For the past year, Drew Weatherford has been working behind the scenes throughout college athletics.
He has held secret meetings with representatives of more than 50 Football Bowl subdivision programs, dozens of athletic directors, several university presidents, and even some school board members and chief financial officers.
There were calls from his office, Zoom chats in hotel lobbies, in-person get-togethers at coffee shops. Most of them played out the same way: Mr. Weatherford, the former FSU quarterback and now private-capital investor, a gregarious, affable guy with a big smile, presented slides detailing a project he launched last year with Jerry Cardinale, a co-partner at RedBird Capital Partners.
Their goal is quite simple. It's an immediate injection of money into major university athletic departments.
“No school said, 'No, that's not something we'll consider,'” Weatherford said.
During one of the most crucial weeks in college sports history, with leaders on the brink of approving a landmark antitrust settlement and adopting a new revenue-sharing model with players, Weatherford spoke publicly about his accomplishments for the first time. In two separate meetings with Yahoo Sports, he revealed and then explained the presentations he gave to university administrators and staff over the past 10-12 months.
Weatherford Capital and RedBird Capital Partners are joining forces (and billions of dollars in cash) on a dedicated campaign and business-building platform to invest capital in the industry's most transformative college athletic departments. Founded Collegiate Athletics Solutions.
“My gut feeling was that this revenue sharing was real. It would be another big blow to the athletic department,” Weatherford said.
University administrators are preparing for a new reality: sharing revenue directly with athletes as part of the terms of the House settlement agreement.
The NCAA and schools agreed to pay $2.8 billion in unpaid damages, while also agreeing to a future player revenue-sharing model with a sub-salary cap of up to $22 million per year per school. Most of the power conference leaders will eliminate the NCAA's distribution reduction for back injuries and, to some extent, financial aid limits, in addition to revenue sharing caps.
This amounts to $300 million in new funding over the 10-year settlement period. That's why Weatherford's phone has been ringing more than usual, especially over the past two weeks.
In a timely move, Redbird Capital last week added $4.7 billion to its investment fund for new initiatives, bringing the company's capital to $10 billion, according to the Wall Street Journal.
As part of the Collegiate Athletics Solutions platform, Weatherford College and Cardinale College are seeking five to 10 programs with a minimum investment of $50 million and a maximum of $200 million. They are having “deep conversations” with a “handful” of programs, but Weatherford declined to identify or discuss specific schools.
At least three power conference school athletic directors confirmed to Yahoo Sports that they have had deep discussions with Weatherford and Cardinale about a partnership. They declined to be identified because the transaction has not yet been completed.
“Private equity and capital are very important if you want to compete at this level,” 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 need to do to succeed and survive? Yes, it is.”
Private equity and private capital are not new to sports.
In fact, Redbird will acquire Italian soccer giant AC Milan for $1.3 billion in 2022 and acquire a stake in Fenway Sports Group, owner of F1's Alpine and Boston Red Sox and English soccer team Liverpool. I own it. RedBird Independent Content His studio, EverWonder, is running a new in-season eight-team men's college basketball tournament based in Las Vegas over Thanksgiving weekend. The tournament will pay participating teams up to $2 million in his NIL contract.
Ventures like this are not entirely new in the world of higher education. But in the world of college athletics, this is completely unusual. words private and capital Surprise someone together. Many people wince at the idea that an athletic department, originally intended to be a university's nonprofit marketing and entertainment entity, would relinquish some control for a quick cash grab.
Weatherford describes Collegiate Athletics Solutions (CAS) as “private capital” rather than equity. There is no ownership here, he says. The school has the flexibility to accept a lump sum of $50 million to $200 million. This money will be spent alongside other existing capital (think traditional debt, booster contributions, bonds, etc.) to offset expenses such as athlete revenue sharing, coaching salaries, and facility improvements. The purpose is that. But freedom is theirs.
He said the CAS project would not require a management role within the sports sector, as private equity often does, but would aim to serve as an advisor to the chairman and sports director in managing revenue growth. .
After all, they have an incentive to see their division's revenue increase, and they get a percentage of the new annual growth. Over a period of 10 to 20 years, the percentage will probably be 22% in the first years, but will decrease to 2% at the end as the company achieves its original investment amount. Weatherford describes this as taking “income royalties.”
Without growth, companies cannot make profits.
“They are not obligated to pay back the money we gave them,” Weatherford said.
These capital companies are built around investing wisely in revenue-producing organizations. Why take a risk on the volatile landscape of college sports when the returns aren't guaranteed?
“I personally believe deeply in college athletics,” Weatherford said. “As a former athlete, I owe a lot to it, and so does my family. We believe in college sports. I don't like the fact that 10-15 teams have a chance to win a national title every year. I'd like it to be more like 40-50. It's not a level playing field. Not everyone has the resources to compete.”
For college athletics departments that have had little to no reserve funds for years, new revenue streams are more important than ever.
Most athletic departments use profits from the only sport that generates real revenue (football) to subsidize the rest of the department, whether that means funding loss-making Olympic sports or covering football costs.
Over the years, athletic departments at the highest levels have become cash-rich, backed by multimillion-dollar television contracts. Unable to pay athletes directly and in a competitive environment, departments are using their surplus funds to invest in flashy facility projects and multi-million dollar coaching and administrative departments to compete with rivals in recruiting. I spent it on my salary.
The result? Many schools are saddled with huge debts that continue to grow as the competition for facility upgrades and coaching salaries slowly evolves. Schools are permitted, but not required, to pay players directly. The competition for facilities is quickly evolving into one that is focused solely on player compensation.
“Every university I've talked to has said that if they don't make the most of revenue sharing, they will lose their competitiveness and risk relegation from their conference,” Weatherford said. “We have to generate more revenue. And in fact, access to funding for universities is becoming tighter. We are taking on a lot of debt for our facilities. They've raised a lot of money. I'm not saying they can't afford it anymore, but they're exhausted.”
However, many still have doubts about the need for private equity and capital in college sports. Although university trustees and presidents are favorable to the idea, they are understandably hesitant. The same goes for the most powerful leaders in sports.
“What can private equity do that schools can't do for their donors?” asks outgoing American Athletic Commissioner Mike Aresco. “Another question…is private equity aligned with your goals?” I question its role in college athletics. ”
In an interview last month, SEC Commissioner Greg Sankey dismissed any insinuations that private equity is some kind of savior for the industry. “If you use the cliché, 'If you're going to buy a stock, you're going to buy a college sports stock,' and it seems like a lot of people believe that even outside of college sports,” he said. ”
But the impending revenue-sharing model has managers looking for cash. The new model is scheduled to go into effect next year, i.e. in the fall of 2025. Raising more than $30 million in 14 months is not easy.
For Big Ten and SEC companies, the job isn't that difficult. Over the next few years, each of these members will be paid more than $25 million in new television and College Football Playoff funds.
In the ACC and Big 12, things get even more complicated.
In fact, some ACC schools may be more advanced than others in attracting private funding. Florida State University and athletic director Michael Alford are believed to be seriously pursuing such a path, with public records obtained by Sportico and the Tampa Bay Times showing a multi-million dollar figure. It has become clear.
Weatherford said that although he is a member of the FSU Board of Trustees, he is not involved in the Seminoles' private equity ventures, but it's likely that in the not-too-distant future, Collegiate Athletics Solutions or some other entity will be writing a big check to an athletic department near you.
“It's basically like taking out a loan and paying it back over 15 to 20 years,” says an athletic director in another powerhouse conference. “The question is how desperate are you because you have to pay back that loan?”
