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How UCONN is making money beyond the BE
http://www.connpost.com/uconn/ci_13185383
What are other BE schools doing to get additional revenue?
Quote:Multimedia rights deal helps UConn keep ahead of money issues
By Neill Ostrout
STAFF WRITER
Updated: 08/22/2009 07:47:57 PM EDT
In most years, the UConn athletic department would have to wait for a pot at the end of the marketing rainbow, hoping that it provided enough gold to support its ever-expanding budget.
But last fall, like many major colleges around the country have done recently, UConn signed a deal that insures the school will be getting the pot up front -- whether a rainbow ever shows.
The multimedia rights agreement UConn inked with IMG College in September 2008 provides the school with a guaranteed $80 million over 10 years. The deal includes radio broadcast rights, signage, corporate partners, game programs as well as numerous other tasks and expenses that the school had performed in-house.
"If we were still doing our own corporate partnerships right now, we'd be riding this economic roller coaster and hopefully we'd be able to renew people or find new people," UConn athletic director Jeff Hathaway said. "This way we have a dollar amount that is more than we made before when we were doing it ourselves."
In the first year of the agreement, the recently completed 2008-09 academic year, UConn received $4,204,000 million from IMG. That figure, according to school officials, represents an increase of $800,000 from the previous year.
UConn's deal is one of many IMG and similar companies have entered into in recent years.
International Management Group (IMG) is a company that made its name by representing individual athletes, beginning with Arnold Palmer
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in 1960. The company still takes pride in that division of its business, managing the likes of quarterbacks like Peyton Manning, tennis stars like Maria Sharapova and coaches such as UConn's Randy Edsall.
But after purchasing Collegiate Licensing and Host Communications in 2007 to form IMG College, the company's new branch began to make a name for itself in the field of broadcast and advertising rights.
A nice neighborhood
Nebraska signed on with IMG College to the tune of $109 million over 13 years. Arizona has a 17-year, $124 million deal. And Ohio State recently came along for a whopping $110 million over just 10 years.
UConn sent out an RFP (Request For Proposal) in January 2008 and received a number of offers. IMG's proposal was near the top in terms of dollar amount, and was also attractive based on its current clientele.
"You look at the IMG partners: Texas, Nebraska, Michigan, Tennessee, Florida, the Southeast Conference," Hathaway said. "You look at the size of those programs and the national prestige and tradition. Frankly, that was a neighborhood we were interested in being in. We feel strongly that we have those types of athletic programs."
IMG, too, was interested in what UConn had to offer.
"You have a very attractive state and they're the primary university in that state without any real pro competition," said Tom Stultz, the senior vice president and managing director of IMG College.
Hathaway, who was UConn's senior associate athletic director from 1990-2001 before leaving to become Colorado State's AD, took the Huskies' reins for himself in the summer of 2003. He had plans to get involved with someone like Stultz and IMG upon his return.
"When I came back as the athletic director, I knew there were two projects we were going to have to undertake when the time was right," he said. "One was the division-wide apparel deal and the second one was the multimedia agreement.
"I also understood that we wanted to make sure our product was at its highest value to date when we went out into the market place."
The apparel deal came through in July of 2008 when Nike agreed to a 10-year, $46 million contract.
But the Huskies didn't have the sexiest inventory some 10 years ago for a company like IMG. The development of its football program -- which had historically played third fiddle to the school's wildly successful men's and women's basketball teams -- and the building of Rentschler Field gave UConn some additional appeal.
It was enough for IMG to promise the school more than $80 million. It wasn't a huge risk, Stultz says.
"This is what we do," Stultz said. "When schools do it in-house, they usually have wonderful people and they do a great job. But they also get brought into other meetings and other things that involve the athletic department: schedules, game-day events, tickets and everything else is needed for their department. It kind of takes some of the focus away from pure sales. That's what we focus on."
IMG has taken a great number of projects away from the Huskies. That's a positive for the school, it seems.
"We don't print posters anymore. We don't print schedule cards anymore. We don't do the UConn corporate partners' golf outing anymore," Hathaway said. "They have taken all those expenses off our books."
Despite the reduction in tasks and man-hours in his department, Hathaway is quick to point out that the staff hasn't been cut.
