June 23, 2024

Drew Weatherford and RedBird Capital Unveil Transformative Plan for College Athletics

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Drew Weatherford, former FSU quarterback-turned-private capital investor, has spent the last year working behind the scenes across college athletics. Weatherford, along with Gerry Cardinale of RedBird Capital Partners, has held clandestine meetings with representatives from over 50 Football Bowl Subdivision programs. These meetings have included athletic directors, university presidents, school board members, and chief financial officers, all aimed at introducing a groundbreaking initiative for college sports funding.

Weatherford’s pitch, now public for the first time, involves injecting instant cash into major college athletic departments through a new venture called Collegiate Athletics Solutions (CAS). This initiative aims to provide much-needed financial resources at a critical time when college athletics is on the cusp of significant changes, including a landmark antitrust case settlement and the adoption of a new revenue-sharing model with athletes.

“No school has said, ‘No, that is not something we would consider,’” Weatherford remarked, reflecting the widespread interest in the proposal.

This is a Game-Changing initiative, Weatherford Capital and RedBird Capital Partners have combined their resources, totaling billions in cash, to form CAS. This platform is dedicated to investing in college athletic departments, providing financial stability and growth potential during one of the most transformational periods in the industry. With the NCAA and schools agreeing to a $2.8 billion settlement in back damages and a future revenue-sharing model with athletes, college administrators are preparing for a new financial reality.

Under the settlement, schools will face a quasi-salary cap of up to $22 million annually per school, along with an expected $30 million in new annual revenue obligations when factoring in reduced NCAA distributions and additional scholarships. This equates to $300 million in new financial commitments over the 10-year settlement term.

Last week, RedBird Capital augmented its financial arsenal with an additional $4.7 billion, bringing its total equity to an estimated $10 billion. This positions CAS to offer investments ranging from $50 million to $200 million to selected programs. RedBird’s impressive portfolio includes the acquisition of AC Milan for $1.3 billion and stakes in Formula One’s Alpine and Fenway Sports Group, showcasing its capability to manage large-scale investments.

As part of CAS, Weatherford and Cardinale seek to invest in five to ten programs initially. Their approach is unique in that it does not involve traditional private equity ownership. Instead, schools retain control and flexibility over the funds, which can be used to offset expenses such as athlete revenue sharing, coaching salaries, and facilities improvements. CAS aims to act as advisers to presidents and athletic directors in managing revenue growth, earning a percentage of any new annual growth over a 10- to 20-year period.

The need for new revenue streams has never been more pressing for college athletic departments, which have historically relied on football profits to subsidize other sports. Multi-million dollar television contracts once made these departments flush with cash, but competitive pressures led to spending on facilities and salaries, often resulting in significant debt.

With the focus now shifting towards directly compensating athletes, the CAS initiative provides a timely solution. By partnering with CAS, athletic departments can alleviate financial strains and focus on sustainable growth.

This is a  new era in College athletics, Weatherford’s initiative with RedBird Capital represents a monumental shift in the financial landscape of college sports. By providing immediate financial support and fostering long-term growth, CAS is set to redefine how athletic departments manage their resources and compete in the evolving landscape.

As colleges brace for the implementation of new financial models and direct athlete compensation, the CAS platform offers a beacon of stability and innovation. The future of college athletics is poised for a transformation, driven by strategic investments and forward-thinking financial solutions.

Richard Thompson
Financial Desk

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