Utes Incorporated: The Legal Engineering Behind a $500M Windfall

The University of Utah is doing the unthinkable with a $500M private equity deal. Traditionalists hate it. I think it’s the only chance at survival.

Let’s be honest with ourselves for a second: the “good ol’ days” of college sports? They’re dead and buried. They didn’t die of natural causes; they were suffocated by a mountain of television money, strangled by the transfer portal, and finally laid to rest by the federal courts and NIL money. We aren’t watching amateur athletics anymore. We are watching a semi-pro league with a wildly inefficient payroll department and a management structure that is just a real big mess. I’m personally about TWO seconds away from quitting my job as an attorney and becoming a high school sports agent (the commissions for agents on NIL deals with college athletes are UNCAPPED!!!!).

When the news broke that the University of Utah is finalizing a partnership with private equity firm Otro Capital, the reaction from the traditional college football world was predictable outrage. Even after staying up all night to get this article written and published to stay ahead of the pack, I continue to experience an icky feeling of uneasiness about it that I also get when I think about the Ute’s 2024-2025 season (TL;DR: it was a bad season). There were cries about the “soul of the game” and the intrusion of Wall Street into college athletics. I admit, I cried some of those cries. But as a lawyer, I tend to/try to ignore the emotional pleas and look at the deal itself. And when you actually look at the mechanics here, I don’t think you see a tragedy. You see a rational actor—one that I’ll opt to call ingenious (go Utes)—responding to a cut-throat environment.

The environment in question is the post-House v. NCAA landscape. Utah isn’t doing this because they love the idea of having private equity partners, although I refute the notion that “PE kills everything it touches.” They are doing it because the cost of doing business just went up, and their revenue model is outdated. This isn’t a moral failing; it’s a liquidity crisis felt by hundreds of universities across the nation. And for the first time, a school is solving it with actual capital markets solutions rather than just asking the alumni association for another check.

A Brief Overview of the House Settlement

To understand what I think is the “why” behind the Utah deal, we have to brief the House v. NCAA settlement. If you haven’t been following the docket, here is a brief summary: the NCAA lost. Badly.

The settlement fundamentally alters the financial structure of the Power 4 conferences. It introduces three new, non-negotiable line items that wreck the traditional athletic department budget.

First, there are the back damages. The NCAA and its conferences agreed to pay roughly $2.8 billion over ten years to former athletes who were denied NIL opportunities. While the NCAA covers some of this, schools are on the hook for a significant portion through reduced distributions. That is revenue that was budgeted for, which is now gone.

Second, and more immediately painful, is the revenue-sharing component. Starting in the 2025-26 academic year, schools are permitted—and for competitive purposes, required—to share approximately 22% of their average revenue directly with athletes. We are looking at a cap of roughly $20.5 million to $22 million annually per school. And this is not funny money! This is real money that needs to come from somewhere.

Third, the settlement eliminates scholarship limits in favor of roster limits. Football programs can now offer scholarships to the entire 105-man roster. Previously, walk-ons were free (slave) labor. Now, if you want to compete with Ohio State or Georgia, you likely need to fund those spots. Tuition, room, board, and cost-of-attendance stipends for an additional 20 players is another multi-million dollar hit.

Most athletic directors are looking at a $25 million or more annual hole in their ledger. They are paralyzed, and for good reason! This is very admittedly a lot of stress to be dealing with. Utah, in what I think was a forward-thinking move, decided to go find a partner with a checkbook.

The Deal is Not a Sale, It’s a Spin-Off

Any headline that says something like “Utah Sells to Private Equity” is factually incorrect and likely clickbait. A state university cannot easily sell a public asset, nor would the NCAA bylaws (as toothless as they are becoming) allow a private firm to control football operations.

