In April 2025, the University of Kentucky quietly became the first major university to restructure its athletic department into a separate legal entity, a limited liability company (LLC), named Champions Blue LLC. While the move made headlines, its deeper significance lies in the model itself: one that many other universities are likely to adopt in the evolving Name, Image, and Likeness (NIL) and revenue-sharing landscape.
This structure marks a potential turning point in how college athletics are organized and governed. For schools navigating the high-stakes shifts brought about by the NIL era, employment classification debates, and the expected implementation of the House v. NCAA settlement,[1] the LLC model offers a compelling path forward.
Why Restructure? Preparing for a Commercialized Future
The core reason for the LLC model is simple: the traditional public university framework is not built for what college athletics is becoming.
With the House settlement looming, projecting an annual revenue-sharing cap of approximately $20.5 million per school, universities must prepare to operate in a new, quasi-professional model where athletes are compensated directly for their role in driving commercial revenue. At the same time, NIL has created an entirely new category of third-party partnerships and marketing obligations that resemble private-sector sponsorship deals more than amateur competition.
The LLC structure allows athletic departments to separate operations from the larger university bureaucracy while retaining full ownership and control. This enables faster, more flexible contracting, cleaner NIL and collective partnerships, and more precise management of financial risk and revenue, all without sacrificing institutional oversight.
Why an LLC? Operational and Legal Advantages
The LLC model offers universities several advantages, especially when responding to:
- Speed and Flexibility: Traditional university structures are often burdened by procurement rules, state oversight, and political accountability. An LLC can make real-time business decisions—hiring, partnering, and contracting with far fewer delays.
- Clear NIL and Collective Alignment: By separating the athletic department into a distinct entity, schools can draw firmer lines between their role and that of collectives or external sponsors. This helps reduce compliance gray areas while also giving the LLC more freedom to innovate within NIL partnerships.
- Revenue-Sharing Management: If student-athletes are to receive direct compensation under House or similar frameworks, an LLC can serve as the entity responsible for those payments. This creates a clearer tax, liability, and employment structure that is harder to establish within traditional university HR frameworks.
- Risk Allocation: High-revenue athletics involve substantial legal exposure—from employment status challenges to sponsorship disputes to Title IX claims. Housing athletics in an LLC creates a liability buffer between the university and its athletic enterprise, offering both legal and reputational protection.
Not Just for Athletics: A Proven Model
Importantly, this isn’t the University of Kentucky’s first foray into using an LLC to achieve institutional goals. In 2017, the university used a wholly owned LLC to acquire the KentuckyOne Health system and integrate it into UK HealthCare. That move allowed the university to navigate the regulatory, financial, and operational complexities of healthcare expansion in a way that would have been difficult, if not impossible, within the university’s direct legal structure.
That experience helped demonstrate how an LLC can serve as a high-functioning subsidiary for mission-critical, revenue-generating enterprises, and athletics is now receiving similar treatment.
Other universities should take note: this is a model with precedent and proof of concept.
A Blueprint for the Future
Kentucky may be the first to act, but it likely won’t be the last. As NIL matures and as the realities of revenue sharing, athlete employment classification, and legal exposure become unavoidable, other schools, particularly those in Power Five conferences, will need to reevaluate whether their athletic departments are structured to thrive in the current landscape.
The LLC model gives schools the ability to:
- embrace commercial realities while preserving academic integrity;
- build more businesslike and scalable operations;
- responsibly manage athlete compensation; and
- strategically shield university assets from legal exposure.
In short, it provides a nimble, accountable framework for navigating what’s coming next.
Conclusion
The decision to convert an athletic department into an LLC is not just a legal maneuver, it’s a strategic alignment with the future of college sports. While each institution will need to tailor the structure to its own governance and regulatory environment, the benefits are clear. The traditional model is cracking under the weight of modern realities.
At WeAreNIL, our team is at the forefront of navigating the legal and structural challenges of the evolving NIL landscape. To learn how we can support your institution or organization through this transformation, connect with our dedicated team of NIL professionals today.
[1] More information on the House settlement can be found in a previous WeAreNIL article: Breaking Down the House v. NCAA Settlement: Insights from an NIL Lawyer