College Sports Reshaped by Hedge Funds

College athletics are undergoing significant changes, not by those traditionally in charge like coaches or university leaders, but rather by hedge funds. The Big Ten is moving forward with a massive private capital initiative that aims to establish a new commercial entity. This effort will extend control of media rights until 2046 and allow investors a voice in the new organization while tiering distribution to the most prominent schools. It’s more than just making adjustments; it’s a fundamental shift in who governs college sports’ core assets.

Warnings are emanating from civil servants. In a letter to the presidents of Big Ten universities, Democratic Senator Maria Cantwell expressed concerns that turning over parts of college athletics to private equity could clash with educational missions, threaten tax-exempt statuses, and be pursued without sufficient input from university trustees. There is a pressing need for clarity as families and taxpayers face the potential auctioning of public resources to the highest bidder.

At the same time, university leaders are raising alarms about the existing financial framework in college sports. Their main worry centers on the House of Representatives v. NCAA case, which resulted from an antitrust lawsuit filed by college athletes challenging the NCAA’s unfair practices. The outcome allows universities to pay players, but the salary cap only the wealthiest schools can manage translates into about $2.8 billion in damages for other NCAA and Division I institutions. A staggering 76% of academic leaders, including nearly 90% of university presidents, believe this settlement negatively impacts the sports landscape.

Interestingly, while financial resources are at an all-time high, the opportunities for many programs are dwindling. The non-revenue sports are often the first on the chopping block. Public university athletics rely heavily on various subsidies, including tax-exempt bonds and federal aid. I share Senator Cantwell’s view that the focus of these assets should be educational, not just another segment of private investment.

Congress needs to step in, commencing with the Protect Me Act, intended to safeguard public resources from being sold or managed by private investors. My proposal would bar external financial interests and foreign ownership of college sports revenues and media rights.

It’s acceptable to seek additional funding for infrastructure or ticket sales, but controlling the sports themselves is another matter. We shouldn’t need to partner with obscure financial institutions.

Now, consider the SCORE method, touted by supporters as a way to create order in the midst of chaos. It essentially codifies the settlement regarding media revenue distributions and provides broad protections against antitrust actions. But do leaders truly want to perpetuate systems they claim are detrimental to college sports?

There are alternatives to consider. Give the President’s Executive Order aimed at “Saving College Sports” a chance to take root. This includes curbing excessive fees, protecting player scholarships, and preventing the marginalization of women’s and Olympic sports. Let’s allow government agencies to manage their roles while Congress addresses legislative needs.

• View college athletics as a public good: Ensure that media and revenue management remains under university control rather than in the hands of investors.

It’s crucial to limit excesses and restore some balance. Using principles already in place in professional sports, Congress should implement spending limits and revenue sharing to protect scholarships and support Title IX across all varsity sports.

• Ensure equal treatment for all athletes under Title IX, guaranteeing a baseline revenue share for each sport.

Reducing unnecessary expenses can significantly benefit student athletes. For instance, eliminating regular-season games on school days can lessen travel demands and keep students engaged in their education.

• Standardize market behavior: A national NIL framework with clear penalties for tampering is essential to prevent the chaos of unrestricted transfers.

Congress must halt the rush to profit-making, prioritize educational outcomes, and establish protective laws that retain the essence of college sports as a public trust, not just a private financial venture. It’s time for parents, university leaders, and sports fans to advocate for a system that values young athletes and their opportunities.