Instead, Utah and Otro Capital are utilizing a structure that is standard in corporate restructuring but novel in college sports: the commercial rights spin-off. I actually was privileged enough (along with tens of thousands of others who simply signed up) to receive some of the PDF attachments from the Board of Trustees. I dug through them to see how it all was presented, and it turns out the University had a legit entity waiting for this exact moment. Here’s a flowchart I created with the help of AI (AI-generated content is subject to inaccuracies, so this is just a visualization of what it could and likely does look like):

On the operational side, the University retains 100% control of the athletic department, employing the coaches, recruiting the athletes, and managing compliance so that the product on the field remains state-controlled. The NCAA actually required this to be the case in order to approve this deal. The financial plumbing, however, flows through a specific entity called the University of Utah Growth Capital Partners Foundation. This is a 501(c)(3) that has been sitting on the shelf since late 2022, quietly tax-exempt, seemingly just waiting for a purpose. This Foundation will serve as the majority owner of the new venture, a for-profit limited liability company called Utah Brands & Entertainment.

Utah transfers its commercial rights—media rights distributions, ticket sales revenue, sponsorship contracts, and IP licensing—into this new entity, which is co-owned by the Foundation and Otro. In the transaction itself, Otro Capital purchases a minority stake in NewCo for a reported total of $500 million (though this number is unofficial, and details are vague at this point) (more on how that cash likely hits the account later), giving Utah upfront liquidity while Otro secures a preferred return on future cash flows.

This is a leverage play. Utah is securitizing its future revenue streams to access capital today. It is the same logic as a tech company taking venture capital to fund research and development, or a homeowner taking a HELOC to renovate a kitchen, albeit on a much larger scale.

Is This Legally Allowed?

You might wonder: “isn’t the University of Utah a public institution? How can it partner with a private equity firm without legal hurdles?”

This is where the structure gets… spicy. Before I continue, please remember: this deal is novel and full details aren’t public yet (read: Alex’s disclaimer that he might be wrong). There is a common misconception that public universities enjoy total sovereign immunity from lawsuits. That isn’t entirely true here. Under Utah Code § 63G-7-301(1)(a), the state actually waives immunity for breach of contract. So, the old “you can’t sue the King” argument doesn’t necessarily apply to a vendor contract.

However, moving assets into Utah Brands & Entertainment still changes the legal landscape. While the University itself might already be suable for contract breaches, the new LLC structure makes Utah Brands a much friendlier, more agile business partner than the bureaucratic state government. It removes the red tape of state procurement processes rather than just the immunity defense.

Furthermore, there is a tax firewall at play. The Foundation (tax-exempt) owns the LLC (taxable). By pushing the commercial activity into a for-profit LLC, it seems like Utah is essentially agreeing to pay corporate tax on ticket sales and sponsorships to keep the IRS away from the main University’s endowment. It’s a tax blocker strategy that keeps the academic side pristine while the athletic side plays capitalism.

There is another lawyerly reason to use this Foundation → LLC structure: it gets rid of transparency. Utah is a public university subject to the Government Records Access and Management Act (lovingly referred to as GRAMA). GRAMA, which Utah’s version of the Freedom of Information Act, allows regular Joes and Jills to request various types of information held by the government. If no legitimate, enumerated excuse exists to keep it private, these laws mandate that the government produce it. If I want to see Kyle Whittingham’s contract, I can request it, and the state would have to determine if there is a legitimate reason it can’t give it to me. Journalists do this for sport.

But Utah Brands & Entertainment LLC is a private company. It is generally not subject to public records requests. By moving the commercial operations into the LLC, Utah effectively takes its business dealings dark. It essentially levels the playing field with private institutions, like our friends in Provo, who have enjoyed the strategic luxury of keeping their books closed since 1875. The University will likely have to rely on claiming trade secrets or private entity status to deny requests from journalists who want to know how much Otro is actually getting paid.

The Unknowns, Evaluated Optimistically by a Ute

Naturally, there are risks. There is no such thing as a free lunch, especially not when the counterparty is a PE firm looking for a not-insignificant percentage of IRR. However, if we assume competent management—which is a big assumption in college sports, but let’s be generous (also, these guys seem to have pretty deep expertise in PE and sports)—the downsides might actually be positives.

