What Are My Multimedia Rights Worth?

July 21st, 2017 | by Dan Gale
What Are My Multimedia Rights Worth?
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Multimedia Rights

This is a common question I hear from many athletic directors and senior administrators who we consult with that are looking to renegotiate with a multimedia rights holder, partner with an external unit for the first time, or debating to handle their rights in house. Many leaders are stuck in the mold of a pure guarantee model where a partner offers a flat amount for the rights to sell multimedia and sponsorship. They are either programmed to the multimedia rights deals of the late 1990’s and early 2000’s when the market was booming, or stuck with outdated internal structures of selling sponsorship in house by an individual with too many other internal responsibilities.

I hate to be the bearer of bad news, but for 90% of schools out there, that pure guarantee model is no longer the model. Even for some of the remaining 10%, there is going to be a drastic shift in these during the next rounds of renegotiation. The days or getting a check and not worrying about anything are LOOOOONG gone. Nowadays, leaders must be aware of the entire picture before making any decision. Their brand is deeply affected by the group they choose to partner with to handle their sponsorship sales, or by whom they have representing their brands if housed internally. Corporate partnership deals are very valuable to organizations and a lifeline of revenue generation if set up properly out of the gate, but if not, they can damage the culture of an entire department.

In response to the What are my Multimedia Rights Worth?’ question from many athletic directors, the best thing I can say is there are three major aspects that you should focus on:

1.      Market- Where are you located?

This does not only mean geographically, but also conference affiliation, competition in your marketplace from other teams or other forms of entertainment, etc. There are many factors that will affect the value of your rights and you need to examine every one of these before deciding your course of action. A B1G Ten school in an over saturated market may not have nearly the value of a Big 12 school that is a premier brand in an area with little competition. Understanding these factors can truly affect your negotiating process.

2.      Assets- What value do you bring to the table?

The importance of what assets you can incorporate in a multimedia rights deal can affect a valuation by 4-5X! In addition, knowing what you can offer before sitting down to negotiate can make or break your first or next deal. Many people are hearing the buzz of campus marketing, and I agree there is strong value to these assets, but making sure you have proper University buy in, prior to negotiations, can aid in your case for increased revenue valuation from a rights holder.

Also, knowing if you have marketable nontraditional assets can swing a deal tremendously! For example, one small Division I school I examined has a football stadium located next to a high traffic state highway. The value of the land was more enticing to the rights holders than the product on the field. This would lead to a much larger partnership for this school if the land could house a video display board facing the highway. This one asset offered increased value for a rights holder, and adds addition value to the school in growing their brand by negotiating away a portion of advertisements and free up space for free advertisements of their programs.

3.       Structure- What structure are you willing to accept?

This is the scariest part for many partners! They do not understand how they can structure partnerships that can build WIN/WIN situations for both a rights holder and a school or how they can build out an internal sales unit. Many believe receiving a guarantee check is the best and only way. This is in no way the case and could be the worst situation for your school.

For example, one mid-major school was offered a guarantee for their rights when they started the property. This guarantee was much more than what they currently netted on corporate sponsorship. However, this would have significantly limited their growth potential compared to another model that was presented. The school conducted an internal review and saw they were in a period of strong growth. They opted to go with a revenue share model that helped them increase corporate sponsorship by 350% and made them 4X more revenue than if they had accepted the guarantee check. Understanding the upside potential and being willing to take a risk can be beneficial, but for some there is a need for the budgeted income yearly. Building the structure correctly out of the gate, or renegotiating it in a new contract, is the only way to ensure that both sides are going to maximize revenue!

To sum it up, you must know your own personal situation and what unique model is going to work the best for your organization before determining your TRUE WORTH. The only way to do this is to do an internal evaluation of your goals and requirements from a multimedia rights partnership and what you can bring to the negotiation table. If you do not begin with the end in mind there is no way of accomplishing a successful partnership!

Dan Gale About Dan Gale
Dan Gale has been working in and around college athletics for the past 15 years. He has worked in fundraising and operations at the University of North Carolina, Temple University and East Stroudsburg University. He spent the bulk of his career at CBS Collegiate Sports Properties in leadership roles at the United States Air Force Academy, Old Dominion University, Towson University and University of Maryland. Upon leaving college athletics, he spent four years in the private sector building companies focusing with college athletics in the areas of technology and secondary ticket sales. He is currently the President of Leona Marketing Group, helping athletic departments formulate their revenue generation strategies and negotiating their multimedia rights.

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