The Future of Multimedia Rights in College Athletics? Outsourcing or In-House?

Before examining why schools have been outsourcing their valuable multimedia rights, it is first prudent to see what exactly they are giving up. According to the Oxford dictionary, multimedia is the use of a variety of artistic and communicative media. This vague definition proves the point that the terminology is open-ended and left to the interpretation of those drawing up the contracts. Typically schools that are outsourcing their multimedia rights include hospitality, signage, print, digital, corporate sponsorships, television, radio and coaches’ shows. The schools outsource these rights to a third-party in order to garner a guaranteed revenue stream. Outsourcing also reduces the number of employees at the university, typically when the rights are sold, the third-party will allocate at least one full-time member of their staff to oversee the rights. Depending on the market size and demand for the school, these staffs can be much larger. Some of these deals have additional performance based revenue, while others are flat annual fees paid to the schools that have no bonuses or built-in incentives.

The two major players in the college multimedia rights market are IMG College and Learfield Sports Properties. As of June 1, 2015, IMG College owns the rights to 76 Division I schools,while Learfield controls the rights to 89 Division I schools and they share the rights to Alabama, South Carolina and Miami. Other owners of multimedia rights include CBS Collegiate Sports Properties, Fox Sports, Rockbridge Sports Group and JMI Sports. Over 160 schools currently manage their own multimedia rights.

Five years ago, a few of the powerhouse football schools held on to their multimedia rights and sold the assets internally. Some of the holdouts included Ohio State, Michigan State, University of Southern California and West Virginia. Since then Ohio State and West Virginia have signed with IMG College and the University of Southern California has signed with Fox Sports. Mark Hollis, the Athletic Director at Michigan State since 2008, has kept the in-house model a staple of Michigan State. Michael Smith of Street & Smith’s SportsBusinessJournal, wrote a great piece in 2013 chronicling how Michigan State was possibly leaving cash on the table, but enjoyed the benefits of controlling their own rights. These benefits include having complete control over your rights and portraying transparency with your sponsors. Instead of dealing through a third party company, all of the Michigan State sponsors work directly with the athletic department. As of 2013, Michigan State was receiving around $6m per year for their multimedia rights while their competitors in the Big Ten including Wisconsin ($7-8m), Michigan ($8-9m) and Ohio State ($11m) were all garnering more from their rights. The advantage for Michigan State comes down to their ability to relate with their sponsors and to accommodate local sponsors that may otherwise be forgotten.

For over one year, Michigan State was the sole member of the Power Five conferences that was handling their multimedia rights in-house until early July 2014. Last July, Syracuse University, which had recently joined the ACC, terminated their agreement with IMG College, one of the two largest rights holders amongst college properties (Learfield Sports being the other). Less than two months later, at the end of August, Syracuse and IMG had confirmed a new rights agreement, it can be assumed for a larger rights fee than had originally been agreed too since their old deal had seven years remaining prior to being terminated.

In October of last year, Arizona State terminated their agreement with IMG College claiming damages of over $5m for “a failure to meet contractual obligations”, which according to reports in the Arizona Republic were mostly from a failure to provide contractually obligated radio coverage and spots. Arizona State was prepared to walk away from $7m in guaranteed payments per year through 2021. The Sun Devils have retained their rights and joined Michigan State as Power Five schools handling their rights in-house.

This spring, Larry Scott, commissioner of the Pac-12 Conference, announced that the Pac-12 would be exploring a new conference-controlled model eliminating third parties such as IMG College or Learfield Sports. By cutting out the third party, this would retain a larger piece of the revenue. Scott brought in two consultants, Chris Bevilacqua and JMI Sports’ Tom Stultz to help with the multimedia rights study. Last year, JMI Sports signed a multimedia agreement with the University of Kentucky for 15-years and $210m for an average of $14m per year. Stulz and Bevilacqua are the perfect combination to assist with this study due to Bevilacqua’s familiarity with the conference. This move is a long way down the road due to the long-term nature of multimedia rights deals unless member schools intend to buy themselves out of contracts or find ways out similar to Arizona State. The league has already sold league-wide deals to AT&T and Dish Network successfully, so it would be intriguing to see the value they could command with the quantity of inventory that would be available. The Pac-12’s expansive coverage of the West Coast along with their already established Pac-12 Networks would provide an unparalleled experience for potential sponsors.

As the Pac-12 is exploring a conference-wide model, schools in other conference continue to finalize deals with third party rights holders, looking for a guaranteed revenue stream. Two schools that recently finalized multimedia agreements for the first time include Virginia Commonwealth University (VCU) and Georgetown University. VCU announced a 10-year agreement with Learfield Sports that will guarantee the university $20m over the life of the contract. VCU is an attractive school for Learfield due to the recent success of their basketball team. Learfield also controls the rights to Massachusetts, Rhode Island, Saint Louis and Duquesne all members of the Atlantic 10 Conference. The expectation according to VCU athletics director Ed McLaughlin is that the “agreement will help to grow our resources, our national recognition and our ability to create sustainable success for our student-athletes and coaches”. Learfield’s financial obligations to VCU along with their successful track record is the most often reason that schools decide to outsource their rights. The methods employed by third party Learfield and IMG College are proven commodities and if for some reason they don’t have the financial success expected at your specific school or market, there is typically a guarantee in the contract, which for VCU will amount to an average of $2m per year.

Georgetown is a founding member of the BIG EAST Conference. As a Jesuit institution, Georgetown is known for their academic curriculum along with their high ethical standards. Their recent 10-year multimedia rights deal with Fox Sports guarantees them between $1-3m per year depending on their performance, as well as a revenue-sharing aspect that activates once Fox recoups their investment. Fox Sports will look to gain from their second foray into the multimedia rights game investing in a broadcast partner for the second time (University of Southern California, a member of the Pac-12). By controlling the multimedia rights, as well as being a broadcast partner, Fox Sports stands to gain a lot from the Hoyas’ success on the hardwood. Athletic Director Lee Reed had the following to say in a recent interview:

“In higher education, especially at Georgetown, we will leave some money on the table if it’s not the right deal for us and it doesn’t make sense for us…but we still have a bottom line that we’re trying to get.”

Georgetown would not have made this decision to outsource their rights if the partnership wasn’t the right one. Fox Sports currently controls the multimedia rights for the BIG EAST as well, which makes one wonder what the media giant has in store for the future. In the short-term Georgetown will benefit from the financial returns and creative partnerships/sponsors that Fox Sports is able to bring forward. In the long-term this deal opens up possibilities and allows for maximum flexibility for both the BIG EAST and Fox Sports.

Here is a PDF with a table containing all DI schools and whom currently managers their multimedia rights. This chart has been updated as of June 1, 2016. A few deals included are going to start on July 1, 2016. Please let me know if you have any comments or corrections to this information.

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