They leaned back in their chairs, equal parts awestruck and mesmerized at the lesson playing out before them.
Former Tigers quarterback Tajh Boyd served as the evening’s professor, diagramming plays and walking Clemson fans through concepts that offered a peek into the psyche and requirements of a high-major signal-caller.
The fans and partners in attendance could thank Clemson Ventures — the school’s third-party LLC, which encompasses the bulk of its commercial business arms — for the experience.
“It’s funny because that’s like, table-stakes-type stuff in my pro days,” joked Clemson Ventures CEO Michael Drake, who spent two decades in the NBA and NFL.
To Drake’s point, hosting events for major benefactors isn’t new. Premium hospitality is a constant in college athletics. But the newly established LLC helping the Tigers boost their bottom line is an increasingly public-facing part of college athletic department operations in the South Carolina Upstate and across the country.
Clemson was among the first to develop such a setup. Kentucky followed in a slightly different form. Michigan State and West Virginia have since joined the LLC trend, as has Texas Tech.
Returns are early, but the last 15 months at Clemson are proof of concept. The school is generating more than double the gross and net revenue it produced in the final year of its JMI Sports deal, despite the operational costs. Clemson Athletic Director Graham Neff declined to share specifics.
“What has been in college athletics is the ‘external unit,’” Neff said. “In a lot of places, that means philanthropy, [multimedia rights] management, sports information, your marketing team. … The distinction of duties and staff under Clemson Ventures is [it’s] all revenue-generating in nature."
There are varying rationales why these entities have popped up over the last 18 months: better commercialization of assets; pay scales that allow for more performance-based bonus structures; more ownership over IP. Each reason has its merits.
What these LLCs actually do varies widely by school, but the ultimate goal is the same: Drive more revenue and create financial flexibility.
“Don’t get me wrong; football, basketball, and everything else are still key pieces of [driving revenue],” said Texas Tech Athletics CRO Chase Jolesch. “But if you’re not thinking about commercializing the business outside of those, then you’re going to be left behind.”
What LLCs at schools do
The impetus for Clemson Ventures is best understood with a brief history lesson.
Clemson previously employed JMI Sports as its third-party multimedia rights provider through a seven-year, $68 million deal signed in 2017. The agreement was supposed to run through 2024, but was renegotiated when JMI couldn’t meet its guarantees. The school subsequently developed Clemson Athletics Properties to handle its multimedia rights in-house.
What followed was a natural progression that has seen the Tigers roll up five of their commercial, revenue-generating assets — multimedia rights, media/original content, sales and marketing, NIL operations and business operations — into Clemson Ventures.
“Our comms staff, I don’t know that they’re waking up every day and thinking about how to generate revenue commercially, nor should they be. That’s not the job,” Neff said. “But putting all the jobs and staff [related to revenue] in a distinct entity that’s a commercial revenue-generation focus is important.”
Clemson’s evolution toward such a model isn’t necessarily a blueprint, nor is the structure the same as it is elsewhere.
Kentucky announced the creation of Champions Blue LLC in April. The nonprofit arm will essentially be a holding company for UK athletics and keep it semi-tethered to the university. Champions Blue will have dual-reporting to its own board and the Kentucky board of trustees, and is expected to be subject to freedom of information laws.
UK’s efforts, too, are less about creating a single commercial business vertical and hinge more on developing a quicker, more efficient system in how the school can operate around slower-moving processes, like procurement.
“Sometimes people want to chase the business model at the expense of the mission,” Kentucky AD Mitch Barnhart said. “It is really important for Kentucky to make sure those are going down the same highway — that mission and business can live together, and we have educational, competitive decisions we’re making that can align with business decisions that are entrepreneurial and that give us a chance to walk together, versus these two different highways that never seem to work together.”
Texas Tech, meanwhile, announced Nov. 21 a 10-year renewal with Learfield that included the creation of Texas Tech Athletics Partners LLC, which will house the school’s business development and Learfield Impact NIL services and staff under the LLC’s branding.
That move also dovetailed with a new elite sponsorship tier, the “Double T Circle,” which will offer premium sponsorship opportunities and exclusive access to Texas Tech AD Kirby Hocutt and Red Raiders coaches. Adidas and Coca-Cola are inaugural members.
“As we go into this new revenue-share model, I want us to steward and build the same healthy relationships with our corporate community as we have with our donor community,” Hocutt said. “Once we do that, we’re going to continue to see elevation and amplification of the Texas Tech athletic brand.”
And while each of these approaches varies widely in rationale, flexibility and revenue generation remain at the core of their missions.
“There’s going to be a lot that develops [in college sports],” said Michigan State AD J Batt, who has spearheaded the creation of Spartan Ventures during his brief tenure. “But a lot of that’s TBD. A lot of this is moving to a place where you’re prepared to take on change and challenge, and this sort of an organization allows you to do that.”
