Why Kentucky athletics just moved to an LLC

Good morning, and thanks for your continued support of Extra Points.

Earlier this week, the University of Kentucky turned heads all over the college sports industry by announcing they were moving their athletic department into a new LLC called Champions Blue. The best overview of why Kentucky decided to do this, in my opinion, came from the Kentucky student newspaper, which you can read here.

I got a few emails and text messages from reporters and other industry people about Kentucky’s decision. Is this the start of a nationwide trend? Is this driven by a desire to shield a university from potential legal or tax liability? To evade open records requests from nosy reporters like me? To potentially sell off equity stakes to outside investors?

I am not a Serious Finance Professional. If I was, I’d probably be doing something that paid more money than newsletter writing. But I do know plenty of those people, so I’ve spent the last few days poking around to try to better understand what this transition means not just for Kentucky athletics and the folks who love it, but for everybody else in the industry.

I’ll go ahead and spoil this part. I believe UK’s decision-making here is motivated by more Kentucky-specific reasons than you might think.

Okay, so Kentucky is a public school, and the athletic department was previously part of the university organizational chart, right? So why would they want to spin the thing off into a different LLC?

Want to read the rest of the newsletter? Subscribe today!