As college athletics prepares for the anticipated approval of a $2.8 billion NCAA antitrust settlement, the University of Kentucky is reportedly the first institution to transition its athletic department into a limited-liability holding company (LLC).
An LLC is a business structure that offers personal liability protection to its owners, known as members. This means that members are generally not personally responsible for the company’s debts or legal issues. The structure blends elements of both corporations and sole proprietorships, providing flexibility in management and taxation. Profits and losses typically pass through to the owners’ personal tax returns, avoiding corporate taxes unless the LLC chooses to be taxed differently.
Champions Blue LLC, officially approved by the university’s Board of Trustees in early May, is seen as a strategy to increase the school’s flexibility in generating new revenue. With the expected settlement looming, which would allow schools to distribute up to $20.5 million annually for athletes’ name, image, and likeness (NIL) agreements, these deals are considered crucial for attracting and retaining top recruits — and require significant funding.
“We believe this is an innovative approach — a new structure and governance model that thoughtfully contemplates how we strengthen Athletics, protect and promote the University and open up new opportunities for growth,” said UK President Eli Capilouto in a press release. “It’s a foundation and model that we are calling Champions Blue. Athletics and its success have always been the result of an incredible and productive partnership with campus. It will continue to be in the future — if we seize the opportunities in front of us to meet the challenges that lie ahead.”
With the college athletics landscape shifting and the House settlement on the horizon, UK Director of Athletics Mitch Barnhart, Capilouto, and other university leaders have begun planning not just for the program’s survival — but for how it can thrive in this new era.
“Our mission remains the same: to put championship rings on fingers and diplomas in hands,” said Barnhart.
“But how we accomplish that goal — how we finance our teams, protect our future and support our student athletes — will have to change. That’s what this new model represents — an understanding that in the market we are in that we have to be creative. We have to find new ways to generate revenue, manage expenses and think about opportunities to grow. I am excited about what the future holds, through even greater collaboration with the University as we partner together to continue UK Athletics as such an important part of the mission of the University of Kentucky,” he added.
UK’s director of strategic communications, Jacob Most, emphasized the flexibility and long-term advantages of the new model.
“There are so many benefits to creating Champions Blue,” Most told AP News. “It provides the flexibility needed to help us stay well-positioned during this period of continued evolution in college athletics. We will benefit from a new board of internal and outside experts with sports business experience — including in pro sports — that will help guide us in finding revenue streams to support our teams.”
“This structure will help us create new revenue streams, which when reinvested in our programs and facilities, will help ensure the continued success of our sports programs,” he added. “In today’s college landscape, isolating the business component enables us to focus on our student-athletes.”
Read more about the House Settlement:
- House v. NCAA Lawsuit Filed (2020)
- House v. NCAA Certified As Class Action Lawsuit
- NCAA Leadership Closing In on Multibillion-Dollar Settlement In House Case
- House Settlement with NCAA Mulling Revenue Sharing Agreement With Athletes
- Big 12, ACC Reportedly Approve Settlement in House v. NCAA Case
- NCAA Approves Multi-Billion Dollar Settlement in Historic House Case, Ending Amateurism
- NCAA Student-Athletes Receive Estimates of House Settlement Payouts; Mixed Reviews
- Most Swimmers See Estimated House Settlement Payouts To Be “More” Than Expected
- House Settlement Final Approval Hearing: Live Updates
- Judge Wilken Delays House Settlement Final Approval Over Roster Limits
- Schools Expected To Be Given Option To Grandfather In Roster Limits In House Settlement
And with that, college sports is officially (and legally) a business!
Is this the first step in spinning off the athletic department as an organization separate from the university?
They don’t want to spin off too far, the alumni dollar pipeline is too important.
We have University of Kentucky Athletic Department, LLC before we got GTA6.
Randy