Why NIL is part of LLC and revenue-generating calculus
Though schools might preach flexibility and innovation, the shifting rules of engagement in NIL and roster building are pushing vast change as much as any other factor.
The House settlement stipulates universities can share up to $20.5 million directly with athletes. But with roster prices, particularly in football, skyrocketing into the $20 million to $30 million range, institutions are trying to drive above-the-cap NIL dollars that must pass muster from the College Sports Commission.
“Finding those relationships that are not going to count against your $20.5 million … you’re going to try to find ways to go above that,” said Matt Banker, a college sports consultant and senior adviser to the CCHA Sports Law group. “We have certain high-profile programs being quoted as having more money around a specific sport than even the individual cap allows, even though that school that’s in that neighborhood is probably supporting multiple sports. That also tells you how much they’re leaning on third parties to help activate stand-alone NIL deals.”
Apparel deals, for one, have been popular fodder for above-the-cap dollars.
Take Wisconsin, which announced a 10-year, $104.5 million deal with Under Armour last week. Its deal is also expected to have language within its contract that will allow the school to repurpose portions of the $3.8 million in rights fees it receives annually toward NIL.
“They’ve been working hand-in-hand with our student athletes,” said Wisconsin Deputy AD/CRO Mitchell Pinta, who helped lead discussions. “And a huge element of this agreement moving forward really memorializes more of that work that we’ll be doing together, and leaning into the promotion of our student athletes.”
Neff and Barnhart acknowledged above-the-cap NIL has become an increasingly steady conversation. And while neither LLC was designed intently with such dealmaking ability in mind, the structure helps.
“While there’s a lot of marketing agencies out there that are aggressive in the commercial business space for their schools, we’re able to do that in-house with Ventures,” Neff said. “We’re able to present, commercially, Clemson athletics assets, Clemson University assets and now our student athletes’ NIL as an opportunity.”
Getting brands involved in NIL has its own challenges. Major corporations are risk-averse and unlikely to partake in deals that might operate in the gray.
Now four years past the first payments to athletes, there’s increased trust between corporate conglomerates and those on campus.
“Figuring out what that brand is looking to get out of a partnership, that’s a big deal,” said Brooke Ellenberger, Clemson Ventures’ VP/business operations and a former longtime Tennessee Titans staffer. “Do they want something community-related? Is it strictly viewership numbers? Is it hospitality? What are they looking for?
“[It used to be] set up like, ‘Oh, throw in a video board and we’ll throw in this.’ Now it’s very tailored.”
The future role of IP and outside investment
Big 12 Commissioner Brett Yormark seemingly makes deals by the day. But for the constant flood of announcements that come from his league, the Big 12 drew its share of headlines last week when it announced a first-of-its-kind deal that gave it a 15% equity stake in the Players Era Festival and an annual minimum cash guarantee.
“I always think about, ‘How do we either create IP or have a vested interest in IP that we’re a part of?’” Yormark said. “It’s a different mindset. And if we’re going to create value, which we are, we want to share in that value. Taking an equity stake in [Players Era] affords us the opportunity to do so.”
That sentiment — and impetus for netting more ownership in a tournament the Big 12 will send eight teams to annually — is at the heart of why schools are considering varying new commercial arms. Schools and conferences are trying to better monetize assets. Increased ownership of one’s IP is key to that effort.
Take the Big Ten’s private capital play. Commissioner Tony Petitti has pushed a $2.4 billion cash infusion from UC Investments that would see schools receive a hefty up-front cash payout. The more commercial-minded play comes in creating Big Ten Enterprises, a holding company that would essentially house leaguewide assets such as media rights and sponsorships.
Sound familiar? It should.
The American Conference created American RISE Ventures in May after deciding not to renew its expiring deal with Learfield. The idea was to take the league’s book of business down to zero and rebuild it with a more cohesive approach and explore new revenue streams.
“The pace of play in college is hugely challenging,” said American Commissioner Tim Pernetti. “If doing things like this can help you accelerate and move more quickly, or move more autonomously while still being tethered to the university, grow your enterprise, then everybody should look at it. But you also have to be in a position where you are, or can believe you can be, self-sustaining by doing it.”
The conference-level approach is also the long-perceived avenue for private capital entering the space, but such setups like those at Clemson, Michigan State and elsewhere could open the door to varying levels of creativity on an individual school basis.
Could Clemson Ventures structure a deal such that equity in the company might integrate a capital partner? Would schools move more than just business operations (think football and basketball) into these companies to better incorporate outside money?
Neither idea feels completely far-fetched these days.
“Private equity or capital, they’re already in college athletics,” Clemson’s Drake noted. “Learfield, Legends, they’re all backed by them. … [Private equity working] directly with an entity on campus is where it hasn’t happened yet. But for us it was like, ‘Let’s go build a company that’s envied. That’s taking in capital for a different reason than just saying ‘Hey, give me money.’
“We look forward to the years ahead, when we’ve built up a sustainable business and we’re having a different type of conversation.”
