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Volume 20 No. 42

Marketing and Sponsorship

IMG College and Learfield Sports have found that competition can make for strange bedfellows, the latest example of that being the two collegiate multimedia rivals teaming together to sell college tickets.

IMG College has been trying to cultivate the emerging ticket sales and marketing space for the last 15 months and ultimately decided that it could do it better with Learfield’s help.

The new joint venture between the two most dominant collegiate multimedia rights holders will be called IMG Learfield Ticket Solutions and together the two companies, both of which are owned by private-equity funds, will work to expand the current client list of 12 schools.

It’s a list that IMG College has built in the year-plus since it bought Matt DiFebo’s ticket sales business and folded it into its college operation. And there have been some successes along the way, with Duke, Penn State, Syracuse and Tennessee standing out among the new ticketing clients. In these arrangements, IMG College typically sets up an office on the school’s campus and hires anywhere from a handful to 10 sales associates to initiate sales calls. IMG shares revenue from new ticket sales with the school.

“We see this as a great opportunity in a very young space,” said Mark Dyer, senior vice president of business innovations at IMG College. “It makes sense to combine forces to provide what we think will be the best offering to schools.”

Despite the almost two-year push by IMG College and its chief competitor in the space, The Aspire Group, the ticket sales and marketing business remains undeveloped.

IMG College has its dozen schools and The Aspire Group, led by veteran Bernie Mullin, has about 16 college clients for which it does ticket sales and marketing. Both are expanding their business and expect to add several more schools this year, but most schools still handle ticket sales internally.

IMG College, however, now figures to fare better on campuses that have relationships with Learfield because IMG and Learfield are in this together.

Even though IMG College had some success outside of its own network of schools, including winning the business at Penn State, a Learfield school, the joint venture opens many more doors. Combined, IMG College and Learfield do business with about 130 college properties. That will enable the new IMG-Learfield ticketing business to cast a much wider net.

Aspire’s Mullin remains skeptical. After learning of Learfield’s decision to partner with IMG College last week, he emailed his staff with the message, “Business as usual.”

He wouldn’t say if Aspire had talks about doing business with Learfield, but Learfield officials admitted meeting with nearly everyone in the space before partnering with IMG College.

“I might be missing something, but I don’t see how this changes anything,” Mullin said of the IMG-Learfield partnership. “It makes sense for Learfield to have ticketing, certainly, but I don’t see how it makes a lot of difference. We run into them on campuses and we’ve certainly won our share.”

Aspire counts Rutgers, Maryland, Memphis, Louisiana Tech, Western Michigan and the NCAA among its college clients.
Mullin concedes that Learfield or IMG College might have an advantage when they go after ticket business on a campus where one or the other already owns the multimedia rights. But Mullin sees very little synergy between the sponsorship side and the ticketing side, so he’s skeptical of how much that will come into play when schools seek a ticketing partner.

Learfield, a company with 40 years’ worth of relationships in the college space as a marketer and broadcaster, has deep ties at 50 schools, such as Alabama, Oklahoma, Missouri and North Carolina. IMG College, likewise, does business with close to 80 schools, including Kansas, Ohio State and Kentucky, three of the four schools in the Final Four.

“Combined, we can go to market in a bigger way,” said Roger Gardner, vice chairman at Learfield. “What we hear from our university partners is that they have needs (in ticketing) and that translates into opportunity for additional service, revenue and all of the other benefits that go with it.”

Neither IMG College nor Learfield have plans to do more joint business. They’ve occasionally worked together to sell advertising and sponsorship, and their properties at Clemson, South Carolina, Miami and Alabama are joint ventures, but that’s all that’s in the works for now.

Learfield, which recently sold a majority interest to Shamrock Capital, and IMG College are currently competitors for the multimedia rights at Illinois.

“That’s not the game plan right now,” Gardner said of future joint ventures. “If there’s something that makes sense, it’d be silly not to think about it, but there’s nothing on the drawing board.”

Nike has signed a sponsorship agreement with Rio 2016 and the Brazilian national team, scoring a major corporate victory in the race for market share in fast-growing Brazil.

The deal gives Nike its first official Olympic organizing committee sponsorship since the 2000 Sydney Games. It represents a tremendous opportunity to strengthen Nike’s brand positioning in Brazil and generate strong licensed merchandise sales on the back of Brazil’s emerging middle class.

Under terms of the four-year deal, Nike will receive marketing and licensing rights to the Rio Games. It also will outfit all Brazilian national teams (except volleyball, which is sponsored by Olympikus) for the 2012 London and 2016 Rio Games. Unlike most Olympic apparel partners, Nike won’t outfit volunteers working at the Rio Games, and it is still being determined if it will provide opening and closing ceremony apparel for the Brazilian team, sources familiar with the deal said.

Financial terms weren’t available, but sources valued the deal in the $25 million to $40 million range. The total is significantly less than Rio organizers could have gotten for the deal.

