Florida State University administrators spent much of the first half of 2023 speaking with at least two private equity firms, Sixth Street and Arctos Partners, about the possibility of providing money to help fund the Seminoles athletic department, according to a series of emails released by the school on Tuesday.
The communications, many of which are heavily redacted, were given to Sportico in response to a public-records request made back in August. The materials provide new insight into Florida State’s work with JPMorgan Chase to explore institutional investment for its athletic department—what would be a first for college athletics. FSU is hoping to maintain its position among the college sports elite, but recently said that staying in the Atlantic Coast Conference would produce a $30 million gap between its income and that of its peers in other leagues. Buying its way out of the ACC, the school says, would cost $572 million.
The private equity talks were internally nicknamed “Project Osceola”—after the famous Seminole leader and FSU mascot—and they appear to center on the creation of a NewCo to house commercial rights from the school’s athletic department. That entity could then take on outside capital. This structure has become common for PE investments in sports, including Silver Lake’s backing of the New Zealand All Blacks rugby team and CVC’s financing of LaLiga, the top Spanish soccer league.
Sixth Street is still in active talks with Florida State about a possible investment, while Arctos is not, according to multiple people familiar with the negotiations. Representatives for Sixth Street and Arctos declined to comment. Representatives for JPMorgan and Florida State did not immediately respond to requests for comment.
The initial discussions between JPMorgan and FSU date back to at least the summer of 2022, the documents show. The parties executed a nondisclosure agreement that August, which was signed by FSU Board of Trustees chairman Peter Collins and Eric Menell, the managing director and co-head of North American media investment banking for JPMorgan. Collins is the co-founder and managing principal of Forge Capital Partners, a private equity firm based in Tampa.
Roughly three months later, on Dec. 2, 2022, JPMorgan asset management vice chair (and FSU alum) Ashbel Williams connected Kyle Clark, the school’s senior VP for finance and administration, with Peter Lovett, executive director of JPMorgan Investment Management. “Peter specializes in liquidity solutions for JPMorgan clients,” Williams said in an email introduction. “With that, I am hopeful this is the beginning of a productive discussion that will be helpful to FSU.”
Sixth Street joined the conversation two months later. On Feb. 7, 2023, JPMorgan organized a call to connect FSU administrators with Sixth Street executives. Over the course of the spring, FSU and JPMorgan engaged with both Sixth Street and Arctos, two of the more active private equity firms in global sports. Sixth Street owns hospitality provider Legends and is an investor in Real Madrid, Barcelona, the San Antonio Spurs and the Bay Area’s new NWSL expansion team. Arctos, which is sports specific, has made more than two dozen investments, including passive stakes in Liverpool, the Boston Red Sox, Los Angeles Dodgers, Golden State Warriors, Philadelphia 76ers and New Jersey Devils.
Navigate, the sports and entertainment consultant, was also involved in the process, according to emails.
While financial specifics are unclear, both Sixth Street and Arctos went through some form of term sheet review in late May and early June. FSU later put together a document, dated June 8, that compared the two firms’ positions on a possible investment. The version of that document provided to Sportico is heavily redacted, but it does provide some information about where talks stood at the time. It lists Arctos’ initial purchase amount as $75 million (Sixth Street’s is redacted.) The document also suggests Sixth Street and Arctos had differing positions on FSU’s intellectual property license, with Sixth Street wanting the license to be “exclusive,” while Arctos was fine with the school’s desire for a non-exclusive IP license to be granted to the newly formed company.
The school also built out a 28-page financial model, dated August 2023 and marked “strictly private and confidential.” The document projects massive jumps in the Seminoles’ revenue in the coming years, including its conference distribution share going from $44.3 million in 2023 to $84.5 million in 2027, owing to an anticipated “bump” in payouts from the College Football Playoff. The school projected those conference distribution figures reaching $187.7 million by 2043. It is worth noting that the projections were made months prior to the FSU board voting to try and sue its way out of the ACC. That litigation is currently ongoing.
Another email attachment labeled, “FSU Sixth Street Diligence Tracker,” includes a list of dozens of categories of financial information requests and questions such as, “How is FSU thinking about a new (multimedia rights deal)?”
According to the document, the school was “currently exploring various 3rd party relationships” and “running (a) bid process in September of 2023” with the expectation it would “make new partner selection mid-October [2023].” However, the school, which has most recently partnered with Learfield, has not made any public indications that it is looking to switch to another multimedia rights company or that it has amended its Learfield deal.
According to its most recent NCAA revenue and expense disclosure, Florida State spent $172 million on athletics in the 2022-23 school year, a $22 million spike from the prior 12 months. This led to a reported athletic department debt of $2.5 million in FY23, after the school reported a $10.4 million surplus the prior fiscal year.
The financial picture, according to FSU board members, will start to get more challenging. The school says the current revenue gap between FSU and its comparable peers in the richer Big Ten and SEC conferences was about $7 million this year. That will grow to $30 million per year next year, as realignment and new TV deals start to take shape. That gap is a big part of the school’s desire to leave the ACC. A lawyer for the board said in December that it would cost $572 million to immediately buy out the league.
Sixth Street’s other sports investments include a series of summer exhibitions played in the U.S. between some of the world’s most valuable soccer teams. In July, a Sixth Street managing director invited a group of FSU officials—including Collins and President McCullough—to a matchup between Barcelona and Real Madrid at AT&T Stadium in Dallas.
“Not to be greedy, but would it be possible for us to bring a couple of our larger boosters with us as well?” Collins replied. “It would be a very nice trip for them to go there with the three of us. If it’s not possible, that’s fine, just trying to get the most mileage out of this for the University…”
