Florida State University is working with JPMorgan Chase to explore how the school’s athletic department could raise capital from institutional funds, such as private equity, according to multiple people familiar with the plans.

PE giant Sixth Street is in advanced talks to lead a possible investment, said the people, who were granted anonymity because the specifics are private. Institutional money has poured into professional sports in recent years, from the NBA and global soccer to F1 and golf, but this would break new ground by entering the multibillion-dollar world of college athletic departments.

The school is considering a structure similar to many of those pro sports investments, where commercial rights are rolled into a new company, the private equity fund invests in that entity, and then recoups its money via future media/sponsorship revenue. That’s how Silver Lake structured its investment into the New Zealand All Blacks rugby team, and how CVC organized its $2.2 billion Spanish soccer deal with LaLiga.

The process comes as Florida State trustees and administrators publicly voice their concerns that the Seminoles, as a member of the Atlantic Coast Conference, are financially falling behind rival schools in the SEC and Big Ten. At a board meeting earlier in the week, Florida State’s president and athletic director both emphasized that barring a dramatic change in how the ACC distributes money, the school should explore opportunities to join other conferences. That would carry a $120 million exit fee.

A handful of FSU trustees and spokespeople didn’t respond to multiple requests for comment. Representatives for the athletic department, JPMorgan Chase and Sixth Street declined to comment.

It’s unclear exactly which FSU entity is most involved in the process. Florida law allows its public universities to organize their athletic departments as separate nonprofits, and there is a complex web of entities that includes the school itself, its booster organization and these nonprofit athletic setups. Many public schools also have strict rules around transparent, competitive bidding for university contracts, and certain deal structures would need to be avoided so as not to jeopardize a university’s tax-exempt status.

The discussions come as conference realignment reaches a panic stage in college sports, with some of the country’s largest athletic departments searching for long-term stability and financial security. The SEC (adding Oklahoma and Texas) and Big Ten (adding UCLA and USC) have risen above the other conferences financially, leaving schools in every other league exploring options.

Florida State administrators have been candid about the financial challenges of staying in the ACC, and additional capital could be used to bolster their current ACC membership, or possibly to help fund an exit. Despite its football team’s recent struggles, the Seminoles could be an attractive candidate to join a different conference, though the $120 million fee is a significant hurdle.

FSU’s president, athletic director and board of trustees laid out their positions on why action by the university was required at a board meeting on Wednesday.

“I believe that FSU will have to, at some point, consider very seriously leaving the ACC unless there were a radical change to the revenue distribution,” FSU president Richard McCullough said. He laid out an “existential crisis” the school faces with at least an annual $30 million shortfall in revenue versus its peers in other conferences, namely those in the Big Ten and SEC.

McCullough said the issue is how to remain competitive at football and get what “selfishly is the revenue we deserve,” citing Florida State as the 12th-ranked team in the country for TV viewership.

The board echoed McCullough. “Do we want to play games moving forward, or do we want to compete?” questioned former FSU quarterback Drew Weatherford, who serves on the board. Trustee Justin Roth called the situation death by a thousand cuts, and “each cut is a $30 million cut over the next 13 years.”

The ACC’s ESPN contract expires in 2036, and to get out of it early FSU would need to resolve the Grant of Rights issue, which legally gives members’ media rights to the conference through the duration of the TV deal.  

“That’s the least of my worries based on what we know,” Peter Collins, FSU board chair, said about the Grant of Rights document during a Tuesday appearance on Warchant TV. “We understand it. We have gotten a lot of counsel on that document. That will not be the document that keeps us from taking action. And I’ll leave it at that.”

Collins led Wednesday’s board meeting and multiple times said he could have more info to share “sooner than later.” FSU would need to notify the ACC of its departure by Aug. 15 to be able to exit next summer.

In early 2021, Sixth Street made its first investment in sports when it bought a controlling stake in event and hospitality company Legends. Sixth Street, with $65 billion assets under management, has since invested in the San Antonio Spurs, Real Madrid and Barcelona. This spring, the San Francisco-based firm became the lead owner in the NWSL’s latest expansion team, Bay FC, at a record $53 million fee.

JPMorgan Chase has a long history of providing stadium financing and advising clients on sports team transactions, but the biggest U.S. bank by assets has moved beyond those areas. In 2021, it was prepared to finance the breakaway soccer Super League comprised of the top European clubs, which it later apologized for after plans were made public. It expressed interest in taking a stake in Serie A’s media business this year.

While private equity funds can now buy passive minority stakes in every major U.S. league except the NFL, college athletic departments would be a new frontier. (In a rare instance, Memphis’ athletic department took out a bank loan in 2020, and college dealmaking giant Learfield is backed by a pair of private equity funds.)

Back in 2019, the Pac-12 hired the Raine Group to explore the possibility of raising money from PE firms by allowing them to invest in the league’s media enterprise. That process, which didn’t ultimately pan out, was motivated by a goal similar to the one currently motivating Florida State—runaway revenue in leagues like the SEC and Big Ten and a desire to narrow that gap.

Florida State spent $150 million on athletics in fiscal 2022, according to Sportico’s college finance database, making it one of the 20 largest public athletic departments in the country. That ranks just below the Big Ten’s Iowa ($151 million) and above the SEC’s Arkansas ($144 million).

Florida’s public universities can organize their athletic departments into separate nonprofit “direct-service organizations,” or DSOs, which gives schools greater flexibility than other states in how they can raise and spend athletics money, often with fewer public disclosure requirements. FSU’s board of trustees voted in 2019 to bring its athletic department under the umbrella of its DSO, the Florida State University Athletics Association (FSUAA), which also is formally tied to another organization, Seminole Boosters Inc.

Since then, however, only a relative fraction of the athletic department’s money and assets have flowed through FSUAA. For example, while the athletic department brought in $161 million of revenue from 2021 to 2022, the nonprofit reported taking in less than $3 million during that time, primarily in contributions from the school’s foundation and Seminole Boosters.

Transparency advocates have criticized the secrecy with which DSOs in Florida can operate, but have so far been unable to expose them to much sunlight. In 2016, a proposed piece of legislation that would remove their public records exemption died in committee.

With assistance from Daniel Libit.