For a year now, Drew Weatherford has worked in the shadows in college athletics.
He has held clandestine meetings with representatives of more than 50 Football Bowl Subdivision programs: dozens of athletic directors, some college presidents, even some school board members and chief financial officers.
There were phone calls from his office, Zoom chats in hotel lobbies, and in-person meetings in coffee shops. Most of them develop in a similar way. Gregarious and charming with a wide white smile, Weatherford, the former FSU quarterback turned private equity investor, presents a slide presentation detailing a project he and partner Gerry Cardinale of RedBird Capital Partners launched last year .
Their goal is pretty simple: pump instant money into major college athletic departments.
“No school has said, ‘No, that’s not something we would consider,’” Weatherford said.
In one of the most consequential weeks in the history of college athletics, with leaders poised to approve a landmark settlement in an antitrust case and adopt a new revenue-sharing model with athletes, Weatherford is speaking publicly about his exploits for the first time. . In two separate meetings with Yahoo Sports, he revealed and then explained the presentation he showed to university administrators and staff over the past 10 to 12 months.
Weatherford Capital and RedBird Capital Partners have combined their powers (and billions in cash) to create Collegiate Athletics Solutions, a dedicated campaign and business creation platform to invest capital in college athletic departments at a time of greatest industry transformation .
“I had a feeling this revenue sharing thing was real. It will be another big blow to athletic departments,” Weatherford said.
College administrators are preparing for the new reality of sharing revenue directly with athletes as part of the terms of the House settlement agreement.
While the NCAA and schools will pay $2.8 billion in back damages, they also agreed to a future revenue-sharing model for players with a quasi-salary cap of up to $22 million annually per school. Most power conference leaders expect to spend up to $30 million in new revenue annually when considering the revenue sharing cap, plus a reduction in the NCAA’s distribution of back damages and the addition of new scholarships in a model that, to some extent, eliminates the limitations of financial aid.
That’s $300 million in new money over the 10-year term of the deal. That’s why, especially over the past two weeks, Weatherford’s phone has been ringing more than usual.
In a timely move last week, RedBird Capital added $4.7 billion to its arsenal for new ventures, according to the Wall Street Journal, putting the company at what is believed to be $10 billion in capital.
As part of the Collegiate Athletics Solutions platform, Weatherford and Cardinale are looking for five to 10 programs to invest in as little as $50 million and as much as $200 million. They are in “deep conversations” with a “handful” of programs, although Weatherford declined to identify or discuss specific schools.
At least three athletic directors from Power Conference schools confirmed to Yahoo Sports that they have spoken deeply with Weatherford and Cardinale about a partnership. They declined to reveal their identity because the deals have not yet been finalized.
“If you want to compete at this level, private equity and capital are really important,” said one athletic director. “I’ve been talking to these people for 10 to 12 months. I haven’t pulled the trigger. But is this what you’re going to need to succeed and survive? Yes it is.”
Private equity and private equity are nothing new to sports.
In fact, RedBird acquired the Italian soccer giant AC Milan for $1.3 billion in 2022 and has stakes in Alpine Formula One and Fenway Sports Group, owners of the Boston Red Sox and the English soccer team Liverpool. RedBird’s independent content studio EverWonder is operating the new seasonal eight-team men’s college basketball tournament based in Las Vegas over Thanksgiving weekend. The tournament is expected to pay participating teams up to $2 million in NIL deals.
These companies are not entirely uncommon in the world of higher education either. But in college athletics it has been something totally unusual. The words private and capital together scared some. Many frown at the idea of athletic departments (originally intended to be a university’s nonprofit marketing and entertainment entity) giving up control of a part of themselves in exchange for a quick buck.
Weatherford describes Collegiate Athletics Solutions (CAS) as “private equity,” not equity. There is no property here, he says. Schools are free to be flexible with the lump sum of between $50 million and $200 million. It is intended to be spent with other existing capital (think traditional debt, booster grants and bonds) to offset expenses such as athlete revenue sharing, coach salaries and facility improvements. But freedom is theirs.
