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PART II
Seeing College Athletics Through The Locomotive Lens
The Pattern Recognition
```Now that you understand the locomotive pattern, let's return to college athletics. But you're going to see it differently now.
Every confusing, chaotic, seemingly random development in college sports over the past five years suddenly reveals itself as part of a coherent pattern—the same pattern that killed the Big Three locomotive companies.
This isn't metaphor. This isn't loose analogy. This is structural pattern matching across industries experiencing the same type of disruption.
Let's go through it systematically.
```1. The Identity Trap: "We Are Amateur Athletics"
```The Locomotive Parallel
The Big Three's core identity was "we are locomotive builders"—craftsmen who engineer custom solutions. This identity was forged over a century of success. It wasn't just what they did; it was who they were.
Recognizing EMD's threat would have required admitting: "We need to stop being locomotive builders and become financial services companies that happen to make locomotives." This was psychologically impossible.
The College Athletics Reality
The NCAA's core identity is "we are amateur athletics"—educational institutions that happen to sponsor competitive sports. This identity has been defended legally, culturally, and institutionally for over a century.
The entire regulatory structure is built on the premise that college athletes are students first, athletes second. The "student-athlete" term itself (invented by NCAA executive director Walter Byers in the 1950s) exists specifically to maintain this identity and avoid worker's compensation claims.
Everything flows from this identity:
- Scholarship limits (to maintain "amateurism")
- Practice time restrictions (to preserve "student" status)
- Transfer rules (to prevent "free agency")
- Eligibility requirements (academic progress)
- The entire compliance bureaucracy
Recognizing that college football is now professional sports would require destroying this entire identity.
Consider what NCAA leadership would have to accept to adapt to the Kentucky/Utah model:
- Football and basketball are professional entertainment products, not amateur sports
- Athletes are employees/partners generating commercial revenue, not students playing games
- The educational mission is a legacy branding asset, not the actual purpose
- Athletic departments need to become for-profit companies with PE backing
- The "student-athlete" concept is obsolete fiction
- Everything we've built our careers defending is wrong
This isn't just difficult to accept. For people whose professional identities are built on preserving amateur athletics, it's existentially impossible.
Why This Matters Now
The House v. NCAA settlement (June 2024) requires schools to share revenue directly with athletes—$20.5 million per year by 2025. This is de facto payroll no matter what you call it.
But the NCAA can't call it payroll. That would make athletes employees. So they're calling it "revenue sharing" and maintaining the fiction of amateurism even while operating a professional compensation system.
Kentucky and Utah looked at this situation and asked: "Why are we pretending?" Their LLC structures don't solve the identity crisis—they abandon the identity entirely. They're saying: "We're a commercial sports entertainment company. Let's stop pretending we're anything else."
Most athletic departments can't do this. Their identity prevents them from seeing it as an option.
```2. The Organizational Structure: Who Has Power
```The Locomotive Parallel
In the Big Three, engineers held power. They rose to leadership. They controlled strategy. They measured success in technical terms. This made perfect sense when competing on engineering excellence.
But it created blindness: engineers couldn't see financial/business model disruption because their training and position didn't equip them to see it. The people who might have recognized EMD's threat (finance, sales, operations) lacked organizational power to be heard.
The College Athletics Reality
In traditional athletic departments, coaches and competition-focused administrators hold power. Athletic directors are almost always former coaches or competition administrators. They rose through the ranks by winning games, managing teams, navigating NCAA compliance.
- College athlete or coach
- Assistant AD for operations/compliance/sports administration
- Senior Associate AD
- Athletic Director
What's missing from this path? Business model innovation. Capital markets. Private equity. Financial restructuring. Corporate law.
These leaders are excellent at running athletic competitions. They're not equipped to recognize that athletic competitions have become secondary to financial engineering.
Here's the brutal parallel:
| Big Three Locomotive Companies | Traditional Athletic Departments |
|---|---|
| Engineers controlled strategy | Coaches/ADs control strategy |
| Success = technical performance | Success = wins, championships, bowl games |
| Sold to railroad mechanical departments | "Sell" to fans, donors, conference commissioners |
| Finance people existed but lacked power | CFOs exist but report to ADs, don't drive strategy |
| Measured: horsepower, efficiency, tractive effort | Measure: wins, attendance, graduation rates |
| Couldn't see financial disruption | Can't see financialization disruption |
The Kentucky/Utah Difference
Look at who's driving Kentucky and Utah's transformations:
Kentucky: Modeled after Beyond Blue Corporation—UK's healthcare holding company run by business executives and healthcare administrators, not doctors. Champions Blue brings in "outside business/sports experts" to advise, not just athletics administrators.
