- The University of Utah partners with private equity firm Otro Capital for athletics.
- This partnership aims to boost revenue and sustainability amid the NIL era.
- President Randall emphasizes the collaboration's potential to enhance the university's overall mission.
SALT LAKE CITY — It was natural to see the University of Utah's private equity deal as a short-term fix to a larger problem.
It was a decision that will work immediately, with a massive infusion of cash to the athletic department in a new era of revenue-sharing for athletes and NIL, but it could spell problems in the future, especially if Utah can't increase revenue and opportunities.
No entity is simply giving away money without an expected increase in return — even as a minority partner, like in Utah's first-of-its-kind deal.
There's numerous examples where private equity has gutted businesses who fail to increase revenue or provide additional value to the originally agreed-upon deal — hence the major hesitation.
But others can point to successes within private equity that help companies accelerate goals and flourish, including in the state of Utah.
Where Utah Brands & Entertainment LLC will fit on that scale remains to be seen, but the upside to the deal could be the beginning of a sustainable future in the ever-increasing arms race within collegiate sports that could make it a no-brainer in five to seven years and be replicated by several others around the country — if not sooner.
Utah went to market, and others will soon follow — as a trusted and proven success story or a case study in what went wrong with college sports.
The university and its administration are betting on the former.
"This will give our institution, particularly our athletic institution, the upside it needs to thrive in the new revenue sharing and NIL era," university President Taylor Randall said. "It also allows the other missions of our university to thrive. ... Each of those missions for us to be successful have to be successful, as well. And in the old model of funding athletics, often those missions were placed at odds with each other.
"This new innovation, this new way of doing business, actually allows them to complement each other in ways that we have never seen before, and we are excited to start executing on this new vision."
Utah's decision, however, was far from reactionary or haphazardly put together by its top leadership. Even the meetings that started more than a year ago and culminated in a partnership with Otro Capital were part of a step to a larger vision for the university.
It's a vision that Randall continues to unfold in a move toward lifting the institution to greater heights — and one with a focus toward the future. Tuesday's announcement was simply the next piece to a multi-step process to set Utah up for continued success, well after he and all the decision-makers are gone.
Part of that success is working to give Utah a stable footing that not only helps the mission of the university — from its academic pursuits to its research opportunities and to an expansive world of healthcare — but to an eventual landing spot where athletics, which is largely seen as a tool to increase visibility to the university, can find sustainability.
It builds upon the "Campus Physical Development Framework" for a future campus that meets Randall's goals of turning the university into a "destination" school and not a commuter campus, and one that is a top-10 public institution, reaches $1 billion in research funding and supports enrollment of 40,000+ students, among many other lofty goals.
"At its heart, this framework creates what I like to call 'college town magic' — a best-in-class experience for students and the entire campus community," Randall said in March.
Each decision — campus transformation, private equity, etc. — stacks upon each other for potential growth.
While not publicly or outwardly stated, the hope has been that these goals — and decisions like partnering with private equity firms — will help Utah earn an eventual landing spot in a Power Two conference, namely the Big Ten, for further sustainability within athletics (and the university's mission).
That, in turn, can provide the university — as a whole — limitless resources and opportunities.
An infusion of cash is temporary, but partnering with a sports-focused brand who shares similar values in a pursuit of increased revenue and probability is a "mentorship" tool that can pay dividends — in this case, in a literal sense for the donors who will invest in Utah Brands & Entertainment LLC — according to top administrators.
As Utah receives immediate support, the framework is created with an entity that has years of experience in professional sports to illicit sponsorship opportunities and revenue opportunities that can bolster and jumpstart the university's efforts — or such is the belief.
It also has the chance to provide more buy-in from university donors.
The newly created for-profit company allows boosters to contribute and benefit from their support of the university with more staying power and success. No longer is money simply expendable — at least in the sense of a repeated desire to support athletes without a real sustainable backing.
It's investing in the university as a whole and not supporting a certain NIL effort or offshoot venture — and not sacrificing the whole for a chance at success in one part of the mission.
On Tuesday, Randall told the board of trustees that one of the objectives first set when investigating private equity was that "we maintain the financial viability of the core of this institution, recognizing that while the athletics department is part of that core and an important part of the mission, we did not want to sacrifice student experience, research and teaching as the chaos and economic upheaval of athletics continued."
Nobody knows today if it'll actually work; it comes with inherent risks — risks the university believes it has done well to mitigate — but the pursuit of a private equity deal far outweigh the risk of doing nothing, according to the trustees, who approved the measure.
"We weren't interested in pure capital, we were interested in a partner. ... They're the ones that are taking risk with us, and I think we both feel an obligation to make this venture successful, and we both want the same thing," Randall said. "So I think that's what you're going to see us focused on the next few years, is just getting this venture off in an extraordinarily successful trajectory."
That journey remains to be seen, even if the short-term vision of the university suddenly looks brighter.