The CAS project does not require a management role within the athletic department as private equity typically does, he said, although its goal would be to serve as advisors to presidents and athletic directors in managing revenue growth.
After all, they have an incentive to see increases in a department’s revenue: they earn a percentage on any new annual growth. Over a period of 10 to 20 years, that percentage decreases from perhaps 22% in the early years to 2% at the end, as the company makes good on its original principal investment. Weatherford describes this as receiving an “income royalty.”
If there is no growth, the company does not receive part.
“They are not mandated to pay us back the money we give them,” Weatherford said.
These equity ventures are based on investing wisely in income-generating entities. Why take a chance on the shaky state of college sports if profits aren’t guaranteed?
“Personally, I believe deeply in college athletics,” Weatherford said. “As a former athlete, I owe him a lot and so does my family. We believe in college athletics. I don’t like the fact that 10 to 15 teams have a chance to win a national title every year. I would like it to be 40-50. It’s not a level playing field. “Not everyone has the resources to compete.”
New revenue streams are more important than ever for college athletic departments that, over the years, have saved little to no money on reserves.
Most athletic departments use profits from their only truly revenue-generating sport (football) to subsidize the rest of the department. That means funding money-losing Olympic sports and paying football expenses.
Over the years, fueled by multimillion-dollar television contracts, top-level athletic departments became flush with cash. Unable to directly compensate athletes and situated in a competitive environment, departments pumped excess cash into flashy facility projects and million-dollar coaching and administrative salaries in an effort to compete with rivals on the recruiting trail.
This result? Many schools are hobbled by significant debt that continues to expand as the arms race for facility upgrades and coaching salaries rages on — until, perhaps, now. Schools will be allowed (not required) to pay athletes directly. The arms race for facilities is quickly evolving into a race focused solely on compensating athletes.
“Every school I talk to says they have to maximize revenue sharing or they will no longer be competitive and risk being relegated out of their conference,” Weatherford said. “They need to generate more income. And the truth is that much of their access to capital is limited. They have raised much of their debt for the facility. “They’ve gone into debt, they’ve raised tons of money from donors to build the facility, and I’m not going to say there’s no room left, but they’re reaching the brink of exhaustion.”
But many still question the need for private capital within college sports. University board members and school presidents, while more enthusiastic about the idea, are naturally hesitant. So are the most powerful leaders in the sport.
“What could private capital do that schools can’t do with their donors?” asks outgoing American Athletic commissioner Mike Aresco. “Another question… Does private equity align with your objectives? “I question their role in college athletic departments.”
In an interview last month, SEC Commissioner Greg Sankey dismissed the suggestion that private equity is some kind of savior for the industry. “If you use the cliché ‘If I were buying stocks, I’d buy college sports stocks,’ well, apparently there are a lot of people outside of college sports who believe that,” he said. “Something’s going right. “
However, the looming revenue-sharing model has managers scrambling for cash. The new model is expected to go into effect starting next academic year, in the fall of 2025. Fourteen months to get more than $30 million is not easy.
For those in the Big Ten and SEC, the task is not that difficult. Over the next few years, more than $25 million in new College Football Playoff and television funding is on the way for each of those members.
In the ACC and Big 12, things are more complicated.
In fact, an ACC school may be further along than others in seeking private money. Florida State and athletic director Michael Alford are believed to be seriously exploring that path, with multimillion-dollar figures emerging from public records obtained by Sportico and the Tampa Bay Times.
Although Weatherford serves on the FSU Board of Trustees, he is not involved in the Seminoles’ private equity venture, he said. However, perhaps in the not-too-distant future, Collegiate Athletics Solutions, or some other entity, will write a giant check to an athletic department near you.
“It’s basically like taking out a loan and paying it off over 15 to 20 years,” said another Power Conference athletic director. “Here’s the question: How desperate are you? Because you have to pay that note.”
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