Why Athletic Departments Need New Revenue Streams

College athletic departments operate in a high-stakes environment where revenue is critical to sustaining operations, recruiting top talent, and maintaining competitive facilities. According to the NCAA, Division I athletics generated $15.8 billion in 2019, with football and men’s basketball driving the majority through media rights, ticket sales, and donor contributions. However, expenses often outpace revenues, with the median FBS program running deficits due to rising coaching salaries (averaging $3.5 million for head football coaches), facility investments, and recruiting costs. The House v. NCAA settlement, expected to be finalized in 2025, will add $20–23 million in annual athlete compensation costs, further straining budgets.

Traditional revenue streams—ticket sales, media rights, merchandise, and alumni donations—remain vital but are insufficient to meet these demands. For example, merchandise sales spike during championship seasons but are inconsistent, and donor contributions, while critical, often come with restrictions. Moreover, the nonprofit structure of most athletic departments incentivizes spending all revenue to maximize victories rather than building financial reserves, creating a “non-profit paradox” where expenses rise in lockstep with income. To address these challenges, departments must adopt innovative, business-oriented strategies, leveraging partnerships with private entities to unlock new revenue potential.

Strategies for Athletic Departments to Boost Revenue

1. Leverage Public-Private Partnerships (PPPs)

   
   

   The University of Kentucky’s Champions Blue, LLC, a for-profit entity created in April 2025, exemplifies the power of PPPs. By transitioning its athletic department to an LLC, Kentucky can pursue real estate ventures, premium fan amenities, and flexible compensation models, generating revenue while protecting the university’s nonprofit status. Other departments can follow suit, partnering with private investors to develop mixed-use facilities, such as stadium-adjacent retail or hospitality spaces, which diversify income and stabilize revenue during economic downturns.

2. Optimize NIL Collectives for Recruitment and Retention

   
   

   NIL collectives, with over 120 in existence, have become critical for recruiting and retaining talent by facilitating deals between athletes and third-party sponsors. Departments can enhance these collectives by partnering with businesses to fund NIL opportunities, ensuring compliance and maximizing athlete marketability. For instance, Texas Tech plans to allocate 74% of its $20.5 million revenue-sharing budget to football, demonstrating how collectives can prioritize high-impact sports while supporting others. By streamlining NIL operations, departments can attract top recruits, boosting team performance and fan engagement, which drive ticket and merchandise sales.

3. Invest in State-of-the-Art Facilities

   
   

    Athletic facilities are a top-five factor in recruiting decisions, with 67 Division I athletes at Bowling Green State University ranking them highly. Modernized venues attract elite talent, increase attendance, and enhance fan experiences through better seating, lighting, and amenities, driving ticket and concession revenue. Partnerships with firms like AECOM, which designed Arizona’s C.A.T.S. Academic Center, can optimize facility investments for both athletic and academic purposes, appealing to donors and sponsors.

4. Harness Data Analytics for Revenue Optimization

   
   

   Data analytics can transform revenue generation by optimizing ticket pricing, enhancing sponsorship value, and informing recruiting strategies. For example, dynamic pricing models can maximize ticket sales during high-demand games, while analytics-driven sponsorship packages ensure brands see measurable returns. Departments can also use analytics to identify high-potential recruits, reducing recruiting costs and improving team performance, which boosts revenue through wins and fan loyalty.

   
   

5. Engage Private Equity and Corporate Investors

   
   

    Private equity (PE) firms are increasingly eyeing college sports as untapped assets with significant revenue potential through media rights, sponsorships, and merchandising. Firms like Redbird Capital are exploring investments in athletic departments, viewing them as financial assets with valuable intellectual property and loyal fan bases. Departments can partner with PE firms to fund facility upgrades, NIL collectives, or media ventures, sharing profits while maintaining control over educational missions. Corporate sponsorships, like those in professional golf (e.g., Rolex, Nike), can also fund athlete services, enhancing recruitment and retention.