Legislation aims to prevent outside investment as schools face mounting financial pressures
On Monday, Rep. Michael Baumgartner (R-WA) introduced legislation which seeks to fundamentally govern the financial landscape of college sports. The seven-page “Protect College Sports from Private Equity and Foreign Influence Act”—known as the PROTECT Act—would amend the Higher Education Act of 1965 to ban athletic departments and conferences from selling ownership stakes or transferring profits to private equity firms, hedge funds, or foreign sovereign wealth funds.
According to a draft of the bill obtained by Front Office Sports, the legislation would also block deals involving spinoff entities created to monetize assets like media rights or real estate. The move comes as college athletics finds itself at a crossroads, caught between escalating costs and the search for new revenue sources.
Note: In the 119th Congress, Representative Michael Baumgartner of Washington has focused on student-athlete protection through several pieces of legislation and related actions. His initiatives primarily target college sports betting, the regulation of name, image, and likeness (NIL) deals, the broader financial structure of collegiate athletics, and safeguarding athletic programs.
The Case for Protection
Supporters of the legislation point to legitimate concerns about what happens when profit-driven investors gain control of educational institutions’ athletic programs.
Private equity firms typically operate on a familiar playbook: acquire assets, extract maximum value in the short term, and exit with returns for their investors. Critics worry this approach fundamentally conflicts with the mission of college athletics, where the focus should remain on student-athletes and the educational experience rather than quarterly returns.
“The risk isn’t just theoretical,” said one college sports administrator who spoke on background. “Once you invite outside investors in, you’re no longer making decisions solely based on what’s best for students or your institution. You’re answering to people whose primary obligation is to their fund’s returns.”
The commercialization concerns extend beyond philosophy. Private equity ownership could lead to cost-cutting measures that harm non-revenue sports, reduce support services for student-athletes, or prioritize short-term financial gains over long-term competitive success. Schools could find themselves locked into decisions made by outside entities with little understanding of—or interest in—the unique culture and values of college athletics.
The foreign influence component adds another dimension to the debate. Foreign sovereign wealth funds represent foreign governments, raising national security questions about allowing foreign powers to gain financial stakes in American educational institutions. The potential for strategic control over media rights, data, facilities, and operations by foreign entities has drawn bipartisan concern in Washington.
“This isn’t just about money,” one policy expert noted. “It’s about who controls American institutions and what influence foreign governments might gain through financial relationships.”
The Financial Reality Schools Face
Yet the push for outside investment doesn’t come from nowhere. Athletic departments across the country face unprecedented financial pressures that make the allure of private capital increasingly attractive.
The cost structure of college athletics has exploded in recent years. The advent of Name, Image, and Likeness (NIL) collectives has created an entirely new expense category. Coaching salaries continue to spiral upward, with top football and basketball coaches commanding contracts worth tens of millions of dollars. The facility arms race shows no signs of slowing, as schools invest hundreds of millions in state-of-the-art training centers, stadiums, and arenas to attract top recruits.
Conference realignment has added another layer of uncertainty and expense. Travel costs have ballooned as conferences stretch across multiple time zones. Schools left out of major conference consolidations face the prospect of being permanently relegated to second-tier status without the resources to compete.
For many athletic departments, traditional revenue sources aren’t keeping pace. Ticket sales have plateaued or declined at many schools. Donor fatigue is real, as boosters are increasingly tapped out between NIL contributions, seat licenses, and traditional giving. Meanwhile, schools are competing not just with each other, but with professional leagues that offer lucrative alternatives to top athletes.
“The financial model is broken for a lot of schools,” said one Power Five athletic director. “We’re being asked to operate at a professional level with amateur-era budgets. Something has to give.”
Private equity and other investment vehicles offer immediate capital infusion without taking on traditional debt. They bring sophisticated financial management and operational expertise. For schools with underutilized assets—real estate, media rights not fully monetized, or intellectual property—outside investors can help extract value that athletic departments lack the expertise to capture themselves.
Proponents argue that college sports is already heavily commercialized, with billion-dollar television contracts, corporate naming rights on every conceivable surface, and coaches who earn more than university presidents. From this perspective, private equity investment isn’t a corruption of college athletics’ purity—it’s simply the next logical step in an evolution that began decades ago.
“The horse left the barn on amateurism a long time ago,” one industry consultant said. “Schools can either adapt to the business reality of modern college sports or watch themselves become irrelevant.”
The Core Tension
At the heart of this debate lies a genuine dilemma that schools must navigate: how to remain competitive in an increasingly expensive and professionalized environment while maintaining institutional control and the educational mission that supposedly distinguishes college sports from professional leagues.
Schools that refuse outside investment may find themselves unable to compete for top athletes, coaches, and recruits. The gap between the haves and have-nots in college athletics is already substantial; without access to new capital sources, it could become insurmountable for mid-tier programs.
Yet inviting outside investors in means ceding control over decisions that have traditionally been made based on institutional values, competitive considerations, and student welfare. Once ownership stakes are sold or revenue streams are committed, reversing those decisions becomes extraordinarily difficult.
The legislation also raises questions about enforcement and scope. Would it prevent all forms of outside investment, or just certain structures? How would it affect existing arrangements or deals in negotiation? And would blocking one avenue for capital simply push schools toward other creative financing arrangements that could be equally problematic?
What Comes Next
The PROTECT Act faces an uncertain path forward, but it arrives at a critical moment. While no major college athletic department has yet completed a private equity deal, the concept is far from hypothetical. The Big Ten is currently in discussions regarding a $2 billion private capital investment into the conference, and multiple private equity firms—including College Sports Tomorrow, Smash Capital, and Collegiate Athletics Solutions—are actively pursuing deals with NCAA programs.
The college sports landscape is watching what’s already happened in professional sports, where private equity has become ubiquitous. All four major U.S. professional leagues now permit private equity investment, with the NFL becoming the last to allow it in August 2024. By late 2024, private equity firms had connections to roughly two-thirds of NBA teams, more than half of MLB teams, and significant stakes across the NHL and MLS.
The bill’s introduction appears designed to draw a bright line: what’s acceptable in professional sports may not be acceptable in higher education. Whether that distinction can hold, especially as schools face mounting financial pressures, remains an open question.
What’s certain is that the financial pressures facing college athletics aren’t going away. Schools will continue seeking new revenue sources, whether through private investment, conference realignment, expanded playoffs, or other innovations. The question isn’t whether college sports will change—it’s who will control that change and whether the educational mission at the heart of these institutions will survive the transformation.
As one longtime college sports observer put it: “We’re at an inflection point. The decisions made in the next few years will determine what college athletics looks like for the next generation. The question is whether we’re making those decisions thoughtfully or just letting market forces run wild.”
For now, Rep. Baumgartner’s bill puts a stake in the ground, arguing that some forms of capital come with costs that exceed their benefits. Whether Congress agrees, and whether schools can find alternative paths to financial sustainability, remains to be seen.