Just when we thought university athletics were getting too professionalized, they go a step further. With the blessing of the NCAA, the University of Utah is creating Utah Brands & Entertainment, a company to oversee its major revenue sources. Otro Capital (a private equity firm) would be the minority owner of for-profit Utah Brands, which will manage operations such as ticket sales, media, stadium events, concessions, and trademark and licensing matters. All this while many universities, especially those in the Power Four conferences, are sharing $20+ million of current department revenue with their student-athletes on top of declining media revenue and soaring operating costs.

Utah’s nonprofit University of Utah Growth Capital Partners Foundation would have majority ownership of the company, and Utah Athletic Director Mark Harlan would serve as the chairman of its board. The athletics department would continue to oversee student athletes and their scholarships, coaches, fundraising, and NCAA compliance.

Multiple sources claim that Otro capital could raise as much as $500 million for Utah. Otro claims to have vast experience in sports operations and management fields that will merge Otro personnel with the current Utah staff. Cynics might challenge the assumption that an outside organization could raise money and run operations more effectively than the current athletics staff.

The University of Utah will maintain majority ownership of the company and have full control in the partnership. Otro Capital will be a minority owner and the source of an immediate infusion of cash into the department. The funds are necessary, according to University officials, to help meet the growing demands of profit sharing and department operations.

But, is such a move a deal with the devil? We have seen time and again private equity snap up any number of businesses only to deliver poorer customer service at a higher cost.

Otro Capital will receive a percentage of the annual revenue from Utah Brands & Entertainment as well. The income will be split with Utah, with the ultimate goal to exit the partnership in the next five to seven years, a hallmark of private equity entities.

The big question is, can Otro Capital deliver tangible athletic department improvement versus current athletic department operations and revenue? As with all private equity deals, investors will be looking for a return on their investment over everything else, including the overall customer experience and on-field/court results.

Furthermore, Otro will have its hands in the revenue cookie jar as well. At the end of the day, only time will tell if Utah benefits financially. Further, is this move going to take a long-term strategic view of athletic operations and key stakeholders – student athletes and fans? Or, is private equity a desperate ‘quick fix’ that will indenture the University to the private equity model for years, even decades, beyond the planned expiration date?

At the end of the day, it will be sponsors, donors, and fans that will have to foot the bill for the $500 million infusion from Otro.

Finally, is this move a last gasp effort of athletic institutions, working with a current operational model that is no longer feasible or profitable? Last month, the University of Colorado, for example, projected a $27 million deficit for its athletics program. Earlier this year, Ohio State University claimed a $37.7 million deficit. Other schools and conferences are said to be looking at a similar private equity model, as both look to increase revenue. Ultimately, there might just not be enough money in collegiate sports to go around to sustain collegiate athletics in their current form, especially at the Power-Four level.