Florida State wants to tap private equity funding ahead of potential conference realignment

While much of the NCAA discussion Friday was about the apparent demise of the Pac-12, there’s another interesting story going on in the Atlantic Coast Conference. That would be the Florida State Seminoles’ apparent attempt to chase private equity funding for their athletic department. Eben Novy-Williams, Kurt Badenhausen, and Scott Soshnick of Sportico reported on that Friday:

EXCLUSIVE: Florida State University is working with JPMorgan Chase to explore how the school’s athletic department could raise capital from institutional funds, such as private equity https://t.co/0hg95TUofu

— Sportico (@Sportico) August 4, 2023

Here’s more from that piece:

Florida State University is working with JPMorgan Chase to explore how the school’s athletic department could raise capital from institutional funds, such as private equity, according to multiple people familiar with the plans.

PE giant Sixth Street is in advanced talks to lead a possible investment, said the people, who were granted anonymity because the specifics are private. Institutional money has poured into professional sports in recent years, from the NBA and global soccer to F1 and golf, but this would break new ground by entering the multibillion-dollar world of college athletic departments.

The school is considering a structure similar to many of those pro sports investments, where commercial rights are rolled into a new company, the private equity fund invests in that entity, and then recoups its money via future media/sponsorship revenue. That’s how Silver Lake structured its investment into the New Zealand All Blacks rugby team, and how CVC organized its $2.2 billion Spanish soccer deal with LaLiga.

…It’s unclear exactly which FSU entity is most involved in the process. Florida law allows its public universities to organize their athletic departments as separate nonprofits, and there is a complex web of entities that includes the school itself, its booster organization and these nonprofit athletic setups. Many public schools also have strict rules around transparent, competitive bidding for university contracts, and certain deal structures would need to be avoided so as not to jeopardize a university’s tax-exempt status.

There’s a notable history of attempts to seek private equity funding in college sports. In particular, the Pac-12 (RIP?) looked for equity funding in 2019, without that leading to anything. And this may also not lead to anything. But just the idea of an athletic department selling off a percentage of its future media rights sparked some comment. Including even a discussion of Saudi Arabia’s Public Investment Fund:

Quick morning recap:

Pac-9 saved, all schools staying and signing ironclad Grant of Rights

Arizona pushing to leave for the Big 12

Oregon/Washington rejected by Big Ten

Pac-9 dead and not signing anything

Oregon/Washington to Big Ten

Tallahassee annexed by Saudi Arabia

— RedditCFB (@RedditCFB) August 4, 2023

At any rate, it’s certainly interesting to see FSU trying this approach. And we’ll see what comes of it.

[Sportico]