The following is a guest post from Jason Hershman, founder and fractional CFO of Point. Opinions are the authors own.
On Jan. 19, the Indiana University Hoosiers play for the College Football Playoff National Championship against the University of Miami Hurricanes. Say that out loud, and it still sounds ridiculous. Until recently, Indiana was a program famous for losing. They literally held the record for most losses in college football history.
Now, they’re 15-0, their star player won the sport’s most coveted award, their coach is a viral sensation and Indiana alum Mark Cuban is dumping money into the whole thing like the university appeared on Shark Tank. Cuban said it himself to CBS Sports: He thinks about Indiana’s name, image and likeness budget the same way he used to think about NBA salary cap management.
What caught my attention, though, wasn’t the sports angle. I’m a CFO, after all. It’s more the fact that Cuban never gave a dime to Indiana athletics until December 2024, and 14 months and an undefeated season later, he’s talking roster construction and player acquisition like he’s a general manager.
Honestly, though, he should be. College sports are going through a transitional period where athletic departments are no longer sleepy university subdivisions, but operating entities with real payrolls, transfer market strategies and billionaire investors who expect returns on capital.
I’ve seen this play out countless times in other industries throughout my career when growth outpaces structure, and the environment starts feeling like the Wild West. It’s on us as the CFO to step in, build the financial backbone and bring discipline before the opportunity collapses under its own weight. That’s exactly why I put together five reasons athletic departments will need to spin off into standalone entities, and why CFOs will be at the center of it all.
1. NIL and revenue sharing
The amateur model is dead. Officially, legally dead.
The House v. NCAA settlement now lets Division I programs distribute up to $20.5 million per year directly to athletes. That cap rises annually, Power Five schools must participate, and over 300 programs have already opted in voluntarily. We’re talking about institutional player payroll that didn’t exist 18 months ago.
That’s also before you factor in booster-funded NIL, which creates a second payroll running parallel to the official one. Cuban’s “salary cap” approach at Indiana isn’t some outlier. Their opponent in the title game, Miami, dropped $4 million to land quarterback Carson Beck through the transfer portal. Weeks ago, Ole Miss “re-signed” running back Kewann Lacy to a “new deal.”
Recruiting has become free agency, and these programs are now franchises, whether they admit it or not.
Once athletes become compensated assets, you need financial infrastructure to support that reality. That’s where we come in. CFOs now budget for player payroll the same way pro teams do. We track fair-market valuations on NIL deals, align spending with performance, and make sure booster dollars flow strategically rather than recklessly.
Not to mention, we haven’t even begun to talk about multi-year contracts and commitments. Contractual incentives to players for sticking around, on-field performance and recruiting new players from high school. All of which will drive the liabilities on the football balance sheets (if those even exist today) through the roof. It will be up to CFO’s to track and manage, while simultaneously communicating the equity value that is created to offset these liabilities.
2. Protecting university tax-exempt status and limiting liability
All that new money creates a new problem: The IRS is paying attention.
Universities are tax-exempt nonprofits. Yet, their athletic departments are pulling in billions from TV deals, corporate sponsorships and ticket sales. That’s commercial activity living in a gray zone, and regulators have started asking uncomfortable questions. Throw direct revenue sharing with athletes into the mix, and you’ve got a potential “private benefit” that doesn’t exactly scream “charitable mission.”
So how do you protect the main entity — the university? You “ring-fence” athletics entirely. That means spinning off athletic departments into separate LLCs that isolate commercial sports revenue from the academic core.
The University of Kentucky transferred its entire athletic program into a wholly owned entity called Champions Blue, LLC. Media rights, sponsorships and ticket revenue now flow through that structure. Not directly through the university.
As CFOs, we’re the brains behind designing these structures. We work with tax attorneys to sidestep unrelated business income triggers, build compliant money flows between foundations and athletic entities and create firewalls that keep liabilities like injury lawsuits or contract disputes contained within the subsidiary and far from the university’s balance sheet.
3. Demand for agility and operations at slow speed
University bureaucracy wasn’t built for the transfer portal.
When a star quarterback hits the market, programs have days to make a decision. Sometimes hours. Traditional campus governance moves at a different pace entirely. State procurement rules, oversight committees, slow-moving budgets. That kind of friction costs wins and dollars.
The LLC structure solves this. An athletics entity owned by the university but run with business autonomy can hire staff, negotiate contracts, and close deals without seeking main campus approval for every dollar. Kentucky cited this exact reason when it spun off its athletics department.
CFOs are the quarterbacks here. We need to build real-time financial monitoring systems to track how a wave of transfer signings impacts the NIL budget. We set guardrails that allow quick action without reckless spending. And we take notes from pro sports by using data analytics to measure which player investments generate the best ROI.
4. New funding sources from big boosters to private equity
Wealthy alums have always written checks. That’s nothing new. What’s changed is the mindset.
These donors now operate like venture capitalists with skin in the game. Mark Cuban is not the only one using his clout and cash. Look at Texas A&M boosters, for instance. They just funneled $51 million into NIL deals in a single year, not as charity, but to yield results on the field and pride off of it.
Private equity has entered the picture, too. Just last month, the University of Utah approved a partnership with Otro Capital to raise roughly $500 million through a new athletics LLC. It’s the first deal of its kind, and you can bet other cash-strapped programs (and institutional investors) are watching closely.
Without CFOs, who else would structure these arrangements? We are the ones who vet terms, protect university control, and make sure outside money doesn’t come with strings that strangle the mission. Once the funds land, we’re also on the hook for deploying capital wisely and delivering the reporting that professional investors demand.
Big money brings big expectations. Someone has to manage both.
5. Escalating costs and the push for sustainability
Most athletic departments waste money anyway. Nearly every program in the country runs an annual deficit. Coaching salaries hit new records every year, while the facilities arms race shows no signs of slowing down. Now add player payroll on top.
The University of Utah’s 2024 numbers tell you everything: $126.8 million in expenses against $109.8 million in revenue. Football alone cleared $26 million in profit, and the department still came up short because Olympic sports and overhead ate it all. Dan Wetzel of ESPN nailed it when he said college sports don’t have a revenue problem. It has a spending problem. No wonder the University of Utah closed that Otro Capital deal.
Which brings me back to why any of this matters in the first place. New structures, outside investors, faster operations. None of it works if the underlying math stays broken. A standalone entity can’t lean on university bailouts or student fees indefinitely. Eventually, it has to stand on its own.
That’s where CFOs earn their keep. We’re the ones running cost-benefit analyses before the next $100 million facility breaks ground. We’re building reserves so one bad season doesn’t sink the ship. Most importantly, when no one else wants to say it, we’re the ones who look at the books and tell the room: you cannot keep spending $1.10 for every dollar you bring in.
The scoreboard, but not the job description, has changed
This is critical to be on the radars of finance leaders because moguls like Cuban are treating a college football program like a franchise investment. Indiana’s football program was once a punchline. Now they’re one win away from a title.
As CFOs, we can connect the dots. That’s where college sports are going. Some programs will figure this out. They’ll spin off, professionalize, bring in authentic financial leadership and compete. Others will keep running deficits, lean on student fees and wonder why they can’t land a five-star recruit.
I’ve watched this movie before in other industries. Growth explodes, the old structures buckle and the organizations that survive are the ones that build finance functions capable of handling the circus. College athletics is living that story right now.