Utah: Otro Capital executives (Alec Scheiner: former Browns president, Cowboys SVP) are on the LLC board. They're not advising—they're co-managing. Professional sports business operators, not college athletics administrators.
The power structure changed. Business/finance expertise now drives strategy. Competition operations (coaching, recruiting, compliance) report to the commercial entity.
This is EMD's structure: business people running a business that happens to involve locomotives. Not locomotive engineers running a business.
```3. The Customer Relationship: Selling to the Wrong People
```The Locomotive Parallel
The Big Three sold to railroad mechanical departments—engineer-to-engineer relationships focused on technical specifications. EMD sold to railroad CFOs and presidents—business-to-business relationships focused on total cost of ownership and balance sheet impact.
The mechanical departments still evaluated locomotives, but they no longer controlled purchasing decisions. Financial officers did. The Big Three kept talking to the people who no longer had power to buy.
The College Athletics Reality
Traditional athletic departments "sell" to:
- Fans (season tickets, merchandise, donations)
- Donors (major gifts tied to facilities, scholarships)
- Conference commissioners (maintaining membership, media distribution)
- NCAA (compliance, maintaining eligibility)
But in the new model, the actual customers are:
- Private equity firms (seeking returns on investment)
- Media companies (buying content rights, not "games")
- Corporate sponsors (buying brand associations and data access)
- Capital markets (financing operations)
Old pitch (to donors): "Help us build a championship program. Your gift supports student-athletes pursuing degrees while competing."
New pitch (to PE firms): "We generate $126.8M in annual revenue with $79.1M from football alone. With proper commercial management, financing structure, and revenue optimization, we project 15-20% annual growth. Your equity stake returns X% annually with exit in 5-7 years."
These aren't the same conversation. They're not even the same language.
Utah's deal with Otro Capital explicitly allows donors to purchase equity stakes in Utah Brands & Entertainment LLC. This transforms donors from philanthropists into shareholders. They're not giving money away—they're investing capital expecting returns.
This is EMD's model: sell financial products that happen to involve athletics, not athletics that happen to need financing.
Why Traditional ADs Can't Make This Shift
An athletic director whose career was built on relationships with coaches, donors, and conference officials isn't equipped to pitch private equity firms on return-on-investment projections. It's not their language, not their expertise, not their world.
And even if individual ADs could make the shift, their universities can't. Public universities have boards of trustees who think of athletics as educational programs supporting university mission. Pitching them on "we should partner with PE firms to maximize commercial returns" contradicts everything they believe the athletic department exists to do.
Kentucky and Utah succeeded because they had leadership willing to reframe the entire relationship: athletics isn't an educational program that needs funding, it's a commercial asset that can generate investment returns.
```4. The Metrics: Measuring the Wrong Things
```The Locomotive Parallel
The Big Three measured horsepower, tractive effort, fuel efficiency, reliability—technical specifications. EMD measured market share, customer lifetime value, service revenue as percentage of total revenue, fleet penetration rates—business metrics.
You can't manage what you don't measure. More fundamentally: you can't even see what you don't measure.
The College Athletics Reality
Traditional athletic departments measure:
• Conference standings
• Bowl/tournament appearances
• National rankings
• Recruiting class rankings
• Academic Progress Rate (APR)
• NCAA violations
• Title IX compliance
• Scholarship distribution
• Annual expenses
• Deficit/surplus
• Donation levels
• Attendance
These are the numbers that appear in reports, the achievements that earn recognition, the goals departments are judged against.
What's missing?
| Business Metrics Kentucky/Utah Track |
|---|
|
• Customer lifetime value (CLV) per fan • Revenue per available seat (RevPAS) • Media rights value per game • Sponsorship revenue growth rate • Brand valuation • Licensing revenue per capita • Digital engagement conversion rates • Capital efficiency (revenue/invested capital) • Return on equity for investors • Market penetration vs. addressable market • Content consumption metrics (streaming, social) • Premium seating utilization and pricing power |
Traditional athletic departments literally don't have systems to track most of these numbers. Customer lifetime value? They sell season tickets annually, not relationships over decades. Capital efficiency? They don't think in terms of capital deployment and returns.
The Utah Example
When Otro Capital evaluated Utah, they didn't ask "How many games did you win?" They asked:
- What's your revenue per fan compared to market potential?
- What's the total addressable market for Utah football content?
- How much pricing power exists in premium seating that's undermonetized?
- What's the brand value in licensing that's not being captured?
- What's the return profile over 5-7 years given projected revenue growth?