"No positions were lost due to the IMG transition. We were very careful about that," Hathaway said. "We did have a couple people leave us for what they believed were better opportunities around the same time and we just didn't fill the jobs -- knowing we were going to sign the IMG contract."
In addition to the $80 million guarantee, there are incentives built into the contract for UConn to recoup more money. If IMG takes in more than a given amount of revenues with regard to UConn's rights, the school will receive a bonus payment equal to 50 percent of the excess net revenue.
For the 2009-10 season, the threshold is $9 million. If IMG nets more than that with its UConn products, the Huskies will earn more than the $5,218,000 they are already contractually promised.
The agreement hands over the radio rights to broadcast UConn's games, but the average fan won't notice much of a change, if any. For starters, IMG doesn't officially gain the rights until 2012 when WTIC-AM's contract with UConn expires.
IMG hopes to gain control sooner and is in discussions with the station and the school already, but doesn't have any plans to change the school's "flagship" station or the announcers who regularly call the games.
"The university is very happy with the current flagship. It's our goal and expectation that we'll be able to work something out where we continue to be there for a long time," Stultz said. "We really don't want to change. But the financial arrangement will change from the flagship paying the university to whatever deal we strike."
Whenever a new radio deal is inked, the broadcasts are likely to be run by something called the "Husky Sports Network." IMG will also explore the possibility of finding a satellite radio affiliate.
The contract both parties signed also conveys the television rights to coaches' shows for the three major sports as well as games not otherwise promised to other parties. The Big East Conference, which has deals with CBS, ESPN and others, owns the rights to broadcast most of UConn's games.
CPTV stays on
One part of UConn's broadcast rights that have not transferred to IMG involves televising women's basketball. UConn is entering the second-year of a four-year contract with CPTV. That deal will remain in place and the university will continue to be able to negotiate new deals.
"The women's basketball (television) rights, while it's a great piece of inventory, it's really not something we have at other schools," Stultz said. "It's not like it's taking anything away from what we ordinarily would have."
What IMG also has as part of the deal is control of 21 suites at Rentschler Field. UConn turned over the luxury boxes -- a major piece of "inventory" as it's called in the athletic marketing business -- so they can be used in variety corporate packages.
Also as part of the agreement, IMG will purchase hundreds of season tickets to UConn home games, including 392 for football, 280 for men's basketball, 272 for women's basketball, 98 for men's soccer, 98 for women's soccer and 68 for men's hockey.
The total price of the tickets IMG has agreed to buy, which includes a number of single-game tickets and postseason tournament tickets, is $1,163,000. That money paid to UConn is in addition to the rights fee payments the school will receive each year.
There are a number of other cash payments UConn will receive that have been earmarked for specific projects.
IMG has pledged $2 million toward the construction of a new basketball practice facility. The payments will be made in four annual installments of $500,000.
That building project is still in the planning process, Hathaway says, and the school is just now receiving drawings from the architects. Some $6 million has been raised so far for a project that will cost in the neighborhood of $25 or $30 million.
Another $2 million from IMG has been earmarked for new signage, the majority of which will be spent on new video boards that will be installed in Gampel Pavilion this season.
Although UConn has signed deals with large dollar figures over the last year, Hathaway points out that the price of college athletics continue to skyrocket. His school's annual athletic budget has grown to about $55 million.
"The IMG contract and the Nike contract do not make us fat, do not make us rich," Hathaway said. "What it's done is allow us to keep our head above water. This has allowed us to stay as whole as possible."
IMG College's clients Arizona -- 17 years, $124 million Nebraska -- 13 years, $109 million Michigan -- 12 years, $86 million Ohio State -- 10 years, $110 million Florida -- 10 years, $100 million UConn -- 10 years, $80 million Rights fees granted to UConn by IMG CONTRACT YEAR AMOUNT Prepayment 4,224,000 2008-09 $4,204,000 2009-10 $5,218,000 2010-11 $6,168,000 2011-12 $6,418,000 2012-13 $7,218,000 2013-14 $7,618,000 2014-15 $7,918,000 2015-16 $8,138,000 2016-17 $8,608,000 2017-18 $8,828,000
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