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Colleges

Outfront aims to retain Virginia, LSU

Two major universities — Virginia and LSU — are closing in on new multimedia rights deals that will increase their revenue significantly.

Virginia took its rights to the marketplace through a request for proposal, which has resulted in a competitive bid process between incumbent Outfront Media Sports and IMG College, according to industry sources. LSU, meanwhile, is quietly renegotiating its deal with Outfront, the company that used to be CBS Collegiate Sports Properties.

These types of multimedia rights deals guarantee the schools millions of dollars annually and, in exchange, the rights holders sell corporate sponsorships, radio and TV advertising, game-day hospitality, in-venue signage and other assets.

The importance of maximizing the value of these deals has grown as costs go up for athletic departments in the power five conferences. Schools in those leagues will begin paying cost-of-attendance stipends to their athletes next season, adding another $1 million to $2 million in expenses in most cases. That’s also added a new layer of pressure on these schools to generate more revenue.

The negotiations with Virginia and LSU serve as an early challenge for Outfront Media Sports, a company known mostly for its outdoor advertising. The business parted with CBS Corp. last year and rebranded to Outfront in November, taking its college multimedia rights business with it. Doug Paschal, vice president and general manager, has overseen the multimedia rights business for Outfront and previously CBS going back to 1998.

LSU and Virginia represent two of the marquee properties in Outfront’s small portfolio, which also includes Maryland, Utah and Wichita State among its 10 college deals.

The bidding for Virginia’s rights is shaping up as a two-horse race between Outfront and challenger IMG College. In the Cavaliers’ RFP, issued in February, they were asking for more than $80 million over 10 years, beginning with the 2016-17 academic year. That figure includes annual guarantees, a signing bonus and a financial commitment for capital expenditures. The signing bonus is expected to be a minimum of $5 million but could be more, according to the RFP. Bidders were requested to submit bids over a 10-year term and/or a 20-year term.

If the new deal comes in averaging $8 million or more, it will double what Virginia received in its previous deal with Outfront, which guarantees about $4 million a year. The previous deal was negotiated in 2006 and the market has completely reset since then, giving the Cavaliers reason to think their rights are worth significantly more now. Guarantees for some of the top schools surpass $10 million annually.

Sources say that Outfront has generated a high of $6 million in annual revenue from Virginia’s rights, so clearly that number will need to increase to meet guarantees of $8 million or more.

A decision between the two front-runners is expected in the next 30 to 45 days, sources said. Learfield Sports, which owns the rights to 90 universities, did not submit a bid.

Outfront had an opportunity to negotiate exclusively with Virginia last fall, but the company was in the midst of its rebranding, so the two sides were unable to get together, sources said. Going back to its days as CBS and previously Viacom Sports, Outfront has worked with the Cavaliers’ athletic department since 1998.

Paschal is negotiating for his side, while Tim Pernetti, the new president of multimedia, leads talks for IMG College. This deal puts Pernetti, the former Rutgers athletic director, front and center of his first major quest for new business. He joined IMG College in March. Virginia Athletic Director Craig Littlepage and Jon Oliver, executive associate AD, oversee the process for the school.

LSU, another longtime Outfront client, took a different approach with its rights. The Tigers are in the final stages of negotiations with Outfront to extend their deal 10 more years, sources said. The Tigers’ current 10-year, $75 million deal has one more year left on it. Terms of LSU’s new deal are still being finalized, but sources expect the annual guarantee to be in excess of $10 million a year.

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