SBJ/Aug. 5-11, 2013/Colleges

Alabama looks to rework rights deal

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
The current deal began in 2008 and runs 10 years at a total value of $75.8 million.

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.

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