LOUISVILLE, Ky. (WDRB) — The University of Kentucky’s athletics department expects to operate at a net loss of nearly $31 million over the next two fiscal years — a sobering figure that underscores the cost of entering college sports’ new era of athlete revenue sharing, even for a financially-stable program in one of the nation’s top conferences.
On Thursday, UK’s Board of Trustees Athletics Committee approved a plan to lend the athletics department $141 million, including $110 million in capital investment loans for major facility projects and an additional $31 million in operating funds to offset expected deficits in fiscal years 2025 and 2026.
The moves come as UK Athletics prepares to shift its entire operating model to a new nonprofit holding company, Champions Blue, LLC, created earlier this year in anticipation of legal and legislative changes that will soon require schools to directly compensate athletes.
The Kentucky athletic department, a long model of financial self-sufficiency, likely would not have dreamed of an operating deficit even several years ago. But today, the cost of doing business has hit home even at a department in the lucrative Southeastern Conference. And it surely isn’t the only place where that is the reality, though perhaps it is one of the more transparent.
The department’s budget challenges may stem in large part from the NCAA’s recent House settlement, which allows schools to begin sharing up to $20.5 million per year with student-athletes beginning July 1. While the university has praised the settlement as a necessary step forward, its financial impacts are already being felt — and forcing fast, aggressive change.
In addition to what is essentially a mandated payroll, schools could face further costs if they aim to maintain full roster sizes in all sports under the new model.
“We are proposing a new strategic governance structure and operating model, unlike any in the country,” said UK President Eli Capilouto. “The goal is to incentivize innovation. The idea is to remain a premier program by pushing us to examine creative ways to grow and generate the revenues necessary to support our success.”
The strategy: Invest now, pay later
The $141 million being borrowed by UK Athletics would come from internal university loans — meaning the school is effectively funding the department’s near-term expansion and deficit coverage from its own financial reserves, with repayment expected over time.
Of that total:
- $31 million will cover shortfalls in fiscal years 2025 and 2026.
- $110 million will fund capital projects and longer-term development.
Planned investments include:
- $15 million for maintenance at Kroger Field.
- $13 million to renovate corner suites and elevators at the football stadium.
- $5 million for improvements to UK’s softball and soccer facilities.
- $8 million for design and infrastructure upgrades, including a new West End Zone Club and Wi-Fi improvements at Kroger Field.
- Issuing a new Request for Information (RFI) to explore an on-campus Entertainment District — potentially including restaurants, hotels, and other commercial developments.
These projects are the first wave of what UK officials said could be a broader revenue diversification strategy made possible by the creation of Champions Blue.
Champions Blue: A new model for a new era
Earlier this spring, UK became the first school in the nation to formally spin off its athletics department into a nonprofit LLC — a move enabled by Senate Bill 3, passed by Kentucky lawmakers in 2025 to give public universities flexibility to adapt to the NCAA’s new compensation environment.
The university will retain control of the program through Champions Blue’s Board of Governors, which includes UK’s president and senior administrators, along with outside experts in real estate, professional sports, and entertainment facility management.
(Other nominated board members include Keeneland President and CEO Shannon Bishop Arvin, retired Fanatics SVP and University of Miami administrator Chris Prindiville, and Jacob Tammy, a UK football star and NFL veteran who previously served on the board of Farmers National Bank and currently is director of the Sports and Entertainment Division for Meridian Wealth Management.)
By shifting to a holding company model, UK Athletics can now enter public-private partnerships, pursue commercial real estate ventures and explore new, non-traditional revenue streams.
The setup mirrors UK’s recent acquisitions of hospital systems in Ashland and Morehead, both held under similar nonprofit umbrellas.
UK Athletics Director Mitch Barnhart said the goal is to stay ahead of the curve in a time of sweeping change.
“At a time when many are searching for answers, our administration has built on the strong partnership we have enjoyed for more than 20 years here on the UK campus,” Barnhart said. “We look forward to continuing that into the future. We will remain focused on education and competition, putting championship rings on fingers and diplomas in hands."
The bigger picture: A blueprint for the future?
What Kentucky is attempting may become a model for other schools — particularly those not named Ohio State, Alabama or Texas, who have long enjoyed the benefit of deep donor pools and larger football attendance bases.
Even in the SEC — which signed a $3 billion, 10-year media rights deal with ESPN that begins this fall — the cost of doing business is rising fast. Revenue sharing, NIL facilitation, growing staffing demands and escalating travel and facility expenses have created a new arms race — but now with fewer guarantees of profitability.
Sen. Max Wise (R-16), the sponsor of the bill that made Champions Blue possible, praised the university for taking bold steps in response to national pressures.
“The University of Kentucky has responded with an innovative governance and organizational model, backed by strategic investments that position the program for long-term growth and success. I believe Champions Blue will become a national model for the future of collegiate athletics.”
But UK’s plans also could represent a high-risk bet: That future growth and innovation can outpace the new financial requirements. That donor and sponsor interest remains high. And that student-athlete success — in classrooms and on the field — continues to drive value in a transformed marketplace.
What’s next?
The full UK Board of Trustees will vote Friday on final approval for the loans and Champions Blue Board of Governors. Design and planning work will begin immediately on the capital projects.
Revenue sharing begins July 1, the same day the fiscal year — and UK Athletics’ new era — officially begins.
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