Elevate Raises $500 Million To Invest In College Athletics Departments

Elevate, a sports and entertainment consulting company, has raised $500 million to invest in college athletics departments and help them maximize revenue as their operating expenses significantly increase due to being allowed for the first time to directly pay players.

Velocity Capital Management and the Texas Permanent School Fund Corp., which own equity stakes in Elevate, are providing the capital. Velocity Capital is a private equity firm that focuses on the sports, entertainment and media industries, while Texas Permanent is a sovereign wealth fund.

Jonathan Marks, the chief business officer of Elevate’s colleges division, said the company through what it’s calling the College Investment Initiative will provide athletics departments with money that will primarily be used to renovate, upgrade, expand or build stadiums and other facilities. The investments will be structured similar to debt instead of an equity stake, meaning Elevate will not have an ownership interest in the athletics departments but rather provide the money upfront and then get paid back over time, usually anywhere from two to 10 years, according to Marks. Elevate will also receive a share of revenue that the colleges generate after the company recoups its initial investment.

Elevate’s College Investment Initiative is an alternative to traditional financing such as obtaining a loan from a bank, issuing bonds or raising money from wealthy alums or donors. Its public announcement comes after a federal judge late Friday approved the terms of a $2.8 billion antitrust settlement, commonly referred to as the House settlement, that will see schools being allowed starting in the upcoming 2025-26 school year to share up to about $20.5 million with their athletes. The amount that schools can give their athletes will increase 4% each year.

Marks said that Elevate is “going to provide capital in a way that doesn’t take a long-term equity stake from a school. We’re not looking to take an equity stake and then sell it down the road. We’re going to provide capital and then also partner with the schools to help them maximize the return on that capital.”

Elevate will have competition in the field. For instance, private equity firms RedBird Capital Partners and Weatherford Capital in May 2024 announced Collegiate Athletic Solutions (CAS), which will also invest in college athletic departments but will not take equity stakes, either. CAS has not publicly disclosed any deals it has struck.

Meanwhile, Elevate has agreed to deals with two colleges in the Power Four conferences of the Atlantic Coast Conference, Big Ten, Big 12 and Southeastern Conference. Marks would not disclose the names of the schools, but he said the investments are in the low-eight figures meaning more than $10 million apiece. He added that Elevate is in discussions with several other athletics departments and that he would “be shocked if we’re not halfway through that $500 million in the next two to three months.” He said Elevate could possibly invest more than $500 million, too.

Elevate’s Initiative Will Build Upon Existing Partnerships

Elevate already works with about 70 colleges in several areas, including helping them with their primary and secondary ticketing, hospitality, suite and sponsorship sales, designing their stadiums, club areas and other facilities and striking deals with brands. For instance, Elevate last August announced a deal with Penn State where it will help the school with ticketing, fan engagement and premium seating experiences for the $700 million renovation of the University’s football stadium. And last month, Elevate disclosed that it would help UCLA with ticket sales across all sports and market the premium seating at the Rose Bowl Stadium, which is undergoing an $80 million renovation. The company in January also acquired Bowlsby Sports Advisors, a search firm that helps colleges hire athletic directors, coaches and other key personnel.

Marks said Elevate’s College Investment Initiative is a natural extension of the business considering how college athletics has changed in recent years. In 2021, athletes were allowed for the first time to earn money based on their Name, Image and Likeness, with those payments being raised through outside collectives and boosters and companies rather than the schools themselves. Now, with the passage of the House settlement, schools will be directly paying players and focusing even more on having their athletics departments make money.

“You are seeing every single conversation (with college athletics officials) discuss how we can generate more revenue,” Marks said. “We’re having these conversations on a daily basis and talking with schools on what they can do. Can they generate more revenue from the current assets they have? Can they invest some capital in the current assets, whether it’s the own capital that they have on their balance sheet or outside capital such as ours to ultimately draw higher revenue on a long-term basis and (generate) sustainable revenue?”

Marks said schools can use the money they receive from Elevate at their own discretion, but that it “makes the most sense for schools and Universities to utilize it to drive long-term sustainable revenue growth,” particularly through upgrading or building facilities where Elevate can help in areas such as determining the optimal amount of premium seating and the best ways to price tickets, concessions and other items fans can buy. If schools decide to use the capital for other means, Marks said Elevate will likely “securitize it by ticket sales or other revenue streams to make sure that if we’re giving them, say, $50 million, the payback of that can be supported.”

Marks also said Elevate has told colleges that “it doesn’t make sense to take capital unless you’re actually going to put it to use right now. Don’t take $50 million if you might not need it for two years. But let’s take $10 million now if you need it right now, and then you can take $40 million next year….We just want to make sure they’re maximizing the value of that capital versus having it sit on their balance sheet in a money market fund.”

Elevate Doesn’t Plan On Making Equity Investments

Elevate was formed in January 2018 by the San Francisco 49ers, Harris Blitzer Sports & Entertainment and Creative Arts Agency. The company at first primarily focused on North American professional sports before expanding its colleges presence in 2021 with the acquisition of Dynamic Pricing Partners, which Marks founded.

Al Guido, Elevate’s chairman and CEO and the 49ers president, said that Elevate has discussed providing capital to college athletic departments for about a year. He spoke with Velocity managing partner David Abrams, the former chief investment officer at Harris Blitzer, as well as others on Elevate’s board of directors. They decided that now is the best opportunity with billions of dollars of infrastructure projects planned on college campuses and Elevate’s existing relationships with athletics departments as well as its deep-pocked investors. Elevate’s ownership group includes the 49ers, Velocity, Harris Blitzer, investment firm Arctos Partners and Levy, a leading hospitality company.

Guido noted that Marc Lasry, CEO of Avenue Capital Group and former part-owner of the Milwaukee Bucks, said in December that his company was bidding to acquire majority stakes in college sports teams. However, Elevate does not plan on taking equity stakes in college teams or athletics departments.

“That is not our initiative, that is not our goal here,” Guido said. “We are a service provider that believes we can help Universities in their ambitions and initiatives to drive revenue and fan experiences on their campuses…If they’re looking for creative ways to capitalize these projects, and they’re making sure that whoever that partner is also brings services to bear that help them in that regard, that’s where we come in.”