SBJ/Aug. 5-11, 2013/CollegesPrint All
The University of Alabama’s timing couldn’t be better. On the heels of winning three of the last four national football titles, the Crimson Tide has decided to renegotiate its multimedia rights contract.
Alabama, under the direction of new Athletic Director Bill Battle, is taking advantage of a look-in provision that began July 1 and runs through Aug. 31. The provision gives Alabama the opportunity to renegotiate with the current rights holders, Learfield Sports and IMG College, for more money, or to receive bids from competitors.
Learfield and IMG, which jointly run the Crimson Tide property and sell sponsorships, advertising, signage and other inventory, have the opportunity to match any offer. Unique to this contract, Learfield and IMG also manage Alabama’s concessions, pouring and isotonic beverage rights, which are not usually included in multimedia rights deals.
Learfield CEO Greg Brown said these types of look-ins are not typical in the multimedia rights space, but Alabama insisted on it because the contract included those additional rights and the school wanted the ability to re-evaluate the market at the contract’s midpoint.
The school’s deal with Learfield and IMG College came before its recent national football titles.
Photo by:GETTY IMAGES
But given the Tide’s reign as the most dominant football program in the nation, Alabama goes back to the negotiating table as one of the nation’s most commercially valuable properties. Gross revenue from the property in 2012-13 was close to $17 million, and Alabama made a little more than $10 million from that.
Tom Stultz, a managing director at JMI Sports, is consulting with Alabama on the negotiations. Stultz formerly negotiated these deals for rights holders when he worked for IMG College and Host Communications.
A new round of talks could land the Crimson Tide one of the country’s most lucrative multimedia rights contracts, industry experts say.
Texas and Notre Dame head the list because of their TV contracts — Texas with ESPN for the Longhorn Network; Notre Dame with NBC. The Longhorns make in excess of $23 million a year in multimedia rights from their IMG College deal.
Ohio State’s 10-year, $110 million deal with IMG College has one of the largest guarantees.
Battle, the founder of Collegiate Licensing Co., who took over as Alabama’s AD on March 22, was not available for comment, but he’s said in the past that he will move aggressively to increase the Tide’s revenue, which hovered around $125 million in fiscal 2011 and 2012. That put Alabama among the top four athletic departments in total revenue and was tops in the SEC.
“As far as my job, people say just maintain what’s going on,” Battle told SportsBusiness Journal earlier this summer. “But you don’t maintain. You’re either getting better or getting worse. We’re going to put the pedal to the metal.”
Alabama is scheduled to make a minimum of $7.9 million in the upcoming 2013-14 academic year. The school is eligible to make more than that if Learfield/IMG hit certain sales thresholds, which they normally do. Learfield/IMG and Alabama share 50/50 any gross revenue that exceeds $13 million.
In 2012-13, for example, Alabama’s guarantee was $7.26 million, but the school made a little more than $10 million total because sales were good, school officials said.
These renegotiations also come at a time when Learfield and IMG both are for sale, and schools typically want the security of long-term deals, especially if there is the potential for a change in the landscape, industry sources said.
The renegotiation cannot result in a lower rights fee, according to the contract.
The only downside for the Crimson Tide is the lack of any competitive bidders. Learfield and IMG are the two biggest players in the multimedia rights space, with IMG owning the rights to roughly 80 college properties and Learfield owning close to 50. But as partners on the Alabama property, they would not be negotiating against each other.
Alabama is one of a handful of college properties jointly managed by Learfield and IMG. Learfield takes the lead position with 75 percent ownership of the Tide’s property.
Spreecast, the social video platform started by StubHub founder Jeff Fluhr, has found its entrée into college sports through an arrangement with the University of Southern California.
The Trojans launched their Spreecast partnership last week with a 45-minute video chat with first-year men’s basketball coach Andy Enfield. The chat coincided with the release of USC’s basketball schedule and the start of season-ticket sales.
USC basketball coach Andy Enfield’s Spreecast chat drew more than 8,000 people.
“The way I see it, Spreecast is like Skype meets Twitter and they went on a date.”
Spreecast enables viewers to put themselves on camera next to the person being interviewed for a full video experience. Side panels provide space for chats and reaction that run concurrent with the interview.
The video player is compatible with Facebook and Twitter, meaning users of those social platforms can engage with their friends and even embed the video player on different sites — a website, a blog or a Facebook page.
The motivation behind Spreecast came from what Fluhr said was too much text-dominated social media. He wanted a platform that would replace some of the text with video, enabling users to have a face-to-face experience online.
With the platform gaining momentum through partnerships with media outlets like the Los Angeles Times and The Wall Street Journal, Spreecast entered the college sports space with the Trojans.
In its first year, Spreecast was mostly a place to find interviews with celebrities, like Reese Witherspoon, who used it as a way to interact with her fans. Studios like Warner Brothers also have used timely interviews to promote movie premieres.
“We definitely think there’s an opportunity in college sports, and maybe a similar opportunity in pro sports,” said Fluhr, who sold StubHub to eBay in 2007 for $310 million. “We’re all about connecting people around common interests, and colleges have displaced fans all over the country. Being able to provide this forum where fans can interact with coaches and players is a big opportunity for us.”
There is not an immediate cash exchange — just the use of the video platform by the Trojans, at first. The school promoted the inaugural chat with Enfield through its social media outlets and email to fans.
But there is a revenue component that will come into play as USC’s Spreecast chats gain a critical-mass audience. The video player provides an opportunity for advertisers to run pre-roll or mid-roll commercials, and the border of the player offers space for display advertising.
For the Trojans’ first chat with Enfield, they used that space to promote basketball ticket sales. But at some point in the future, that space will likely be sold to a sponsor.
Spreecast and USC would share in the revenue from ad sales. Fox Sports is the Trojans’ rights holder for sponsorship sales.
“There is some revenue potential with sponsorship and advertising,” Eskenazi said. “We’ve chosen not to do that yet. We want to keep it as organic as possible. But there could be some sponsor integration at some point.”
Colin Evans, who worked with Fluhr at StubHub and joined him at Spreecast late in 2011, led the talks with Southern Cal and will be looking for other opportunities in the college space. Evans, vice president for business development and content at the San Francisco-based Spreecast, said there’s a bigger play in higher education for the company.
“The entire college space is interesting to us, from athletics to alumni relations, fundraising, development, lots of things on the education side,” Evans said. “Athletics is one piece of a much larger pie.”