First, let’s consider the fan experience. The cynic says Otro will just raise ticket prices. If I’m totally honest, there is a decent chance this does happen. However, the optimist says Otro will fix the inefficiencies. University athletic departments are run like fiefdoms (or you can also picture country clubs, but I recently learned about fiefdoms and challenged myself to add it into an article). They are incredibly inefficient. Private equity brings operational discipline. Instead of just hiking ticket prices across the board, perhaps we can expect some segmentation. You create ultra-premium experiences—field-level suites, loge boxes—and charge corporations exorbitant fees for them. I see this as sort of one-upping what the setup is right now for large donors. This high-margin revenue subsidizes the general admission tickets.

Further, capital expenditure improves the product. We are talking about basic infrastructure that universities neglect: high-density Wi-Fi, better concessions logistics, and upgraded audio-visual tech, and imagine the marketing being run by a private equity-funded team! On that note, @Otro can Rice-Eccles please get those cool dimming lights when the team scores touchdowns? Seems like a necessity nowadays.

Second, let’s consider recruiting. In my opinion, Utah is smartly separating revenue streams from what I can tell. The PE money pays for the “boring” stuff—infrastructure, debt service, operations. This allows the donors and NIL collectives to focus on talent acquisition. While other schools are cannibalizing their own fundraising (asking donors to pay for the building and the quarterback), Utah effectively offloads commercial growth to Wall Street—keeping the “ask” clean and focused.

Third, the dreaded “shadow board” problem. We keep saying Utah retains operational control, but anyone who has drafted or read through a Shareholders’ Agreement knows the devil is in the Major Decisions clause. Sure, Otro Capital can’t call a timeout on 3rd and 4. But private equity firms almost always demand what’s referred to as “negative control” or veto rights.

This means that while they can’t tell you what to do, they can tell you what not to do. Want to hire a new AD for $5M a year? Veto. Want to expand the stadium in a way that hurts short-term cash flow? Veto. The University might hold the steering wheel, but Otro likely has a foot on the brake. And who knows if they will be like Utah drivers (aggressive, lead-footed, insane), or like Oregon drivers (never gone over 55 mph). That is a dangerous dynamic for a public institution. I have not read the contract, so I am sort of spitballing here, but something to keep in mind.

EDIT AS OF 12/11/25: The shadow board is not as much of a concern now with new information. Apparently, the Board composition will be 4 Utah reps, 2 Otro reps, and 1 donor rep. Utah thus has a mathematical majority, meaning Otro likely cannot veto standard operations easily (though major decisions, as discussed elsewhere, is a different story).

And finally, the escape hatch. What happens in seven years when Otro wants out? The Board documents hint at a standard exit mechanism, likely involving a Put Option. This is the risk no one is talking about. If the “Super League” doesn’t form by 2030 and media rights crater, Otro could theoretically exercise this option and force the University to buy them out at a premium. That is the ticking time bomb.

However, the optimistic view is based on market trajectory. We are likely heading toward a Super League consolidation. Be honest, c’mon. Of course we are. By injecting millions now, Utah is buying its way into the upper echelon of that future. If the strategy works, the valuation of Utah Brands & Entertainment in 2032 will be significantly higher than it is today, and Utah can easily refinance Otro out.

The Title IX Elephant in the Locker Room

Trying to guess what issues are going to arise with the U’s new deal is akin to looking into a crystal ball, but I’ll try: I foresee Title IX issues arising.

To recap what is now old news, Title IX is the 1972 federal statute prohibiting sex-based discrimination in any education program receiving federal funds. It mandates that schools provide equitable participation opportunities and benefits to athletes regardless of gender—and notably, the statute doesn’t care which sport makes the money.

If Utah uses its new-found war chest to fund the $22 million annual revenue share cap, who gets that cash? The football team generates the money, so the “business” logic says that Alabama-born linebacker should get paid. But if Utah distributes $20 million to male athletes and $2 million to female athletes, they are inviting a federal lawsuit before the check even clears.

