The University of Utah is moving forward with a plan that could reshape the financial landscape of college athletics. The university's board of trustees has unanimously approved a partnership with private investment firm Otro Capital, creating a new for-profit entity to manage commercial aspects of its sports programs.
While the final terms are still being negotiated, reports suggest the total value of the venture could exceed $500 million. This move marks the first time a major university has brought in outside private equity investors to directly partner in its athletic department's commercial operations, setting a significant precedent for the industry.
Key Takeaways
- The University of Utah's board of trustees unanimously approved a partnership with private equity firm Otro Capital.
- A new for-profit company, Utah Brands & Entertainment, will be formed to manage athletic commercial rights.
- The university foundation will maintain a majority interest in the new company.
- This is the first deal of its kind in major college sports to involve outside private equity investors.
A New Business Model for College Sports
The groundbreaking plan involves the creation of a new company called Utah Brands & Entertainment. This entity will be formed by the university's foundation, which will retain a majority stake and control.
Otro Capital will join as a key partner, bringing both capital and expertise in sports, media, and entertainment. The primary goal of the new company is to maximize revenue streams that have traditionally been managed within the athletic department. These areas include ticketing, corporate hospitality, and licensing agreements.
How the Partnership Works
Under the proposed structure, a seven-person board will oversee Utah Brands & Entertainment. The university will hold four of these seats, including one for the athletic director who will serve as chair. Otro Capital will appoint two members, and a final spot will be filled by a Utah supporter or investor. This composition ensures the university maintains control over strategic decisions.
Crucially, core athletic decisions will remain with the university. The athletic director will continue to have sole authority over hiring and firing coaches, as well as game scheduling. The partnership is designed to handle the business side, freeing up the athletic department to focus on competition.
Pioneering a Path Others Have Explored
While the idea of private capital in college sports is not new, Utah's approach is a significant step forward. Private equity firms have been exploring opportunities in the collegiate space for years, drawn by the passionate fan bases and valuable media rights.
Other schools, such as Clemson and Kentucky, have created separate entities to manage their commercial rights, but Utah is the first to formalize a partnership with an outside investment firm. The deal, which administrators say has been in development for two years, could provide a blueprint for other institutions seeking new revenue sources in an increasingly competitive environment.
Who is Otro Capital?
Otro Capital describes itself as an “operator-led private equity firm with deep expertise” in sports, media, and entertainment. Their involvement is expected to bring sophisticated business strategies to the Utes' commercial operations.
Other institutions have come close to similar arrangements. Florida State University pursued a deal with a different firm in 2022-23, though it did not materialize. The Big 12 conference also explored a league-wide private equity investment before members decided against it.
"We’re just not ready to jump in just yet," Big 12 commissioner Brett Yormark said in May, reflecting the cautious sentiment among many college sports leaders.
Conference-Level Hesitation and Alternative Models
The move by a single university like Utah stands in contrast to the hesitation seen at the conference level. The Big Ten conference spent over a year meeting with major firms like RedBird Capital, Blackstone, and Apollo to explore private equity opportunities.
An alternative proposal eventually emerged for the Big Ten from a nontraditional investor: UC Investments, the non-profit public pension arm of the University of California system. The offer involved a $2.4 billion investment for a 10% stake in a new company that would hold the conference's media and sponsorship rights.
However, that deal is currently on hold due to strong public opposition from two prominent members, the University of Michigan and the University of Southern California.
Mark Bernstein, chairman of Michigan's board, has publicly criticized the proposal, comparing it to “a payday loan.” This resistance highlights the cultural and philosophical challenges that come with integrating for-profit models into the traditionally non-profit world of higher education and college athletics.
As Utah finalizes its partnership with Otro Capital, the rest of the college sports world will be watching closely. The success or failure of this venture could determine whether private equity becomes a mainstream funding source for athletic departments nationwide or remains a controversial, seldom-used option.