The PROTECT Act restricts colleges from receiving federal student aid if they enter agreements that give private equity firms or foreign government funds ownership stakes or control over their athletic programs.
Michael Baumgartner
Representative
WA-5
The PROTECT Act aims to safeguard the public mission of college athletics by restricting agreements between universities and private equity firms or foreign government investment funds. To maintain eligibility for federal student aid, institutions cannot transfer revenue rights or grant control over their sports programs to these outside investors. This legislation seeks to prevent conflicts of interest and ensure that publicly supported athletic programs benefit students and the public good rather than prioritizing private financial gain.
PROTECT Act Bans University Sports Deals with Private Equity and Foreign Funds; Compliance Required for Federal Aid
The newly proposed PROTECT Act aims to fundamentally change how college sports are financed by drawing a hard line against private equity and foreign government investment. If a college wants to keep receiving crucial federal student aid—the Title IV money that funds student loans and grants—it can no longer enter into certain financial or management agreements regarding its athletic programs with private capital firms (like hedge funds or PE) or sovereign wealth funds (investment arms of foreign governments).
The New Rules of the Game
What exactly does this mean? Basically, universities are forbidden from making deals that involve selling off any piece of the sports revenue pie. This includes transferring or pledging any ownership, profit share, or revenue interest from things like media rights, ticketing, sponsorships, or commercial data. If a firm wants a cut of the gate receipts or the TV money, the deal is out. Furthermore, the bill bans granting these firms "control rights"—meaning they can’t get veto power over key decisions like hiring coaches, setting the schedule, managing the school’s brand, or deciding which students play. This is a direct shot at the increasingly complex, revenue-sharing agreements that have started popping up in college sports.
Why the Policy Breakup?
Congress states that college sports are a "public good" that should support the educational mission of the university, especially since many of these institutions receive taxpayer subsidies. The concern is that when private equity or hedge funds get involved, their incentive is short-term profit maximization. This could create a conflict of interest, potentially forcing universities to prioritize cash flow over their educational duties or compliance with laws like Title IX. The PROTECT Act is essentially saying: if you take public money, your sports program must serve a public, educational mission, not private investors.
The Real-World Compliance Headache
For universities, this bill creates a massive compliance challenge. First, the restrictions don’t just apply to the university athletic department itself. They extend to any affiliated entities the school "directly or indirectly owns or controls," including athletic conferences or foundations. If a school’s conference has a revenue-sharing deal with a private firm, the school could still be penalized. The definition of "control rights" is also quite broad, covering everything from budgeting to branding, meaning even standard consulting agreements might need careful review to ensure no unintended control is transferred.
If a university already has one of these prohibited agreements in place, they have a 24-month grace period to either unwind the deal or restructure it to comply with the new rules. Imagine a major university that recently signed a lucrative, multi-year media rights deal that includes a private equity partner with a revenue share. That university now has two years to untangle a complex financial contract, which could involve significant legal costs and potentially break penalties. Failure to do so means losing access to federal student aid—a catastrophic outcome for any institution.
Who Stands to Win (and Lose)?
The clear winners here are those who want to keep college sports governance traditional and non-profit, arguing it protects the student athlete experience and the educational integrity of the schools. The big losers are the private capital firms and foreign funds that were hoping to tap into the multi-billion dollar college sports market for investment returns. Universities that were counting on these large, private capital infusions to fund expensive facility upgrades or coaching salaries will also find their options significantly narrowed. Ultimately, this bill uses the leverage of federal student aid—a financial lifeline for most universities—to enforce a specific governance model on college athletics, pushing back against the trend of highly privatized, corporate involvement in the college game.