These are private equity questions. Professional sports franchise questions. Not college athletics questions.
And Utah couldn't answer them—because they'd never measured those things. Otro's value isn't just capital. It's bringing the measurement systems that reveal where money is being left on the table.
```5. The Sunk Cost Trap: Conference Networks and Infrastructure
```The Locomotive Parallel
Baldwin's Eddystone plant represented massive capital investment optimized for custom steam locomotive production. Admitting it was obsolete meant writing off enormous sums and acknowledging catastrophic strategic error. So they didn't. They kept trying to make it work, even as it became increasingly clear the future required different infrastructure.
The College Athletics Reality
College athletics has its own Eddystone traps—massive investments in infrastructure optimized for the old model that are becoming obsolete in the new one.
The Big Ten Network launched in 2007. It was revolutionary—conferences could own media distribution, capture more value, build brands. SEC Network (2014), Pac-12 Network (2012), ACC Network (2019) all followed.
These networks represented massive investments in production facilities, distribution deals, staffing. They were the future of college sports media.
Until they weren't.
The Pac-12 Network never achieved profitability and was a major factor in the conference's collapse (2023-2024). Linear cable distribution is dying. Streaming fragmented the market. The infrastructure built for 2007's media landscape is increasingly obsolete in 2025's.
But conferences can't just abandon these networks. They have contracts, debt, employees, commitments. Admitting the conference network model was a dead-end means admitting strategic failure. So they keep operating them, keep investing in them, keep pretending the model still works.
The Stadium Infrastructure Trap
Schools have invested billions in stadium expansions and renovations over the past 20 years:
- Texas A&M: $450M Kyle Field renovation (2015)
- Notre Dame: $400M stadium renovation (2017)
- Penn State: $700M+ in Beaver Stadium renovations
- Countless others: luxury suites, premium clubs, video boards
These investments made sense when the revenue model was "pack stadiums, sell tickets, maximize game day experience." They're increasingly misaligned with the new model where the revenue is media rights, streaming content, and brand licensing—where stadium attendance is almost incidental.
But you can't just write off a $450 million stadium renovation. So schools keep focusing on attendance, keep selling season tickets, keep investing in game day experience—even as the financial center of gravity shifts elsewhere.
The Kentucky/Utah Model Avoids These Traps
By creating LLCs that can operate separately from university infrastructure and constraints, Kentucky and Utah can:
- Partner with external media companies without being locked into conference network obligations
- Optimize stadium operations for revenue per seat, not attendance maximization
- Invest in digital/streaming infrastructure without university procurement constraints
- Pivot quickly to new revenue models without seeking board approval
They're not trapped by yesterday's investments. They can build for tomorrow's reality.
```6. The Technical Superiority Delusion
```The Locomotive Parallel
Alco's Century 636 produced 3,600 horsepower—more than any EMD locomotive. It was genuinely superior on technical specifications. They believed this mattered. It didn't. Railroads were no longer buying based on technical specs—they were buying based on total cost of ownership, financing packages, and service guarantees.
The College Athletics Reality
Traditional athletic departments keep competing on what they understand:
- Better facilities: State-of-the-art training complexes, nutrition centers, recovery facilities
- Better coaching: Hiring top coaches with massive salaries
- Better recruiting: Investing in recruiting infrastructure, player development
- Better "student-athlete experience": Academic support, life skills, wellness programs
These are the competition dimensions. Schools spend hundreds of millions trying to out-recruit and out-develop each other, believing that excellence in these areas will drive success.
And it does drive success—in the competition. But the battle is no longer primarily about winning games. It's about capital efficiency and revenue optimization.
Schools are competing to build better training facilities (higher horsepower locomotives) while Kentucky and Utah are restructuring how athletics is financed and operated (GMAC financing and service networks).
One is competing in the old game. The other is playing a new game.
Just like Alco kept building more powerful locomotives while EMD sold integrated transportation solutions, traditional athletic departments keep building better facilities while Kentucky/Utah sell investment returns.
The Illusion of Relevance
Here's what makes this delusion dangerous: facilities and coaching still matter. You can't compete without them. But they're no longer sufficient for survival.
It's like the Big Three's technical expertise—still necessary, no longer decisive. You need good locomotives to be in the market, but having good locomotives doesn't determine who wins the market.
Similarly, you need good coaching and facilities to be competitive in college football. But having good coaching and facilities doesn't determine which athletic departments survive the next decade. That will be determined by business model, capital structure, and commercial operations—dimensions where most athletic departments aren't even competing.