But if they split it 50/50 to satisfy Title IX, the football team (which is the only entity generating the return on investment for Otro) becomes underfunded compared to the Big 10 and SEC schools that might ignore Title IX and risk the fine. By taking private equity money, the Utes create a fiduciary duty to maximize returns (football) that directly conflicts with their federal duty to ensure equity (Title IX). I don’t know how they solve this. I’m not sure they know how they solve this. I’ve got some ideas on how to solve this dilemma, but they’ll have to call me and hire me ;)

Tax Implications for Donors

One of the first questions I envisioned from donors was something like this: “If I’m writing a check to a for-profit LLC, did my tax deduction just evaporate?”

The short answer is: I think it depends on which checkbook you are opening.

This is semi-speculative, but it looks like this deal creates a strict separation between philanthropy and investment. The University and the Crimson Club remain the charitable arm. If you donate cash to the University, that money still flows to a tax-exempt public institution. You still get your charitable contribution deduction.

However, if you are one of the select donors invited to buy equity in Utah Brands & Entertainment alongside Otro Capital, that is a different animal. That is not a donation; that is a securities transaction (more on this later). You are buying stock in a private company. You don’t get a tax write-off for buying shares of Apple, and you don’t get one for buying shares of Utah’s commercial arm.

This creates a smart dual track for the donor base. The tax-sensitive donor who wants a deduction can stick to the Crimson Club. The risk-tolerant investor who wants skin in the game can buy into the LLC.

One MAJOR Worry from a Ute Fan

In October 2025, Representative Michael Baumgartner (R-WA) introduced the Protect College Sports from Private Equity and Foreign Influence Act (HR 5693). Unlike other vague sports bills that die in committee, this one pretty targeted, aimed directly at deals precisely like the one the University of Utah is in process of making with Otro.

The bill aims to amend the Higher Education Act to strictly prohibit universities from entering into agreements with private equity firms, hedge funds, or sovereign wealth funds that convey “control rights,” “revenue sharing,” or “security interests” in athletic programs.

The most terrifying part of this bill for Utah isn’t the ban; it’s the timeline. Most legislation applies prospectively—meaning if you sign your deal before the law passes, you are safe (grandfathered). HR 5693, however, reportedly includes a 24-month “unwind” provision. This means if the bill passes, existing deals wouldn’t be safe. Schools would have two years to terminate their private equity partnerships and buy back the equity.

The nightmare scenario, if this passes, is that Utah could find itself in a scenario where they have already spent the funds on a new basketball stadium and roster, only to have Congress order them to return the money to Otro Capital within 24 months.

Where does a public university find $500 million in liquid cash to pay back a forced regulatory recall? They don’t. It creates a solvent-but-illiquid crisis that could effectively bankrupt the athletic department. Utah is betting the house that this bill dies in the Senate. If they are wrong, the House settlement will look like a parking ticket compared to the federal bailout they will need. Admittedly, under the current administration, I doubt this passes. But still… it is a very real risk! And once again, I have not read any of the fine print, so maybe the Utes have contracted around this. Time may tell.

Let’s give the lawyers some credit here. If the professionals structuring this deal didn’t account for this federal legislation, it would probably be malpractice of the highest order. I’d bet there is a specific unwind window or “out” clause in the documents that protects the Utes if this legislation passes. If not… again, that is not good news for the lawyers involved.

Furthermore, we know that the $500 million isn’t hitting the bank account on Day 1, meaning the recall risk would be limited to what has been drawn down.

And of Course, the SEC (Securities and Exchange Commission) Will Be Watching

The Securities and Exchange Commission; the federal agency in charge of regulating securities.

First, a clarification: I don’t see major securities concerns, at least initially, with the Otro Capital deal. Otro is not a silent partner; they will maintain a level of control and involvement in the LLC, which typically exempts the transaction from being a security. However, if the Utes proceed with the plan to allow select high-net-worth donors to buy equity in Utah Brands & Entertainment alongside Otro, they are no longer just fundraising; they are issuing securities. By definition, they have walked out of the warm, fuzzy world of philanthropy and into the cold, hard world of federal securities regulation.

