Proposal: Why Elite Professional Sports Teams Are Losing Their Shine While College Football Emerges as the True Nascent Market

Mock Client: Creative Artist Agency (CAA)

Executive Summary

With the introduction of NIL law by the Supreme Court in 2021, the industry of college athletics has seen an abrupt and inconceivable shift. Nobody truly understands the by-laws of this rule change, so different interpretations of name, image, and likeness have opened interesting avenues for investment.

What was initially intended to allow college athletes to receive endorsements and sponsorships has instead led to multi-billion-dollar consortiums forming to reshape the outlook of a college’s athletics programme.

Ryan Smith, co-founder of business management company Qualtrics, has invested millions of dollars into his alma mater, BYU. The most apparent example of this was the signing of the number one recruit in the country, AJ Dybantsa, to an estimated NIL deal worth $7 million—deterring him from blue-blood programmes like North Carolina and strengthening BYU’s squad for what will most likely be his lone season in Utah.

The formation of collectives by these colleges consists of the wealthiest alumni pooling their money together to, in essence, create de facto private equity funds. Their primary purpose is to enrich the university’s athletic performance, thereby elevating its profile through an alternative form of marketing via sport.

Schools that previously dominated college football, such as Alabama, and basketball powerhouses like Indiana, are slowly falling behind new competitors with deeper pockets and wealthier alumni.

SMU in Texas, for instance, has extremely wealthy boosters who have taken full advantage of the nascent market, propelling the college into the ACC Power 4 conference. Changing conferences came at a steep cost of $200 million, which boosters were more than willing to cover to push the university into national prominence. This investment has already paid dividends, with the football team securing a spot in the inaugural College Football Playoffs.

Universities have the money—it is now a matter of spending it efficiently and effectively, which presents the main challenge. Colleges in a similar position to SMU, such as Rice University, Northwestern, and Vanderbilt, are financially viable enough to make similar investments across their athletic departments. Northwestern has already committed to

building a brand-new, state-of-the-art stadium.

Professional Sports Teams at the highest level are not as financially viable as many think.

Manchester United, arguably the most valuable and reputable sports franchise in the world, lingered on the market after its owners, the Glazer family, put the club up for sale at $6 billion. Initially expected to attract a long line of suitors, interest eventually dwindled to an unreliable bid from Qatari businessman Sheikh Jassim and a 10% stake offer from chemical company INEOS, led by founder Jim Ratcliffe.

It was the most lucrative offer on the market, made even more accessible by the club being listed on the New York Stock Exchange following the Glazer family's leveraged buyout in 2005.

The stadium and surrounding area are also ripe for development, and once the club stabilises its performance on the field, it could generate annual revenues of $900 million.

Yet no consortium, billionaire, or sovereign wealth fund saw it as a viable business deal.

Speculatively, this could be due to the massive initial outlay required to purchase the club, combined with a growing sentiment that growth at the highest level is beginning to stagnate. Wealthy owners and private equity consortiums may struggle to turn enough profit to justify such investments.

Additionally, the finances involved in many of these franchises—from the NFL and NBA to the English Premier League—are so lofty that they immediately exclude a wide pool of potential buyers.

The domestic market of collegiate sports, however, attracts financiers whose primary interest is not necessarily a return on investment but rather an emotional or ideological connection.

The psychology behind an individual’s loyalty to their alma mater—and the institutions and teams associated with it—often surpasses pure economic logic. Many alumni perceive these investments as charitable donations, yet in this case, there is also a clear path to long-term economic gain, particularly for the universities and their investors.