From Amateurism to Asset Class: Private Equity Enters U.S. College Sports – Lessons for Canada

Recent antitrust litigation in the U.S. involving the National Collegiate Athletic Association (“NCAA”) has accelerated the commercialization of college athletics, prompting universities to explore private equity investment structures traditionally associated with professional sports franchises. In NCAA v Alston (“Alston”), current and former student athletes challenged NCAA rules under Section 1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.”¹ The U.S. Supreme Court (“SCC”) confirmed that NCAA compensation rules are not exempt from antitrust law and must be assessed under the rule of reason, rejecting broad reliance on “amateurism” as a justification for wage restrictions. As Justice Kavanaugh observed in concurrence, the NCAA’s compensation rules as previously constructed “would be flatly illegal in almost any other industry,” underscoring the Court’s skepticism toward amateurism-based restraints that suppress athlete compensation.²

Alston represents the culmination of a longer line of decisions progressively eroding the NCAA’s amateurism model. In NCAA v Board of Regents of the University of Oklahoma, the SCC invalidated NCAA restrictions on television broadcasting rights, recognizing that coordinated control of media rights constituted a restraint of trade in a commercial market.³ This trend continued in O’Bannon v NCAA, where the Ninth Circuit held that restrictions on name, image, and likeness (NIL) compensation violated antitrust law, although it stopped short of requiring full athlete payment.⁴ Following a wave of state NIL legislation in 2021, college athletics evolved into a hybrid compensation system combining NIL earnings, booster collectives, and emerging institutional revenue-sharing mechanisms tied to media rights, ticketing, and sponsorship agreements. This evolution culminated in House v NCAA (“House”), where the court approved a settlement providing approximately $2.8 billion in back-pay damages and establishing a revenue-sharing framework permitting schools to distribute up to 22% of qualifying revenues to athletes, subject to escalating institutional caps, thereby embedding athlete compensation directly into the financial structure of collegiate athletics.⁵

Against this backdrop, private equity has begun to explore entry points into collegiate athletics as the sector increasingly resembles a fragmented but monetizable media and entertainment asset. Most notably, the Board of Trustees of the University of Utah (“Utah”) unanimously approved a transformative partnership with New York-based private equity firm Otro Capital (“Otro”) expected to generate upwards of $500 million in capital for the university (consisting of committed capital from Otro and donor contributions).⁶ The transaction will be facilitated through the creation of Utah Brands & Entertainment LLC, a new corporate entity formed to manage revenue-generating athletic operations. While final terms have not been fully disclosed, the structure reflects a conventional private equity sports investment model, in which Utah retains majority ownership and control, while Otro will acquire a significant minority interest in exchange for capital investment and operational expertise. This expertise is intended to enhance monetization across key revenue streams including media rights, sponsorship agreements, licensing, concessions, and ticketing. The structure also contemplates a future exit for Otro, including potential buyback rights in favour of Utah. Overall, the transaction reflects a broader trend toward structuring collegiate athletics as commercial enterprises, pooling collegiate athletic revenues into joint ventures or revenue participation structures involving external investors.

Why private equity? The Canadian Perspective

Many U.S. collegiate athletic departments operate within financially strained or cross-subsidized models, where even high-revenue programs face persistent budgetary pressures due to escalating coaching salaries, facilities investments, and emerging compensation obligations under NIL and revenue-sharing regimes. Empirical reporting suggests that a significant portion of Division 1 athletic programs, often estimated at approximately 80-90%, operate at a deficit, underscoring the structural dependence of collegiate athletics on university support and external funding sources.⁷ These constraints have created incentives to explore alternative capital sources, including private equity participating and revenue monetization structures, as universities seek to stabilize long term funding models for athletics.

In Canada, university athletics remain structurally insulated from large scale private capital participation. U Sports governs interuniversity athletics within a model defined by public funding dependence, institutional oversight, and comparatively limited commercialization. Canadian programs are similarly characterized by constrained revenue generation and reliance on institutional subsidies, with athletic departments generally not operating as self-sustaining commercial entities.

Against this backdrop, Canadian university athletics may face increasing pressure to reassess their financial and governance structures over time. As cost structures rise and competitive pressures intensify, traditional subsidy-based models may become more difficult to sustain without additional funding mechanisms. While private equity participation is unlikely in the near term given institutional and public-sector constraints, more modest forms of external capital participation, commercialization partnerships, or quasi-investment structures could emerge as potential tools for supporting program stability and competitiveness.

Conclusion

In conclusion, U.S. college athletics is undergoing a structural transformation from an amateur governance model into an emerging commercial asset class shaped by antitrust litigation, state legislation, and institutional revenue-sharing frameworks. Decisions such as Alston and the settlement in House have effectively embedded athlete compensation within the financial architecture of collegiate sports. The entry of private capital reflects both the maturation of revenue streams and the increasing financial sophistication of athletic departments. While U Sports remains structurally and institutionally distinct from the U.S. model, the widening divergence in commercial models raises important questions about the future competitiveness, governance, and economic sustainability of university sport in Canada.

About the Author

Jonathan Wallace is a Banking and Finance Associate at Blake, Cassels & Graydon LLP in Toronto, where his practice focuses on banking, finance, and corporate/commercial transactions. He represents borrowers and lenders across a range of financing matters. Prior to joining Blakes, Jonathan practiced at an international full-service law firm.

Jonathan obtained his undergraduate degree with distinction from University of Guelph before earning his Juris Doctor from Osgoode Hall Law School. During law school, he was heavily involved in advocacy, representing Osgoode in the Canadian National Negotiation Competition and the International Law School Mediation Tournament, while also serving as President of the Advocacy Society.