The Bay Area is a crowded sports market. Competition for share of mind and wallet is getting even tougher with teams becoming world champions, stars being born, MVPs named, a new stadium opening, arenas being planned, and teams entertaining relocation.
How is the business of collegiate athletics going to shoulder its way to the front of the revenue line? Right in our own backyard, the Pac-12 is rearranging the business of collegiate athletics.
At the recently concluded Pac-12 meetings, the conference announced the creation of an internal sales and marketing division that will be responsible for multimedia rights for those institutions that choose to opt in. The multimedia rights umbrella is usually defined by stadium/arena signage, corporate partnerships, radio, digital and other types of new media to come.
Individual schools and conferences have structured deals for third party rights sellers for many years. Companies such as IMG College, Learfield, Nelligan, JMI, Fox Sports, CBS Collegiate Sports, Actions Sports Media and others are the major players in the reselling of collegiate sports rights. Locally, Stanford is represented by Learfield and Cal by IMG College. These marketing companies contract with the school’s athletic departments, which might receive seven figure deals annually on these types of arrangements. The third parties use their expertise and professional sales forces to negotiate corporate deals and guarantee the school a negotiated figure. If that guarantee is exceeded the upside is shared between both parties on a pre agreed percentage. If the number falls short the third party takes the loss.
There are also some conference-wide partnerships like AT&T Wireless that include all Pac-12 schools.
Beginning with the 2015-16 academic year, many FBS schools will begin paying athletic cost of attendance stipends, which could add a million or more dollars to next season's athletic department budget.
The business of collegiate athletics is becoming more sophisticated every day, and the Pac-12 has recognized that they may be able to generate a multimedia-rights upside by putting together its own sales and business operations groups.
Pac-12 schools could see an increase of over 20 percent in revenue from this new structure by eliminating the middleman.
The Pac-12 Network is trying to build subscriptions and revenue in an extremely crowded market. Conferences such as the SEC and Big Ten are generating significant piles of cash from their TV revenues.
Pac-12 Commissioner Larry Scott is a bold thinker and understands that new revenue streams must be generated at home and around the world of sports. The Pac-12 is trailblazing in China through its partnership with Alibaba, the world’s largest online and mobile commerce company. If you want to see your Washington Huskies men’s basketball team live on Nov. 14, book a ticket to Shanghai. The Huskies will be hosting Texas, and it will be the first US sports league -- collegiate or professional -- to host a regular season game in China.
The Pac-12’s game plan for controlling it’s own business growth will be studied by many schools and conferences to see if its time has come.
