College sports are catching the eye of private equity investors, and this may be just the beginning.
The $60 billion Texas Permanent School Fund Corp. and private equity firm Velocity Capital Management are backing an initiative from sports agency Elevate Sports Ventures Inc. to provide funding for collegiate athletics-related capital projects.
The Texas Permanent Fund, a sovereign fund which provides revenues to public schools in Texas, and Velocity, which primarily makes sports-related investments, are backing the Collegiate Investment Initiative with an initial $500 million.
According to Elevate’s announcement, two in-the-works transactions are expected to be announced soon. Sportico reported that the first two schools to sign on to the initiative are Penn State University, in University Park, Pennsylvania, and the University of California, Los Angeles.
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The announcement came three days after a court ruling that requires the NCAA to allow its schools to begin paying current and former college athletes directly.
Under the settlement agreement for House v. NCAA and related cases, approved on June 6 at the end of a lengthy litigation process that began in 2020, the NCAA will share approximately $2.8 billion in media-rights revenue as back pay to thousands of college athletes who have competed since 2016. Beginning July 1, universities will be able to enter into name, image and likeness agreements to pay their athletes for appearing in ads or for public appearances, according to a publication by Joshua Lens, associate professor of instruction of sport and recreation management at the University of Iowa.
“College athletics are at a critical inflection point, and institutions need partners who can bring both capital and strategic expertise to the table,” said Al Guido, Elevate’s chairman and CEO, in a statement. “With the Collegiate Investment Initiative, we’re doubling down on our commitment to helping schools thrive not just today, but for decades to come.”
According to Elevate’s announcement, the investment strategy will prioritize infrastructure and commercial projects, including modernizing venues, as well as investing in multimedia rights; name, image and likeness platforms; and premium seating expansions.
Elevate touts more than 1,000 clients across sports, entertainment and related industries. Some of its collegiate clients include the University of Florida, the University of Southern California and the University of Alabama, according to its website.
“We are excited to be the catalyst for Elevate to launch a new vertical that will further its mission to be a value-add strategic partner to its collegiate clients,” said Robert Borden, the Texas Permanent School Fund’s CEO and CIO, in a statement. “We are confident that the combination of Elevate’s operating capabilities, Velocity’s domain expertise and our capital will greatly benefit collegiate athletic programs during this unprecedented period of change and disruption. “We will continue to seek ways to allocate additional capital and be a long-term permanent capital partner to Elevate and its clients as new opportunities arise,” Borden said.
Private equity investors have been increasingly active in sports: purchasing stakes in teams, buying media rights and providing private debt financing for capital projects like new venues and stadiums.
Professional leagues like the National Football League have recently changed their rules on who can invest in their teams, inviting investments from private capital in a sector heretofore dominated by family and high-net-worth investors.
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Tags: Collegiate Investment Initiative, Elevate, sports, Texas Permanent Fund, Velocity Capital Management
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