Rio organizers opted to take Nike’s tier-three sponsorship offer over a tier-one sponsorship proposal from the Brazilian sportswear brand Olympikus, which is owned by Vulcabras Azaleia. In doing so, it is expected to become the first organizing committee to split team and volunteer outfitting into separate categories. They are expected to begin searching for a volunteer outfitting sponsor later this year, but it’s unclear where the organizing committee will turn to find an outfitter for that workforce.

Adidas paid $127 million for a tier-one sponsorship agreement for the 2012 London Games. But Brazil needed an outfitter for its national teams for the upcoming London Games, and sources said it chose Nike because of its reputation for product innovation.

Adidas, the official sportswear partner of the Athens, Beijing and London Games, did not compete for the Rio 2016 sponsorship. As an official FIFA partner, the company will have a dominant position in Brazil during the 2014 World Cup.

Rio 2016 already has signed five tier-one sponsorships and surpassed its goal of raising $570 million in sponsorship revenue. The organizer’s last tier-one deal with Nissan reportedly was worth $250 million. Its other tier-one partners are Bradesco, Bradesco Seguros, Claro and Embratel. It has a tier-two sponsorship with Ernst & Young.

The 2016 Olympics sponsorship is a departure for Nike. The company historically sponsors Olympic teams, not organizing committees. It last sponsored an organizing committee in 2000 when it replaced Reebok as the official sportswear partner less than a year before the Sydney opening ceremony. Reebok had withdrawn from its sponsorship after alleging that Sydney organizers breached their contract. Within days, Nike reached an agreement with the International Olympic Committee and Sydney organizers to replace Reebok.

Though the deal for the 2000 Olympics was cut hastily, Nike benefited from strong licensed product sales during the Games. Sources close to the deal with Rio 2016 said the company expects licensed product sales during those Olympics to be huge because of the growth of the Brazilian middle class and worldwide interest in Rio. Organizers of the 2016 Olympics projected more than $50 million in licensed merchandise sales in their IOC bid in 2008.

The deal included two other appealing components for Nike. First, it will be the dominant brand worn by Brazilian athletes in every sport from sailing and tae kwon do to track and field and soccer, which it already outfitted. Second, it doesn’t require the company, as is customary, to outfit the 50,000-plus volunteers who work an Olympics. That gives Nike the assurance, which the company prefers, that its brand will only be featured on athletes.

Sources say Casey Wasserman plans to use the investment to expand the company’s business overseas.
Editor's note: This story is revised from the print edition.

Wasserman Media Group has received an investment of approximately $25 million from Highbridge Capital Management, giving the New York-based private equity firm a minority position in the sports and entertainment company.

Wasserman plans to use the money for acquisitions and strategic growth initiatives, and sources familiar with the company’s plans say it’s particularly focused on expanding its business overseas.

The deal gives one of Highbridge’s funds, Highbridge Principal Strategies Growth Equity (HPSGE), preferred equity in Wasserman. Clifford Friedman, who oversees HPSGE, has become a director on Wasserman’s board.

Highbridge does not comment on its investments, and Wasserman Media Group CEO Casey Wasserman declined through a representative to speak for this story.

Sources familiar with Casey Wasserman’s plans say that he envisions using the money to expand the company’s business overseas, especially in Europe, Asia and South America. The company has been active in Europe for years and has set up offices in India and forged an alliance with a basketball agency in Brazil. Sources added that Wasserman’s vision for growth isn’t limited to overseas and said the company also will consider opportunities to expand domestically by adding talent agents or acquiring agencies.

JP Morgan has a majority interest in Highbridge Capital, which has $27 billion under management, and Wasserman has ties to JP Morgan’s most senior executives.

Under terms of the investment, Wasserman is able to buy out Highbridge at any time. He also has the ability to secure more funding under similar terms to the group’s initial agreement.

Highbridge is the first outside investor in Wasserman Media Group. The Los Angeles-based sports and entertainment marketing company was built primarily through acquisition and investment by its namesake, the grandson of Hollywood talent agent and studio executive Lew Wasserman.

Wasserman began buying sports marketing and representation agencies in 2002. His first acquisition was Jeff Knapple’s Envision Group, which specialized in naming-rights sales. That was followed less than a year later by the acquisition of Steve Astephen’s action sports agency, The Familie. He went on to hire former SFX Sports agent Arn Tellem and build out a stick-and-ball-athlete representation division with offices in the U.S. and Europe. He later acquired OnSport in 2007, giving the agency a foothold in the corporate and property consulting business.

Over the last decade, Wasserman Media Group rarely missed in its acquisitions. Knapple and Gary Stevenson, who founded OnSport, are no longer with the company, but Wasserman remains active in sales and sponsorship consulting.

As it grew, the company’s only real failure was its vision for a digital sports network called Sportnet. It formed in 2007 a programming and marketing partnership with USA Swimming, USA Track & Field and USA Gymnastics and planned to develop a series of websites that would show those sports’ competitions. Eventually, those plans were abandoned and Sportnet merged with GrindTV to create a digital network of action sports sites.

Staff writer Terry Lefton contributed to this report.