfield through 2029, Cunningham answered:” Absolutely…college sports is going to look very different between now and 2029″.