Film Room: University of Utah-Otro Capital Deal

University of Utah-Otro Capital Deal

On June 12, the University of Utah and its foundation announced they finalized a partnership with Otro Capital.

According to the announcement, the arrangement established a new entity, Crimson Brand Partners, which will manage commercial operations across Utah athletics and the broader university—including events at stadiums and arenas, branding, licensing and sponsorships, ticketing, and digital media.

Crimson Brand Partners CEO Matt Webb stated, “Crimson Brand Partners will provide Utah Athletics with the resources to compete at the highest level and do it in a way that takes pressure off the rest of the university—growing the brand, growing revenue, making gamedays better, and freeing up university dollars for scholarships, research and students.”

Regarding its organizational structure, Crimson Brand Partners will operate under the oversight of the university’s foundation and its own board, and in close coordination with university leadership and trustees. The company will report annually to the university’s foundation and the Board of Trustees.

According to this article in Sportico, Otro Capital is committing at least $100 million to the endeavor.

Considerations for College Athletics Investment Deals 

In our recent article published by University Business, we flag key issues for schools and investors considering an investment in college athletics. In the article, we identify critical deal factors, including (1) tax planning, (2) existing partner obligations and evolving rights, (3) institutional and athletic department strategic aims, and (4) legal and regulatory constraints. Careful analysis of these items can position schools to accept desired funding via a deal structure that aligns with institutional goals.

We also sketch out potential structures for deals with passive and strategic investors. In a deal with a passive investor, the investor might receive a return equal to a percentage of certain revenues (for example, a percentage of distributions received from the conference), with those revenues not serving as collateral but providing a manner in which to calculate return. 

In a deal with a strategic investor, the institution and the investor might form a new entity to house key athletically related rights. In such a deal, in exchange for an investment in the institution, the investor may receive an ownership interest in the new entity, with deal documents carefully delineating duties and roles among the institution, investor and any current non-university entities (for example, any multimedia rights partner) that have a role in revenue generation activities.

The Utah-Otro deal is an example of a deal with a strategic investor.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.