```7. The Actual Disruption: It's Financialization
```The Locomotive Parallel
EMD didn't disrupt the locomotive industry with better engines. They disrupted it by financializing locomotives—turning them from custom capital equipment into standardized assets with integrated financing, service guarantees, and fleet management.
GMAC financing was the revolution. Everything else (standardization, service networks, selling to CFOs) enabled and reinforced the financing model.
The College Athletics Reality
College athletics is being disrupted by financialization—the transformation of athletic departments from university educational programs into investment vehicles generating returns for capital providers.
This isn't about NIL or revenue sharing or conference realignment. Those are symptoms. The underlying disruption is that athletic departments are becoming financial products.
| Locomotives (1930s-1960s) | College Athletics (2020s) |
|---|---|
| GMAC financing Integrated capital for purchases |
PE partnerships (Otro Capital) Integrated capital for operations |
| Lease arrangements Convert CapEx to OpEx |
Revenue-sharing structures Convert donations to equity investments |
| Service contracts Ongoing revenue streams |
Media rights bundling Ongoing revenue streams |
| Fleet standardization Predictable asset values |
Brand standardization Predictable revenue streams |
| Sell to CFOs Balance sheet optimization |
Sell to investors Return optimization |
Let's be explicit about what Utah's Otro Capital deal actually is:
- Otro invests capital (estimated $200-300M) for equity stake
- They receive percentage of annual revenue generated by Utah Brands & Entertainment
- Exit in 5-7 years, presumably at multiple of investment
- Donors can buy equity stakes (converting from donors to shareholders)
- Professional sports business operators manage commercial operations
This is a private equity acquisition with university retaining majority control for regulatory/political reasons. It's not "athletic department with some outside funding." It's "sports entertainment company with university as majority shareholder."
The product being sold isn't athletics. It's investment returns generated by commercial exploitation of athletic brand assets.
```8. Why Traditional Athletic Departments Can't Copy This
```The Locomotive Parallel
Could Baldwin have created a financing arm like GMAC? Technically yes. Practically no. It would have required:
- Massive capital they didn't have
- Financial expertise they didn't possess
- Relationships with capital markets they'd never developed
- Organizational transformation they couldn't execute
- Admission that their core business model was obsolete
- Becoming something fundamentally different than what they were
The Big Three couldn't copy EMD's tactics without copying EMD's strategy. And copying the strategy meant ceasing to be themselves.
The College Athletics Reality
Now watch what happens over the next 2-3 years. Other schools will see Kentucky and Utah's LLC models. Some will announce they're "exploring similar structures." Many will create LLCs.
Almost none of them will succeed the way Kentucky and Utah are succeeding.
Why? Because they'll copy the tactics without copying the strategy.
Creating an LLC is easy. You file paperwork. But the LLC is just a legal structure. The actual transformation requires:
Most schools will do what Alco did: create the LLC structure (copy the visible tactic), maybe bring in some outside advisors, call it "innovation," and then continue operating basically as before.
They'll have the form without the function. The structure without the strategy. The LLC without the actual transformation.
And they'll wonder why it doesn't work the way it worked for Kentucky and Utah.
The Exception: Who CAN Make This Work
A small number of schools have the conditions required for successful transformation:
- Massive revenue that makes them attractive to PE (top 15-20 programs)
- Leadership willing to destroy amateur identity (rare—requires special circumstances)
- Political/legal environment that allows it (some state laws prohibit this for public universities)
- Existing business sophistication (schools that already think commercially)
- Crisis forcing action (financial pressure, regulatory threats, conference instability)
Kentucky had Beyond Blue Corporation as template—they'd already done this with healthcare. Utah had financial crisis ($17M deficit) forcing innovation. Both had leadership willing to take reputational risk.
Most schools lack these conditions. They'll watch from the sidelines, create ceremonial LLCs, and continue operating traditionally—until it's too late.
