A $500 million investment triggers unsettling staff reductions and restructuring as Otro Capital transforms the Utes' commercial operations into a profit-driven enterprise focused on long-term growth.
After announcing an unprecedented $500 million private equity deal, the Utah Utes athletic department is making some changes. For better or worse, this comes with a reorganization and reduction of staff, which doesn't sit well with some.
As part of its restructuring, Otro Capital will be overseeing massive changes. This is "preparation for the growth of Crimson Brand Partners (CBP, formerly Utah Brand Initiatives),” an athletics department spokesperson told the Salt Lake Tribune.
“The University has begun the process of transitioning select units of some University operations to the new company. The first step of that process requires the discontinuation of the individual positions in those units through a reduction in force (RIF), to be followed by CBP’s hiring process.”
What does this mean for Utah's current athletic staff?
In short, this is a reevaluation of some positions with some carryover of others, according to a source familiar with the process. All the employees will have the opportunity to interview for a "similar position" with CBP. This isn't a complete overhaul of the department or mass layoffs as some have floated out there.
"In an email sent to department employees on Friday and obtained by The Salt Lake Tribune, Athletic Director Mark Harlan said, “Today marked an anticipated, but still significant, day in the process of transitioning select units of the athletics department to Crimson Brand Partners, as we conducted meetings with multiple staff members in those units.
“Each impacted employee will have the opportunity to interview for a similar position with the new company, but this is understandably an unsettling process to go through for those individuals. These are our teammates and friends, and we want to make all of you aware so you can be supportive of them during this transition."
An opinion piece from USA Today's Matt Hayes added fuel to the fire, painting the ugly side of company takeovers. At the end of the day, Utah needed a lifeline and got one from Otro Capital. If anyone thought changes weren't going to happen, they weren't following along. Not saying there was a perfect solution to the matter, but it's the price of doing business.
"This is the problem with inviting the private equity wolf through the door: No matter what moves are made, it’s seen through the lens of green and greed," Hayes wrote.
"The university will retain a majority ownership of CBP (estimated at 66%) commercial operations, including but not limited to ticketing, licensing, NIL sales and sponsorships. Otro gets an estimated 33%.
"The only way this thing works is if — and it’s big IF — Utah makes a boatload of cash in a college sports environment currently drowning in the deep end of inflation. A college landscape, mind you, that changes by the month and is wildly unstable."
In a sense, Utah is betting on itself to pull out of this better on the back end. Are these growing pains? Sure, every business has them. But what remains to be seen is how five-year projections will stay on target with some instability in the marketplace. What's key to any future negotiations will be Otro's ownership stake.
The cash on hand is needed right now, but is the cost worth it down the road?