Legally, Utah cannot just let any fan with a few hundred dollars buy a share of the team. That could constitute a “public offering,” requiring a full IPO registration statement, which is both exorbitantly expensive and invasive. Also: that would just be absolutely crazy. To avoid this, the University will almost certainly rely on Regulation D, a safe harbor that allows them to raise unlimited capital without registering, provided they only sell to “accredited investors.” In plain English, this means you must have a net worth of over $1 million or an annual income exceeding $200,000 to even see the pitch deck. This creates a literal caste system within the fan base: the wealthy alumni get to own a piece of the team and profit from its success, while the average fan just gets the privilege of paying higher ticket prices (maybe higher, but hopefully not for my sake).

Further, this exposes the University to a massive marketing trap. Athletic departments are used to marketing with emotion, hype, and optimism. But when you are selling securities, you have to market with math. If a fundraiser tells a donor, “Buy into the LLC, it’s a guaranteed return and you’re helping the team,” and the LLC subsequently loses money, that isn’t just a disappointed donor; that is securities fraud. The SEC’s anti-fraud provisions apply even to private equity deals. If Utah glosses over the risks of the NewCo failing in their pitch, they aren’t just risking a lawsuit; they are risking an SEC enforcement action. SEC oversight might scare me more so than others because it lands squarely within my professional wheelhouse, so I understand the gravity of the risk here. I just hope the Utes have someone qualified advising them on this front!!

Why This Deal Makes Sense

Assuming we have no problems legally (again, I don’t believe there are any problems, but I guess we will see), I think this deal makes sense. University athletic departments are strange businesses. They are asset-rich but cash-poor. They own valuable intellectual property and massive real estate portfolios, but they often run at a functional deficit (see, e.g., Ohio State lol).

Public universities cannot easily access traditional debt markets because their assets are tied up in state trust. You can’t exactly foreclose on a public university stadium. Private universities face a parallel liquidity trap: their massive endowments are legally restricted by donor intent (you can’t raid the Medieval History fund to lure Alabama’s #1 linebacker prospect), and leveraging the general balance sheet risks tanking the entire institution’s credit rating.

These situations create a liquidity trap. Utah needs cash now to handle the House payments and remain competitive in the Big 12, but their revenue arrives in slow, annual trickles. Relatively speaking.

Private equity solves the liquidity problem. $500 million, or whatever the actual number is, is legit war chest money. It potentially allows Utah to clear up existing debt, which immediately improves annual cash flow by removing debt service payments. It allows for immediate capital improvements without waiting for a five-year fundraising campaign.

The Verdict

As a lawyer, I advise clients to deal with the world as it is, not as they wish it to be. The world where college football was a charming regional pastime is gone. It was litigated out of existence thanks to stupid lawyers. I still hope that one day, conferences will once again make sense geographically, but I digress.

We are now in an era of free agency, revenue sharing, and uncapped costs. In that world, I believe the schools that operate like businesses will survive, and the schools that operate like charities will fade. The University of Utah looked at the House settlement and realized that the old budget models were insolvent. They didn’t panic. They structured a deal using a sleeper 501(c)(3), a calculated separation of assets, and sophisticated capital markets logic to solve a sophisticated problem.

Are there landmines the University will have to carefully sidestep? Absolutely. They are navigating a Title IX tightrope, inviting the SEC to scrutinize their donor lists, dodging transparency laws by turning the department into a semi-private black box, and betting the house that Congress doesn’t burn it all down with HR 5693. But the risk of inaction is irrelevance. Utah chose to leverage their assets to secure their survival. It’s bold, it’s legally creative, and frankly, it’s the kind of forward-thinking strategy that makes me think (and desperately hope) the Utes are going to be just fine.

*All writing for this article was performed and executed by a HUMAN*