College sports attract private equity interest.

• NCAA sports programs are attracting private equity and venture capital enterprises such as College Sports Tomorrow, Smash Capital, and Collegiate Athletics Solutions.
• The best schools are those with the most valuable athletic programs.
• At typical Power 4 schools, about 75% of athletic program revenue comes from football, according to sources familiar with the economics.

There's a mad dash for cash in college sports.

The financial gains for college football programs have never been greater with the addition of multibillion-dollar television deals, the transfer portal, and NIL deals.

Private equity and venture capital firms, such as College Sports Tomorrow, Smash Capital, and Collegiate Athletics Solutions, are interested in investing in schools with valuable athletic programs, giving them an advantage in the market.

The top schools in terms of football performance generate about 75% of their athletic program revenue, according to sources familiar with the economics of college sports. These schools are part of the Power 4 conferences, which include the ACC, Big Ten, Big 12, and SEC.

The 12-team College Football Playoffs will begin on Dec. 20. Disney, the parent company of ESPN, signed a six-year extension in March for the rights to the games through 2031. The deal is worth an average of $1.3 billion annually, which is double the previous deal, according to reports.

According to CNBC's experts, when the SEC's current television agreement expires in 2033-34, the conference is expected to surpass the Big Ten in terms of wealth.

Irwin Kishner, a partner at Herrick Feinstein and co-chair of its Sports Law Group, stated that the SEC is nearly a super-conference and owns the most valuable content in college sports due to its football teams.

Private equity ownership in sports is not a novel idea, as Major League Baseball, the National Basketball Association, the National Hockey League, and Major League Soccer have allowed private equity firms to own limited partner stakes for several years. The National Football League recently voted to allow select private equity investors to take minority stakes in August.

Now the attention is turning to college programs.

According to Greg Carey, the global co-head of sports franchise in investment banking at Goldman Sachs, the asset class of college sports, particularly football, is performing well and growing, which is why investors are looking at it.

Private equity firms RedBird Capital Partners and Weatherford Capital are proposing to provide capital to schools through Institutional Investors such as Collegiate Athletic Solutions, in exchange for a share of the school's athletic revenue.

The belief is that external investors' business acumen could further increase profits.

Kishner stated that there is a significant chance to increase EBITDA in college sports as there are simple methods to preserve quality while decreasing costs.

And schools have incentive to bring on outside investors.

The NCAA and five largest conferences have reached a $2.8 billion settlement that will compensate 14,000 students who were previously barred from earning endorsement money. Although a final approval hearing is scheduled for April, schools are already preparing for the deal's implementation.

A significant revenue disparity could result from a gap in television broadcasts among the largest conferences.

Universities in the ACC and Big 12, as well as those in the bottom of the SEC and Big Ten who generate less local commercial revenue, will have no choice but to take on private capital and operational expertise or risk being left out of the top tier of competition in the future, according to Jason Belzer, publisher of AthleticDirectorU, who now advises athletic departments on private equity deals.

JPMorgan Chase has been working with Florida State for over a year to raise institutional capital, but the move to private equity is still uncertain and may not happen for several months.

According to CNBC's interviews with bankers and attorneys, private equity will eventually invest in college athletic programs.