New business entities test university control, transparency, and financial discipline.
When the University of Kentucky (UK) approved a new business structure for athletics in April 2025, the promise was greater flexibility: more opportunities to generate revenue, manage expenses, borrow capital, and draw on outside expertise and partnerships. The move reflected a historic proposal to transform its athletic department into a separate legal holding company called Champions Blue, LLC. This made Kentucky the first major university in the United States to shift its entire sports operation into a limited liability company structure.
The financial commitments remained substantial. UK’s trustees subsequently approved an internal loan of up to $110 million for athletic capital investments. University plans also anticipated operating loans totaling up to $31 million across two fiscal years.
The figures illustrate a central question facing colleges reorganizing the business of sports: What changes when athletics moves into a separate entity, and what responsibilities stay within the institution?
For Karen Weaver, PhD, an adjunct assistant professor at the University of Pennsylvania Graduate School of Education and a former athletics administrator and coach, the answer begins with governing boards understanding the full bargain. Her book, Understanding College Athletics: What Campus Leaders Need to Know About College Sports, came from years of teaching senior campus leaders.
“The trustees can’t just see what’s the good in the deal,” Weaver says. “They have to see what the risks are in the deal.”
Know Which Deal You Are Making
The House v. NCAA legal settlement approved in June 2025 enables participating Division I institutions to provide direct financial benefits to athletes, with a first-year limit of $20.5 million. Third-party name, image, and likeness agreements have separate rules. That added financial pressure has helped spur new organizational approaches.
Champions Blue, LLC is a nonprofit, public holding company for athletics, ultimately governed by the university’s board of trustees. UK says its affiliated corporate framework resembles the structure used for two community hospitals and allows for outside expertise and operational differentiation.
Michigan State University took a different approach with Spartan Ventures, launched July 1, 2026. Its structure includes a nonprofit parent, a for-profit media corporation, and a nonprofit fundraising foundation. Commercial operations moved into the organization while coaches, compliance, facilities, and athlete support remained within university athletics.
Neither structure should be conflated with a private-equity transaction. Establishing an affiliate determines how an institution organizes its activities. A financing or commercial agreement determines what it promises a partner, potentially including access to assets, future revenue, or decision-making authority. That distinction matters when evaluating Weaver’s warnings about private capital. An affiliate may create opportunities for such agreements, but its formation alone does not establish their terms.
“There is no one size fits all,” she says. “Every board has to answer those questions for themselves.”
Looking Past the First Payment
When an institution considers outside financing, Weaver cautions against allowing an upfront payment to overshadow the obligations attached to it.
She describes arrangements in which outside companies offer substantial funding in exchange for control over revenue-producing activities including ticketing, marketing, hospitality, and parking. The immediate benefits can be appealing, such as cash for investments and fewer employees on the college’s payroll.
The longer view is not simple. Weaver says some proposed agreements stretch 20 years, likely outlasting the tenure of the administrators and trustees approving them. Leaders need to consider what happens if the organization is sold, institutional priorities change, or a relationship no longer serves the university. The size of the payment cannot answer those questions, and neither can a promise of faster decisions.
Board composition is another consideration. Weaver offers a hypothetical arrangement in which a company holds three seats on a five-member board and the university holds two. The institution could lose a vote on a decision affecting its future. Her example concerns a possible partnership structure, not the composition of every athletics affiliate. The broader question is whether the institution’s actual decision rights match its stated commitment to retain control.
Make Oversight Usable
In its launch announcement, Michigan State described a seven-member Spartan Ventures board, with seats reserved for the university president, trustee chair, and athletics director, alongside four outside members. It also said safeguards would prevent the university from losing control of department operations.
Such assurances provide a starting point for scrutiny. The practical reporting questions are specific: Which decisions require university approval? What documents can trustees review? What happens when commercial objectives conflict with institutional priorities?
Weaver’s clearest requirement is access to the full agreement. She says she has encountered situations in which only a smaller group was allowed to review documents because of concerns about public disclosure or competitors obtaining information. Trustees cannot assess obligations they cannot see.
Public disclosure raises a related but distinct question. Weaver emphasizes that public records requirements depend on state law, while university oversight also depends on institutional governing documents. Moving activity into an affiliate requires examining both, rather than assuming a new legal structure resolves either issue.
She also cautions that university counsel may need additional expertise to navigate commercial arrangements, nonprofit obligations, taxation, and conflicts of interest.
“This requires more expertise than you might already have on campus,” she says.
Define What Success Protects
Operational flexibility can change incentives as well as organizational charts. Michigan State reported 46 Spartan Ventures employees at launch and described opportunities to reward employees for financial performance. Weaver questions whether outside operators necessarily understand higher education’s culture. Generating revenue, she says, must remain consistent with the institution’s mission and vision.
That concern becomes tangible when leaders consider who can reject an unsuitable commercial opportunity, how staff incentives reflect campus responsibilities, and whether new income supports broad athletic participation or simply finances the next competitive escalation.
Michigan State identifies preserving opportunities across 23 sports as a reason for its revenue strategy. That is an institutional goal against which the model’s results can eventually be evaluated.
Weaver remains skeptical that structural innovation alone will contain spending.
“We don’t necessarily have a resource problem,” she says. “We have a spending problem in athletics.”
Weaver worries that competitive pressure encourages leaders to accept a deal before they understand its consequences.
“If you had that time to plan and strategize and learn, you could make better decisions if and when that opportunity comes,” she says.
