IMG’s reach creates big college platform for UPS
UPS loves logistics, but there was a time that doing a national sponsorship deal in the college space was a logistical nightmare.
Ron Rogowski, UPS’s sponsorship chief, admits that if he had to go school to school to aggregate 68 college sponsorships one at a time, the way sponsors had to in the past, he never would have done it. Talk about daunting: 68 negotiations, 68 contracts, 68 approvals from legal.
In UPS, IMG College found a willing partner that already was committed to college sports.
That’s the uphill task brands faced in the past if they wanted to create a national college sponsorship. That’s also why many of them went elsewhere. It was just too complex.
The beauty of the four-year, $100 million national deal UPS closed recently with IMG College to sponsor 68 colleges lies in its simplicity: one negotiation, one contract, one approval from legal. IMG College calls it the largest college sports sponsorship deal ever signed, primarily because it’s the first of its kind. No entity has ever been in a position to package this many schools together in one deal.
“What’s transformational about this is the platform,” said George Pyne, the president of IMG Sports & Entertainment who came over from NASCAR in 2006 and made college marketing the focus of a new-look IMG. “The college sponsorship market was very fragmented and it was extremely hard to do a national deal unless it was a media buy. Now we can do that, and it’s a value that’s unmatched in sports.”
Industry experts say they expect three to five more deals like UPS’s this year — eight-figure expenditures that are national in scope across dozens of colleges. IMG College supposedly has deals in principle with two of them, sources say.
What the marketplace will be watching is how UPS and other brands activate so many college relationships, said Jeff Ehrenkranz, executive vice president for Octagon Marketing.
“The test is whether or not companies will really activate enough to get their value out of the deal,” Ehrenkranz said. “For UPS, with their B2B focus, that makes a lot of sense. But the proof point will be how much brands push it. This is a buy for veteran sponsors who understand the challenge. I’d be very wary of companies trying to do this if they haven’t been in sports sponsorship before.”
Getting the deal done is just the first step. Managing a portfolio of 68 school relationships is a completely different task, one that can become overwhelming if it’s not staffed properly.
IMG College plans to hire 75 to 100 employees in the next year across all of its divisions. Some of those executives, based in the company’s Winston-Salem, N.C., headquarters, will be assigned one brand to work with. If partners have a problem or an idea, they will funnel it through their contact at IMG College, instead of reaching out to the schools directly. The purpose is to streamline communications for the brand.
“We are fundamentally changing the whole buying and selling experience in college sports,” said Ben Sutton, president of IMG College. “Internally, this [UPS] deal was like the shot heard ’round the world. We’ve made college sports more accessible to brands than it’s ever been and we believe the floodgates will open.”
Bryce Townsend, CEO of GroupM ESP, is one of those evaluating the national college platform for his clients. While he is not sure that the national college platform is ready to take on the NFL, he sees the potential for sponsors that are committed to the college space.
“A large part of the success of the NFL or the NBA or any major entity is how the brand showcases them,” Townsend said. “A large part of their success has come from the brands elevating them to a broader audience. The key will be how brands embrace the college platform and if they elevate it. There’s certainly a very good premise there. It remains to be seen if you’ll eventually be able to compare the college platform with the professional sports.”
The other complexity in putting together the national sponsorship was clearing the inventory across so many schools. IMG College had to standardize the package from school to school so that it provided a consistent set of assets.
That task fell largely on Lawton Logan, senior vice president, U.S. business development. He said IMG College has tried to simplify the list of assets by boiling them down to three categories: intellectual property, experiential marketing and unique access, such as hospitality, on-field access during games, seats on team flights and other experiences. Those assets go along with the typical sponsorship elements, such as ad units on radio and TV and signage.
“Every school is unique so it’s hard to have the exact same assets at every school,” Logan said. “But we know we can offer those three main categories — IP, experiential and access. It’s definitely a task to coordinate that on a per-school basis, but now that we have one down, it should be much easier moving forward.”
The UPS agreement is the kind of national deal that wasn’t available before IMG College consolidated the college space, unless a company was willing to aggregate college deals one at a time. State Farm did this and it now has 90 college relationships that have been built over 25 years, but most companies haven’t been willing to make that kind of investment in time or resources.
IMG began by acquiring Collegiate Licensing Co. in 2007 and added Host Communications and ISP Sports, all for $300 million. Those acquisitions gave IMG College the ability to sell the marketing and media rights to more than 80 Division I colleges, most of which were packaged into UPS’s deal. The handful of schools that weren’t part of the deal mostly were schools that don’t have football.
As many as five or six different multimedia rights holders represented schools in the past, while another handful of universities handled sales internally. It made the college space incredibly complicated before IMG College began gobbling them up to create a one-stop shop, or as close as you can get to one these days.
Learfield Sports still represents close to 50 college properties, including blue-chippers like North Carolina and Penn State.
“For as long as I’ve been in this business, people have complained about how fragmented this industry is,” said Sutton, who founded ISP Sports 20 years ago and sold it to IMG last year for $100 million. “But to be able to create a coast-to-coast platform with schools all over the country, it’s a dream come true for me. It’s why I sold my company to IMG.”
In UPS, IMG College found a willing partner that already was committed to college sports. Represented by Momentum, UPS became a corporate partner with the NCAA and the SEC last year through separate agreements.
Jim Pyne, who works out of IMG’s Atlanta sales office, had sold UPS the SEC deal, and late last year he was back to pitch the first national sponsorship. He invited Rogowski and UPS’s CEO, Scott Davis, to attend the BCS championship between Auburn and Oregon in Phoenix in January.
Jim Pyne, who is George’s younger brother, knew that Davis was a huge Oregon fan. Rogowski, meanwhile, saw immense business-to-business potential in partnering with universities that are often like small cities unto themselves.
Davis and Jim Pyne sat next to each other at the game and talked football. Pyne, a former All-America center at Virginia Tech, spent part of his NFL career with the Detroit Lions. Davis grew up a Lions fan near Detroit.
From there, it took six months of haggling over assets and price, mostly price, but Rogowski finally agreed to terms with IMG College over dinner at Seasons 52 in Atlanta, where UPS is based.
A text message from Pyne to Logan read simply, “Done.”
The two sides went back and forth for months over price because a single deal that aggregated so many schools had never been done before. There wasn’t a template to go by.
As the talks evolved, UPS looked at the pricing of comparable assets, both in the college space and in other sports properties.
“We had to do a lot of work to put a price on it,” Rogowski said. “The actual negotiations were tough. The language, the finer points of the deal, we were plowing new ground here. It took a lot of back and forth.
“As for the value, what we paid is the value. Three, four, five years from now, we’ll see.”
IMG College calls its national platform unlike anything else in the sports sponsorship landscape. George Pyne touts the 80-plus school properties that cover 49 of the top 50 markets and nearly every state. Pyne also gushes about the 172 million college fans, 80 million female fans and 29 million fans who make $100,000 or more.
This platform, he says, can challenge the reach of the NFL, NBA or any other property.
“When you look at the numbers, it makes you think, ‘Where is everybody?’” Pyne said. “There are five or six really mature categories in the college space. When I was at NASCAR, we had 32. Even now, people just don’t know the untapped value in the college market.”