```The Pattern Complete
```Let's bring it all together. Here's the complete parallel:
| Locomotive Industry (1930-1970) | College Athletics (2020-2030) |
|---|---|
| The Big Three: Baldwin, Alco, Lima | Traditional ADs: 90% of FBS schools |
| Identity: "We are locomotive builders" | Identity: "We are amateur athletics" |
| Culture: Engineering excellence, custom craftsmanship | Culture: Competition excellence, student-athlete welfare |
| Power structure: Engineers control strategy | Power structure: Coaches/ADs control strategy |
| Customer relationship: Mechanical departments | Customer relationship: Fans, donors, conference |
| Metrics: Horsepower, tractive effort, efficiency | Metrics: Wins, attendance, graduation rates |
| Sunk costs: Eddystone plant, custom tooling | Sunk costs: Conference networks, stadium expansions |
| Delusion: "Our locomotives are more powerful" | Delusion: "Our facilities are better" |
| THE DISRUPTOR | |
| EMD/GM: Entered market in 1930s | Kentucky/Utah LLC model: Entered 2024-2025 |
| Innovation: GMAC financing, not better engines | Innovation: PE financing, not better athletics |
| Product: Transportation solutions with financing | Product: Investment returns from sports brands |
| Customer: Railroad CFOs and presidents | Customer: PE firms and investors |
| Strategy: Standardization + service + financing | Strategy: LLC structure + PE capital + commercial ops |
| Result: 70% market share by 1970 | Prediction: Dominance by 2030 |
| THE OUTCOME | |
| Big Three: Extinct by 1969 | Traditional ADs: Struggling by 2030? |
| Baldwin: Last locomotive 1956 (131 years) | ?: First major AD failures 2027-2028? |
| Lima: Merged 1951 (too small, too late) | ?: Conference realignment casualties? |
| Alco: Exited 1969 (technically superior, commercially obsolete) | ?: Elite programs that can't adapt financially? |
The pattern isn't metaphorical. It's structural.
College athletics is experiencing business model disruption disguised as regulatory chaos. Just like the locomotive industry experienced business model disruption disguised as technology transition.
The schools that understand this—that see Kentucky and Utah as EMD, not as peers doing something slightly different—have a chance to adapt.
The schools that think this is just about "getting creative with financing" are Baldwin watching the FT demonstrator tour and thinking "we can build diesel locomotives too."
They can. And it won't matter.
What Every Confusing Development Now Explains
```With the locomotive lens, everything that's been confusing about college athletics over the past five years suddenly makes perfect sense:
Conference Realignment (2021-2024)
What it looked like: Chaos. USC/UCLA to Big Ten. Texas/Oklahoma to SEC. Pac-12 collapse. Geography meaningless.
What it actually was: Market consolidation before disruption. The valuable brands (those that can be financialized) moving to conferences with media leverage and capital access. The Big Ten and SEC aren't athletic conferences anymore—they're media companies with member institutions.
This is exactly what happened in locomotives: market consolidated to EMD and eventually GE. The entities with capital and business model advantages absorbed market share. Everyone else got squeezed out.
NIL Collectives (2021-present)
What it looked like: Boosters finding creative ways to pay players while maintaining fiction of amateurism.
What it actually was: Early financialization. Converting donor philanthropy into player compensation. Testing whether capital could flow directly to athletes outside university control. Proof of concept that investors would fund athletics for returns (even if returns were winning, not financial).
The NCAA fought this, just like railroad unions fought diesel. Didn't matter. Capital finds a way.
House Settlement Revenue Sharing (2024)
What it looked like: Legal settlement forcing schools to pay players.
What it actually was: The forcing function. The moment when pretending athletes aren't being paid became untenable. Schools need $20.5M annually to comply. Where does it come from?
Traditional answer: Cut Olympic sports, raise donations, increase ticket prices.
Kentucky/Utah answer: Bring in private equity, restructure as commercial entity, access capital markets.
This is the diesel viability moment—when the new technology/model proves it works and the old model can't match it without transforming.
The NCAA's Weakness (2020-present)
What it looked like: NCAA losing every court case, losing control of governance, becoming irrelevant.
What it actually was: Trade association trying to preserve old model while new model makes it obsolete. The NCAA is like the locomotive industry trade association trying to protect steam while diesel takes over.
They can't stop it. They can only pretend to regulate it while it transforms around them.
The "Playoff Expansion" (2024)
What it looked like: More teams in playoff, more games, more revenue.
What it actually was: Creating inventory for media rights. More games = more content = more value for streaming platforms. This isn't about competition fairness—it's about content production for commercial exploitation.
Professional sports lens, not amateur athletics lens.
The "Super League" Rumors (2024-2025)
What it looked like: Crazy speculation about top programs leaving NCAA.
What it actually is: Logical endpoint of financialization. If top programs can generate massive returns as standalone commercial entities, why share revenue with NCAA structure? Why maintain fiction of amateurism?
This is the Big Ten/SEC pulling away completely, just like EMD dominated the market. The "Super League" isn't a radical idea—it's the natural conclusion of the transformation already happening.
Now That You Can See The Pattern...
The question isn't whether this transformation will happen.
The question is: Which schools are EMD, and which schools are the Big Three?
And if you're working for one of the Big Three...
...what are you going to do about it?
Next: The Evidence — Documents, Deals, and What's Actually In The LLCs
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