Key Takeaways
- • Ian Charles, managing partner of Arctos Partners, called private equity involvement in college sports "the worst idea I've heard in my entire career, and I love private equity," and said it "is a disaster scenario" in collegiate athletics, according to D Magazine.
- • Charles said PE capital is aimed at compounding returns of at least 15 to 17 percent, unless a guaranteed return is provided, and is not a safety net or community-oriented investment.
- • SMU athletic director Damon Evans said the department has held conversations with three to four private equity groups but that the process is slow-moving and not yet fully understood.
- • The Big 12, through commissioner Brett Yormark, previously struck a deal with RedBird Capital, and the University of Utah became the first athletic department in the country to partner with private equity earlier in the year.
- • Yormark said the conference is still assessing where private capital will land in its ecosystem, describing it as "a very different dynamic."
Summary
Private equity's expanding role in collegiate athletics drew sharp criticism from Ian Charles, managing partner of Arctos Partners, who spoke on stage at the Dallas Citizens Council's annual meeting on November 5, according to D Magazine. Charles, a private equity veteran and co-founder of the Dallas-based firm, said PE involvement in college sports was "the worst idea I've heard in my entire career, and I love private equity." He described the sector as "a disaster scenario" and said private capital "is not a safety net," arguing that it seeks to compound returns of at least 15 to 17 percent unless it is offered a guaranteed return. Arctos holds stakes in several professional sports franchises, including the Golden State Warriors, Boston Red Sox, Los Angeles Dodgers, Buffalo Bills, Liverpool F.C., and Aston Martin F1 Team.
Charles appeared alongside Big 12 outgoing commissioner Brett Yormark and SMU athletic director Damon Evans, who framed the issue around competitiveness in an increasingly business-oriented landscape. Evans said SMU has had conversations with three to four private equity groups but described the process as slow-moving and said the school has not yet fully grasped it. He emphasized the need for stronger commercialization and revenue generation, saying PE "could be a safety net for some" and "might be right for others," while warning that institutions may "rush to do something" without understanding their objectives. Evans also floated separating collegiate athletics into for-profit and not-for-profit operations, with commercial assets housed on the for-profit side and valued accordingly.
Yormark said the Big 12 is obligated to give member institutions options. He noted the conference evaluated debt and traditional private equity before choosing a different path, becoming the first conference to tap a third-party resource through a deal with RedBird Capital, which was first reported by Front Office Sports. He said the conference was seeking a more bespoke arrangement and that many stakeholders are deliberating further private equity relationships. The University of Utah became the first athletic department in the country to partner with private equity earlier this year. Yormark acknowledged uncertainty over where private capital will ultimately fit in the Big 12 ecosystem.
Charles appeared alongside Big 12 outgoing commissioner Brett Yormark and SMU athletic director Damon Evans, who framed the issue around competitiveness in an increasingly business-oriented landscape. Evans said SMU has had conversations with three to four private equity groups but described the process as slow-moving and said the school has not yet fully grasped it. He emphasized the need for stronger commercialization and revenue generation, saying PE "could be a safety net for some" and "might be right for others," while warning that institutions may "rush to do something" without understanding their objectives. Evans also floated separating collegiate athletics into for-profit and not-for-profit operations, with commercial assets housed on the for-profit side and valued accordingly.
Yormark said the Big 12 is obligated to give member institutions options. He noted the conference evaluated debt and traditional private equity before choosing a different path, becoming the first conference to tap a third-party resource through a deal with RedBird Capital, which was first reported by Front Office Sports. He said the conference was seeking a more bespoke arrangement and that many stakeholders are deliberating further private equity relationships. The University of Utah became the first athletic department in the country to partner with private equity earlier this year. Yormark acknowledged uncertainty over where private capital will ultimately fit in the Big 12 ecosystem.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.