SBJ/Feb. 7-13, 2011/Colleges

USC exploring sale of marketing and media rights

The University of Southern California, one of the few remaining major schools to manage its marketing and media rights in-house, has met with several companies to explore outsourcing those rights.

Fox Sports, IMG College and Learfield Sports are among the rights holders that have interviewed with USC’s athletic officials about the Trojans’ rights.

USC is a private institution, so it’s uncertain what the school has been making annually by selling its own rights, but industry sources think the Trojans have been netting $6 million to $7 million a year. The premier college brands typically generate up to $10 million a year from their rights deals, and some, like Ohio State and Texas, make even more.

Among the major schools that also have not aligned with a traditional rights holder are Illinois, Michigan State, North Carolina State and West Virginia.

“Investigating outsourcing, that’s something we’ve never done, something we’ve never even looked into,” said Jose Eskenazi, USC’s associate athletic director for marketing. “But it’s something we’re considering very seriously. When you look at some of the rights fees out there, it definitely gets your attention.”

The look into partnering with a rights holder came up when USC changed athletic directors last summer. New AD Pat Haden took the helm of the athletic department in August, replacing Mike Garrett, whose 17-year run crumbled in the wake of the Reggie Bush scandal.

“With the new leadership, there was a decision to take a step back and examine the business,” said Eskenazi, who emphasized that USC is not on a strict timetable to make a decision. “Forever, we’ve handled things in-house and we’ve done pretty well. But we’re asking the question, ‘Can we do better?’”

AJ Maestas, president of Chicago-based Navigate Marketing, thinks the Trojans will do better by outsourcing, pointing out that they’re a marquee college brand with a strong football tradition in the nation’s No. 2 market.

There are challenges with milking more revenue out of USC, though, because potential advertisers and sponsors have a multitude of sports and entertainment choices in that market. USC also is limited by the revenue it can derive from the city-owned Los Angeles Memorial Coliseum, where the Trojans play their home football games.

“I’d say that USC’s rights have been grossly undervalued,” said Maestas, who has worked with schools such as Ohio State, Arizona State and Indiana to evaluate the value of their rights. USC is not working with any outside agencies to determine value, but instead is relying on estimates from the rights holders.

“You’re talking about a school that should be in the top four every year in multimedia revenue, and they’re not,” Maestas said.

Garrett, the former Heisman Trophy-winning tailback who ascended to the AD position in 1993, had opposed outsourcing the rights. Nobody sells USC better than USC itself, Garrett used to say. Why share the money with a rights holder when the Trojans can sell the deal and keep all of the profits?

Eskenazi said there have been benefits to that approach, which has generated consistent growth over the long haul and recently has held steady during the recession.

“When you do it in-house, you control your brand and you control who you partner with,” said Eskenazi, who is Haden’s point man for the look into outsourcing. “The sponsors are dealing directly with the source and there’s a big comfort level with that. Not that others can’t provide that comfort level, but the buck stops with us.

“But times are different now. When you think about mitigating risk, guaranteed revenue, number of years, the difficulty with the economy in recent years, all of that is a reason to look into it. A guaranteed revenue stream gives you predictability.”

The competition for the USC property includes two traditional university rights holders, Learfield and IMG, and a nontraditional candidate, Fox, which has been looking to deepen its collection of college rights recently.

Fox recently has won the broadcast rights for the Big Ten’s football championship game, as well as the Pac-10’s title game. It also has been the longtime marketing rights holder for the Pac-10.

USC would be an important property to add for Learfield and IMG College, as well, because it’s a premium college brand that would enhance both companies’ ability to create regional and national sales. Since IMG acquired ISP Sports last summer, it now owns the rights to seven schools in the conference, including USC’s crosstown rival, UCLA. Learfield has three Pac-10 schools, including newcomer Colorado.

“There’s a lot of competition between companies to create a national sales capability, and having a linchpin in L.A. would certainly help those efforts,” Eskenazi said.

None of the other schools that run their rights in-house say any changes are forthcoming.

Mike Parsons, the deputy AD at West Virginia, wrote in an e-mail that the Mountaineers are happy with their current structure and that keeping the rights in-house, at least for now, fits the school and business community. Michigan State, Illinois and N.C. State say they’re constantly evaluating the market, but currently none of them are in talks to outsource their rights.

Return to top

Related Topics:


Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug