University of Utah's For-Profit Partnership Maximizes College Sports Revenue

Key Quotes

"every college athletic department in the country is struggling right now in 2019 the ncaa released data showing that only about 25 of its 1100 member schools made a profit with most fbs fcs and non football schools reporting losses and that was in 2019 years before the pandemic and the recently announced house v ncaa settlement the house v ncaa settlement has made it ten times harder to turn a profit this is due to back damages revenue sharing and the elimination of scholarship limits"

Joe Pomp explains that college athletic departments face significant financial challenges, exacerbated by the recent House v. NCAA settlement. The settlement imposes substantial costs through back damages, mandated revenue sharing with athletes, and the elimination of scholarship limits, collectively increasing expenses by approximately $25 million annually for major conference schools without a corresponding revenue increase.

"the house v ncaa settlement awarded 2 8 billion in back damages to former student athletes for denied nil earnings the damages will be paid out over a 10 year period and the ncaa will cover about 40 or 1 1 billion of the 2 8 billion however the remaining 60 call it 1 7 billion will be paid by schools as the ncaa reduces its revenue sharing distributions to make up for the difference"

Joe Pomp details the financial burden of the House v. NCAA settlement, specifically highlighting the $2.8 billion in back damages for denied NIL earnings. He clarifies that while the NCAA covers a portion, schools are responsible for the remaining $1.7 billion, which will be offset by reduced revenue sharing distributions from the NCAA.

"ohio state's athletic department generated 255 million in revenue last year yet still reported a 38 million loss alabama finished 2024 with a 28 million deficit while ucla at 52 million and rutgers at 42 million both spent much more than they earned in total the big ten's 16 public universities generated 2 84 billion in revenue last year but collectively spent 3 billion an average deficit of 10 million per school"

Joe Pomp illustrates the widespread financial distress in college athletics by citing specific examples of major university athletic departments operating at a significant loss. He points out that even high-revenue programs like Ohio State and collectively the Big Ten conference's public universities are spending more than they earn, indicating a systemic issue beyond individual mismanagement.

"athletic departments really only have a few options to stop the bleeding you can one raise student fees or request more institutional support you can two cut research and educational programs three eliminate olympic sports and other non revenue generating programs or four do nothing and risk widening the gap between revenue and expenses none of these options are great which is why schools have started to look at outside capital"

Joe Pomp outlines the limited and undesirable choices athletic departments face to address their financial shortfalls. He explains that the presented options--increasing fees, cutting academic programs, eliminating sports, or inaction--are all detrimental, leading schools to explore external funding solutions like private equity.

"the problem with most of the private equity proposals i have seen is that they are structured as loans whether the deal is done directly with the school or indirectly through a conference schools receive a large upfront cash payment for facility upgrades coaching salaries or nil initiatives the private equity firm then receives a guaranteed rate of return on its investment sometimes through revenue sharing agreements tied to media rights ticket sales sponsorships and or licensing deals in other words the school is assuming nearly all of the risk while the private equity firm collects its return"

Joe Pomp critiques typical private equity proposals in college sports, explaining that they are often structured as loans. He notes that these deals provide upfront capital but place nearly all the financial risk on the school while the private equity firm secures a guaranteed return, often through revenue-sharing agreements.

"but the reason i prefer this deal to the credit agreements we have seen in the past is that utah found a way and a structure that mitigates its risk while still providing expanded upside ouro capital is an equity investor they are putting nine figures of investor capital in the deal for an ownership stake in the business if things go well ouro capital will make money if things don't go well ouro capital and its investors could lose money"

Joe Pomp highlights the University of Utah's deal with Ouro Capital as preferable to previous credit-based agreements because it mitigates risk for the school. He explains that Ouro Capital is an equity investor, meaning they share in both the potential profits and losses of the new entity, unlike a loan where the school bears all the downside.

"the reality is that college athletic departments are operating 15 to 20 years behind their professional counterparts some of these schools have larger fan bases than nba or mlb teams yet they generate a fraction of the revenue seen in professional sports this is why private credit is less appealing athletic departments don't just need more money they need operators who can professionalize the commercial side of athletics ouro capital brings that ability in spades"

Joe Pomp argues that college athletic departments lag significantly behind professional sports in revenue generation and operational sophistication. He posits that Ouro Capital's value lies not just in capital but in their operational expertise, which is crucial for professionalizing the commercial aspects of college athletics and maximizing revenue.